The Transportation Sector, Cap-and-Trade and Blockchain: A Carbon Credit Trading Platform

Abstract

This study offers a solution that facilitates direct trading of carbon credits with no intermediaries by using blockchain technology aligned with the cap-and-trade system. With this solution, along with other major transformations in the industry, the transportation sector can take more ownership of emissions and mitigate the impact of its role as the largest contributor of greenhouse gasses. The solution sits at the confluence of the Cap-and-Trade initiative, carbon credit trading, and blockchain technology. Although the concept of blockchains has been the subject of significant curiosity, scrutiny, boosterism, investment, criticism, it most importantly is at the core of useful, rapidly growing innovations. The technology is critical because it removes the need for costly intermediaries for the successful functioning of complex systems. More specifically, the technology has demonstrated that value and asset trading can take place securely and meticulously in the absence of middlemen such as financial intermediaries and other brokers. This study shows how a democratized trading system for carbon credit trade can be constructed in which the parties conduct trades directly, with no third-party involvement, speeding up the process and potentially making it more secure and efficient. This intersection of cap-and-trade and blockchain may increase global participation in peer-to-peer exchange, which will help increase universal participation in carbon offset credits trading and allow the transportation sector to contribute actively to both short- and long-term climate change solutions.