Climatecoin,
an Ethereum-based cryptocurrency, has partnered with a carbon credit
exchange in an effort to help in the fight against climate change.
The move is expected to lead to the creation of the world’s first
blockchain-based platform for carbon credits trading.
Carbon
emissions are wreaking havoc on our environment, and one way the
world is attempting to combat this problem is through the use of
carbon credits, an approach agreed upon by most of the world’s
nations through an international treaty called the Kyoto Protocol.
The idea
behind the system is that everyone has a limit to the emissions they
can produce. If a nation wants to exceed its limit, it must purchase
a carbon credit. Each of these carbon credits serves as a permit to
produce a certain amount of emissions; for example, one credit might
equal one ton of carbon dioxide emissions.
If an
entity ends up with extra carbon credits, it can trade them to others
on markets such as the European Union’s Emissions Trading System
(ETS).
From
this system emerged voluntary carbon offsets. These give companies
and consumers the ability to pay a certain amount to offset their own
emissions. For example, an airline might ask passengers if they want
to pay an extra $20 when purchasing a ticket to offset the emissions
caused by their flight.
The
money used to purchase carbon credits and offsets is given to
projects attempting to help the environment, such as by developing
renewable energy systems or protecting forests.
These
credits give purchasers a way to effectively cancel out the amount of
emissions they produce. They’re doing something bad to the
environment, so they give money to someone attempting to do something
good for it.
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