IBM Corp. is collaborating with start-up company Veridium Labs Ltd. with the goal of using blockchain technology to help companies measure their environmental footprint and trade carbon credits to offset their emissions.
Blockchain is the digital accounting ledger technology behind bitcoin and other crypto-currencies. Blockchain technology taps into the computer networks of participants to authorize and execute transactions in real time and create a permanent financial record.
As of this year, 42 countries and 25 subnational areas put a price on carbon, almost double the number that did so in 2012. And some U.S. states are considering creating their own carbon pricing regime or joining either of the nation's two existing programs.
Experts have said one of the challenges of carbon markets is preventing double counting, and IBM is hoping to use blockchain technology to address that challenge.
IBM and Veridium aim to create a "far more efficient and transparent approach to carbon accounting and offsetting that will empower individuals and companies to play a role in improving our environment," Bridget van Kralingen, senior vice president of IBM Industry Platforms and Blockchain, said in a statement.
Many experts view carbon pricing mechanisms such as cap-and-trade or a tax on carbon as critical to achieving the emissions reductions goals of the Paris Agreement on climate change. President Donald Trump has pledged to withdraw the U.S. from that agreement, but a number of U.S. businesses, cities, counties, states and investors have said they will continue to pursue the goals of the accord.
IBM and Veridium are not the only companies looking to use blockchain technology to tackle environmental challenges. The United Nations Climate Change secretariat in late 2017 launched a "Climate Chain Coalition" aimed at examining options for using blockchain technology to support action on climate change. More broadly, energy companies have begun exploring the use of blockchain, and enthusiasts of the technology envision using it someday to help integrate distributed energy into grid-scale power markets.