The threat of rising carbon dioxide emissions approaching 414.72 parts per million, a new record high in 2021, as stated in the National Oceanic and Atmospheric Administration's Climate in the United States, demonstrates that the environment is now a global priority.
With the effect of these emissions on climate change in mind, many countries have made public their commitment to reducing their carbon footprint. The United States, for example, has openly communicated its plan for measuring environmental commodities through the Bureau of Economic Analysis.
However, because achieving absolute zero carbon emissions is unthinkable in many sectors, carbon offsetting becomes critical to offset residual emissions. Under this model, organizations can compensate for excess emissions by investing in carbon-absorbing projects. Carbon offsets are then used to track the number of credits required for an individual or organization to be carbon neutral.
Consider that as the environment and carbon become top priorities for the world, the traditional way the world views energy and, more importantly, value is likely to change. As more countries adopt an energy-credit-first strategy, a value denominated in US dollars and loans that may never be repaid may become unsustainable.
Value, which is a perception construct, may shift for countries to acknowledge non-tangible energy credits — specifically, carbon credits — on their balance sheets. Recognizing energy over dollars makes sense, given the size of the US debt and the fact that paying it off necessitates a budget surplus, which hasn't taken place in the country since 2001.
Carbon market unification
There currently needs to be a unified carbon market solution that allows participants to quickly and easily capture the value of carbon commodities. Today, several private companies provide carbon offsets to businesses and individuals, with each offset representing an investment in forestry or other projects with a negative carbon footprint.
Buyers can also purchase credits on a carbon exchange, but traditional finance (TradFi) has a bad reputation for being outdated and part of a suppressive system. High-quality carbon credits are scarce for a variety of reasons, including differences in verification methods.
As a result, 1GCX believes that combining the best parts of TradFi with blockchain will be the only solution capable of supporting a global transition to this new value system.
A commodity-first strategy
1GCX is dealing with these issues head-on. By highlighting its most promising projects, the exchange symbolizes a green technology that can yield the benefits of new markets to cryptocurrency market valuations. The resulting two-way bridge for carbon offset trading has become part of a larger, holistic market that can facilitate crypto adoption, education, and connection.
When it comes to the rest of the ecosystem, users will encounter transformative offerings focused on tokenized bonds, known as black bonds, and new payment systems that combine crypto with crypto-commodity pairings.
How do you think blockchain will impact the carbon market? Let us know your thoughts by sharing this article on social media.