Blockchain Powered Carbon Credit Trading System using CAP-and-Trade Mechanism

Climate change is the greatest long term threat that the global Community is currently facing. In response, many countries are submitting enhanced Nationally Determined Contributions (NDCs) to the UN, committing to reduce greenhouse gas (GHG) emissions by 2030. The Energy and Environmental Department at the National-level government wanted to create price incentives for industries to reduce their GHG emissions and stimulate investment in green innovation. To support these efforts, the proposed solution aims to develop a fully-functional, automatic and blockchain-powered Carbon trading platform that enables market participants to track, manage and trade GHG Credits (often referred to as Carbon Credits) while also helping the government to verily actual emission reductions. Blockchain-based architecture ensures that emissions data is tamper-proof, auditable securely recorded, enhancing accountability and participant trust. The carbon trading platform runs on CAP-and-Trade mechanism which is Government regulated Compliance market, in which specific sectors and Companies (usually called as obligated entities) are designated allowed to generate a certain volume of emissions (i.e. a CAP, carbon emission limit, acts as a Carbon emission Allowance Permit for these carbon emitters). If they exceed this limit, they may purchase Carbon Credits from environmental projects or have to pay carbon heavy taxes.