Blockchain: A Theoretical Framework for Better Application of Carbon Credit Acquisition to the Building Sector
Junghoon Woo, Ashish T. Asutosh, Jiaxuan Li, Wolfgang D. Ryor, Charles J. Kibert, Alireza Shojaei
Abstract
Since the Kyoto Protocol was ratified in 1997, many countries have tried to reduce their greenhouse gas (GHG) emissions by implementing various reduction schemes. Carbon credit trading, one of these programs, has been used in many countries to comply with the protocol. In spite of the existence of carbon credit markets for over a decade, global GHG emissions recently reached their highest recorded level ever. The credits clearly have not achieved their promised results. Buildings have likewise hardly been affected, even though their energy use is among the largest sources of emissions. There is great potential for the construction sector to employ blockchain to support a significant reduction in fossil fuel consumption and improve building energy performance. In an attempt to revamp carbon credit trading, several non-profit foundations recently unveiled a blockchain trading scheme that is applicable to the carbon credit market. Financial activity which utilizes interconnected data “blocks” has many advantages. For example, this technology eliminates the need for time-consuming security to protect transactions. This goal of this paper is to present a new carbon trading paradigm that employs blockchain technology and that the construction industry can utilize to incentivize participation in the carbon market. This “smart” automation can simplify regulatory compliance.