What Are Tokenized Carbon Credits?
Tokenized carbon credits represent carbon that has been avoided or removed from the environment. One metric tonne of carbon verifiably avoided or removed translates to one carbon credit.
They are created upon bridging carbon credits from voluntary carbon market registries onto the blockchain.
Tokenizing Carbon Credits
Carbon credits are often integrated into sustainability strategies as a tool for organizations to compensate for net greenhouse gas emissions.
Non-governmental organizations (NGOs) and carbon industry bodies develop independent criteria to verify these carbon credits and ensure their integrity.
Tokenized carbon credits can be utilized as a financial tool within cryptocurrency ecosystems, empowering individuals, corporations, and governments to access carbon as an investable asset.
Tokenization also helps to improve liquidity within carbon markets – a space that OTC transactions have driven.
Thus, using a blockchain ledger addresses many issues inherent to the traditional carbon markets: improved liquidity, access, transparency, pricing signals, and data standardization.