A Comprehensive Hierarchical Review of Blockchain Technology in Revolutionizing Carbon Emission Trading System

Abstract

The growing climate crisis has raised the need to search for reliable mechanisms which could reduce greenhouse gas gas emissions worldwide. Carbon markets can continue to play a central role in this effort but often there is a problem of duplication of credit, fraud, multi-jurisdiction and poor traceability. There is an attempt to avoid such shortcomings by suggesting a multi-layered framework, called BAIC-Gov. The framework enables automated and verifiable monitoring and enforcement of carbon credits through blockchain technology, smart contracts, live real-time data on the Internet of Things (IoT) and anomaly detection via Artificial Intelligence (AI). Smart contracts are coded in such a way that they will be directly connected to the emissions data measured by IoT sensors, thus credit issuance as well as compliance will take place autonomously and with precision. Such application was illustrated with the use of the IBM-China ETS and Toucan Protocol. The framework enhances the climate governance, the ability of the market to scale, and the willingness by countries around the world to achieve carbon neutrality to establish a more sustainable future by strengthening confidence and integrity in carbon trading.