In today’s rapidly growing blockchain industry, Carbon Grid Protocol addresses the carbon footprint by providing mechanisms in which to monitor estimated carbon footprints, all on the Blockchain.

It’s not something we think about on our drive to work, or when we go to sleep at night, but if there’s one thing to be certain of, it’s that carbon emissions (CO2 emissions) are something to be concerned about. Over the recent years, studies show that there has been a dramatic rise in the CO2 emissions. But, how do we know this? It’s all based on the carbon credit market.

Understanding the Carbon Credit Market

Earlier this summer, BP released its Statistical Review of World Energy report that showed new all-time high for global carbon dioxide emissions from 2017. Since 2016, the carbon dioxide emissions have grown almost 1.6%, or 426 million metric tons higher.

In this market, BP is among the most well-known companies implementing the traditional emissions program.

Carbon Credits

A ‘carbon credit’ is a permit or certificate allowing its holder to legally emit carbon dioxide or other greenhouse gases that absorb infrared radiation. The credit limits the emission to a mass equal to one ton of carbon dioxide. By issuing credits, the government hopes to reduce the emission of greenhouse gases into the atmosphere, minimizing any harms already lending itself to global warming.


Under the “cap-and-trade” program, better known as the “emissions program,” a company emitting less than its capped limit may sell unused credits, or the difference, to a company that has exceeded its limit. Think of this as the economic “good Samaritan.” Otherwise, without purchasing those unused credits, the company exceeding its limit would be facing strict penalties and fines. At the same time, the price in which to acquire those credits may exceed the amount in fines, therefore, companies may choose to accept the penalties and continue with its operations and emissions of hydrocarbons.

Brokering Through ‘Offsetting’

In the global market, middlemen companies, called ‘offset firms’ estimate a company’s emissions and then act as brokers by offering opportunities to invest in carbon-reducing projects around the world. Unlike carbon trading, offsetting is not subject to government regulation and it’s up to buyers to verify a project’s environmental worth. For example, there are many cases in which some offset firms in the U.S. have been caught selling offsets for normal operations that don’t actually remove any additional CO2 from the atmosphere.

Kyoto Protocol

The Kyoto Protocol was an agreement originally established in Kyoto, Japan in 1997, requiring that industrialized, or developed nations cut their greenhouse gas emissions. Under the Protocol, 37 industrialized nations in addition to the European Community were required to cut their emissions.

Unable to go into effect until at least 55 nations ratified it. The reasoning behind this was to account for almost 55% of the world’s emissions (back in 1990). The Protocol recognizes that developed countries are the primary conduits responsible for the currently high levels of greenhouse gas emission in the atmosphere, whereby, placing a higher burden on those nations to comply with the treaty.

Finally, in 2005, the Kyoto Protocol went into effect, binding its parties to pre-determined emission reduction targets. Countries were and are still required to meet their targets through national measures, but they also have additional means in which to satisfy those targets. The mechanisms the treaty sets in place are International Emissions Trading, Clean Development Mechanism, and Joint implementation. These mechanisms aim to provide a cost-effective way for nations to reach their targets.

What’s important here is that the U.S. has continued to reject the Protocol.

What Issues Are Polluting Our Footprints?

According to the Global Carbon Atlas, the United States and China have been the largest contributors of greenhouse gases.

Since the implementation of the Kyoto Protocol, global carbon dioxide emissions have increased by almost 19%. The question is why?

It all stems from global uncertainty as to climate change and global warming. Many continue to question its existence. Others question how much global warming will take place and when? How much damage it will cause and how? While these uncertainties do not excuse the failure to act, having a climate change policy that fails to take into consideration many of these questions will only continue to increase these emissions.

A Costly Ratification

In order to ratify the Protocol, a developed country must agree to reduce its emissions to a specified level. The problem is the costs associated in doing this. It is for this reason that most developed countries have no interest in ratifying the treaty or offer some sort of accounting adjustment. There is no way to prove that the benefits the treaty provides are truly worth the costs associated with abiding by its terms.

Accurate ‘Targets’

While there’s no question that the Protocol is flawed, the major drawback involves the “targets” aspect of the agreement. On its face, the strategy of implementing targets is its downfall, because there is no way to verify that these targets and timetables are in fact accurate. How can we account for such targets when one of the major issues in the global market is whether or not climate change or global warming is in fact a reality?


At the end of the day, the incentive governments have in monitoring and policing the Protocol is weak. Not only is it expensive, but imposing penalties on those companies who violate it, negatively impact those domestic residents, and governments are often hesitant to be the cause of that. As of today, there is no mechanism in place that can harmonize this trade-off.

Why Can ‘Carbon Grid Protocol’ and Blockchain Change This?

Photo Credit: Carbon Grid Initiative

Did you know that blockchain transactions are one of the biggest contributors of carbon emissions? Take a simple Bitcoin transaction, for example. One Bitcoin transaction produces approximately 300kg of carbon emission, and one Ethereum transaction emits 25-35kg of carbon emission. This is in comparison to a VISA transaction (8 grams) and a Google search (5 grams).

So, in light of the mechanisms already in place, it seems that the emergence of blockchain technology may be the solution in addressing many of these issues. Decentralized blockchain networks consume a lot of energy for verifying and validating transactions. Specifically, the “proof of work” (POW) blockchains such as Bitcoin and Ethereum utilize a large amount of energy. This would only add to the headache already caused by current systems.

One project, aims to be the first of its kind, enabling blockchain networks and DApp developers to monitor their estimated carbon footprint. Provided by New Era Energy, Carbon Grid Protocol helps bring companies and consumers closer to offsetting their carbon footprint at a per transaction ratio.

Blockchain Agnostic

What I found unique about this project is its mission in integrating its system with many of the most widely utilized blockchain platforms, implementing its protocol as a plugin, allowing project developers and DApp developers to absorb and/or pass on these mitigated costs to users. It is Carbon Grid’s belief, that by taking on an agnostic approach to the Blockchain space, this will allow for greater adoption of carbon credits.

I was able to speak with a representative of the company on why they believe taking on the current system may work to its benefit, at least in the blockchain space. According to the company, Carbon Grid believes that the current carbon credit market plays host to unfriendly protocols, such as the Kyoto Protocol, and holds itself out as an inefficient and costly market, making the demand for carbon credits extremely low.

So, how does Carbon Grid’s vision differ from systems already in place? First and foremost, it believes complying with the Paris Agreement within the United Nations Framework Convention on Climate Change (UNFCCC), which was signed in 2016, and hopefully implemented by 2020, it can facilitate accessible purchases and usage of carbon credits across the market.

Speaking To Millennials and Younger Entrepreneurs

According to the CEO, Andy Tan, information is key and having access to that information could be crucial when it comes to mitigating environmental impact.

“By 2025, the brightest millennial minds will be jostling for the attention of the companies featured in the trusted Top-100 companies to work for lists,” said Tan. “Millennials will be more determined to secure a position at one of these companies because they embody their very own ideals.”

“According to a recent survey by Schroders, more than 78% of respondents have stated that sustainable investing has become more important to them in the past five years. 86% of millennials, versus 67% of baby boomers believe sustainable investing has increased in importance.”

The Future

As for the future, Tian believes the battle on climate change will only continue to gain relevance.

“We believe our Carbon Grid initiative will be one of the first of the many tools that blockchain technology can offer to give companies a solution to track information at their fingertips; and the ability to act on that in a transparent and accountable way.”