Carbon Credits and Sustainability: Can Blockchain Combat Climate Change?

Despite increasingly ambitious climate targets, global emissions remain stubbornly high, rising 1.1% to a record 38.1 billion tonnes in 2025, as energy demand outpaces renewable energy sources. To bridge the gap, many companies turn to carbon credits: tradable permits that allow them to offset their own pollution by funding emission-reducing projects elsewhere. 

​​However, the current market is messy, plagued by verification issues and greenwashing that erode trust. Enter blockchain carbon credits. Supporters argue that a tamper-proof ledger can transparently track the creation and retirement of credits. But can this technology actually fix the trust gap, or is it just a digital layer over old problems?

Read on as we discuss the following:

• What carbon credits are meant to do in global climate efforts

• Why today’s carbon markets struggle with trust and transparency

• How blockchain carbon credits work, from tokenizing to retirement

• Where blockchain can help, where it falls short, and what needs to change for real impact

At the end of this article, you will understand what blockchain can realistically fix in carbon markets, and what it cannot.

What carbon credits are meant to do

Carbon credits were created to support real climate solutions by directing money into projects that help reduce or remove emissions. One credit represents one ton of carbon dioxide avoided or captured from the atmosphere. These credits come from many types of projects, such as:

• renewable energy installations

• forest protection or reforestation

• clean cookstove programs

• methane capture at landfills or farms

The idea behind carbon credits is simple: companies cannot cut all emissions overnight, so they help fund climate projects while they gradually improve their own operations.

Why current carbon markets struggle

Even though carbon credits play a role in global sustainability, today’s markets face major issues that make people doubt their effectiveness.

One key issue is double-counting. A credit can be claimed by more than one party because registries do not always coordinate or share data. Another problem is weak additionality. Some projects get carbon credits for things they were already planning to do, so the credits do not really add new climate benefits.

There is also limited transparency. Many carbon credit records sit in separate databases, PDFs, or spreadsheets that are not easy to verify. This makes it hard for buyers to check whether a credit is genuine, whether the project is real, or whether the credit has already been used.

Because of these gaps, greenwashing becomes a risk. A company may claim to be “carbon neutral” based on credits that do not reflect real or measurable climate gains. When this happens, it damages trust in the entire system.

What blockchain brings to the table

Because these trust problems are baked into how carbon markets are tracked today, many people are asking whether better technology can help make the system clearer and harder to game.

Blockchain is a type of digital ledger that many people can view and verify at the same time. Once information is recorded, it becomes very hard to change without everyone seeing the change. This is why blockchain is often described as transparent and tamper-resistant.

In carbon markets, this transparency can help fix several long-standing problems. A shared ledger means the same credit cannot be quietly duplicated or sold twice. It also means anyone—auditors, buyers, regulators—can follow a clear trail of how a credit was created, who owned it, and when it was retired.

Note that using blockchain doesn't necessarily mean relying on volatile cryptocurrencies. Many carbon platforms use permissioned blockchains, which allow controlled access while still improving traceability.

How blockchain carbon credits work

To see what blockchain really changes, it helps to understand how it fits into the basic life cycle of a carbon credit.

Tokenization and tracking

Blockchain starts by turning each carbon credit into a digital token. This process is called tokenization. Every token can store key details, such as:

• Project type

• Project location

• Year of issuance

• Verification method

• Ownership history

Once tokenized, the credit moves through the market with a clear, shared record. When a buyer uses the credit to offset emissions, it is “retired” on the blockchain. A retired credit cannot be reused or quietly sold again, because the ledger keeps a permanent history of that retirement.

Blockchain can also link project data — like satellite images or sensor readings — directly to a token. This reduces the need for scattered files and manual updates and makes it easier to check what is happening with a project over time.

Why this matters for sustainability

These mechanics are important because they change how climate claims are recorded and checked:

• They strengthen trust by making it easier to see which project a credit came from and when it was retired.

• They simplify markets by giving everyone a single, up-to-date record instead of multiple, disconnected registries.

• They improve access by helping smaller developers and buyers join the market through tokenized and even fractional credits.

All of this makes it harder to hide weak or duplicate credits behind vague reporting.

Limits and risks of blockchain carbon credits

Even though blockchain can improve trust and efficiency, the technology does not solve the biggest issue in carbon markets: whether emission reductions are real and scientifically valid. A low-quality project remains low-quality on blockchain.

There is also a risk of speculation. When carbon credits become tokens, some people treat them like assets to trade rather than tools for climate action. This can distort prices and weaken the environmental purpose.

Another limitation is fragmentation. Many blockchain platforms do not connect to each other or to traditional registries. This makes tracking difficult and can create new inconsistencies instead of fixing old ones.

Finally, clear regulation is still developing. Without strict rules, some platforms may tokenize credits that are outdated, unverified, or misleading.

What needs to be in place for real impact

For blockchain carbon credits to actually help the climate, three simple things need to be true.

First, the projects need clear rules. There should be simple but strict standards for:

• What kind of project can earn credits

• How emission cuts are measured

• How often projects are checked in real life

In short, the project has to prove it is really cutting emissions before anyone turns those cuts into digital credits.

Second, the platforms using blockchain need clear rules too. There should be guidelines on:

• Who is allowed to issue credits on the platform

• What proof they must show before listing a credit

• How fake or low-quality credits are stopped or removed

This is what is meant by “regulation and governance,” having rules and people who enforce them.

Third, all the systems need to talk to each other. Traditional carbon registries and new blockchain platforms should be connected so:

• The same credit is not recorded differently in two places

• A retired credit is marked “used” everywhere, not just on one system

If these three things are in place, then blockchain can really help make carbon markets more honest and easier to trust.

Conclusion

To sum things up, blockchain can make carbon markets more transparent, traceable, and efficient—but it cannot fix weak climate projects or unrealistic corporate promises. Its value still depends on the quality of the credits behind it and the rules used to check them. When paired with solid verification and clear standards, blockchain carbon credits can help rebuild trust and support more effective climate action.