The Role of Blockchain in Establishing and Enabling Transparent Carbon Markets in Africa

Abstract

In response to calls for more ambition to address climate change, carbon markets have emerged as pivotal mechanisms, enabling the trading of credits to curb global emissions and catalyze financial support for development initiatives. Despite their significance, concerns persist regarding the transparency of existing carbon markets, prompting exploration into blockchain technology as a potential solution. This study delves into the practical considerations for implementing blockchain to augment transparency in both established and emerging carbon credit markets across Africa. Employing a Decision Framework for blockchain adoption and the Decision-Making Trial and Evaluation Laboratory (DEMATEL), the research aims to provide project developers with informed insights into the suitability of blockchain solutions and the key factors enabling its adoption as an alternative market framework. The study also endeavors to devise a conceptual model for a blockchain-backed carbon trading market, designed to strengthen the transparency and efficiency of transactions, data aggregation, and National Determined Contributions (NDCs) tracking, while aligning with the global architecture of carbon monitoring and reporting at the UNFCCC. Findings reveal that smart contracts, data security and privacy, regulatory frameworks, and transparency emerge as key enablers influencing blockchain adoption. These insights offer guidance to policymakers and project developers in Africa, providing essential data points to catalyze discussions and propose measures aimed at overcoming barriers to blockchain adoption on the continent, thereby facilitating enhanced transparency in carbon markets.