A 'carbon credit' is a term used to define any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the equivalent in other planet-warming greenhouse gases. Carbon credits were devised as a market-oriented mechanism to reduce greenhouse gas emissions (companies get a set number of carbon credits that decline over time, they can sell or buy credits to or from other companies). This mechanism is used as an incentive for companies to reduce their carbon dioxide emissions (or other harmful greenhouse gas emissions).
However, the current carbon credit market is broken. This is because the way carbon credits are calculated is largely asymmetrical across nations, and often inaccurate. Different countries have adopted different techniques to calculate their carbon credits, resulting in a number of issues:
What is known as 'double (or triple) counting' is prevalent in today's carbon trading markets. Double counting essentially means that two different parties claim the same carbon removal or reduction credit. To illustrate the problem, an offset project in country X may sell a carbon credit to company Y, but country X may have already claimed that credit to reduce their nation's carbon emissions, resulting in higher overall emissions in reality.
If we are to achieve the mammoth task of reducing global carbon emissions by 7.6% every year for the next decade to achieve the 1.5° limit set out in the Paris Agreement, a clear strategy paired with suitable technological innovation is required. That is why we have created a solution built on the blockchain, to bridge the trust gap in the carbon offsetting industry.