Abstract
The Paris climate agreement requires to improve current solutions to reduce pollution and fight global warming. Different market-based approaches to face the problem are available, such as emissions trading. However, in order to increase effectiveness of these approaches, several challenges need to be addressed. Blockchain technologies may represent an opportunity to create an emissions monitoring system collecting a large amount of data about vehicles and an emission trading system that allows emissions permissions to be traded in a decentralized peer-to-peer system. However, the adoption of blockchain for massive large-scale systems has still to illustrate its applicability.
This report is primarily intended to evaluate existing Distributed Ledger Technology (DLT) systems and their readiness for an emission monitoring and permission trading system associated with road transportation in Europe. Initially, we analysed requirements of the emissions monitoring system, executed a comparative analysis of the available blockchain technologies and identified limits of current DLT systems to fight global warming.
After executing scalability and performance tests on permissioned public DLT systems to store carbon emission data for the approx. 300 million vehicles on European roads, we identified DLT systems that are capable to handle the necessary transactions per second under different consensus mechanisms.
Subsequently, the requirements and involved stakeholders for the emission trading system are discussed. Such a system needs to build upon the emission monitoring system and ideally provides an autonomous trading mechanism that seamlessly interact. The proposed DLT system would be again a permissioned public solution that allows for smart contracts to create a trading market place. As part of the emission trading mechanism, mechanism design and nudging techniques are discussed, such as a safety valve system and a feedback mechanism to incentivize users to behave in the intended way.
This work concentrates on the feasibility of rolling out an emission monitoring and trading system on a DLT system in Europe and highlights the specifications, design elements, stakeholders, as well as performance and scalability considerations as information base for further discussions regarding feasibility of DLT systems to fight global warming in Europe.
This report is primarily intended to evaluate existing Distributed Ledger Technology (DLT) systems and their readiness for an emission monitoring and permission trading system associated with road transportation in Europe. Initially, we analysed requirements of the emissions monitoring system, executed a comparative analysis of the available blockchain technologies and identified limits of current DLT systems to fight global warming.
After executing scalability and performance tests on permissioned public DLT systems to store carbon emission data for the approx. 300 million vehicles on European roads, we identified DLT systems that are capable to handle the necessary transactions per second under different consensus mechanisms.
Subsequently, the requirements and involved stakeholders for the emission trading system are discussed. Such a system needs to build upon the emission monitoring system and ideally provides an autonomous trading mechanism that seamlessly interact. The proposed DLT system would be again a permissioned public solution that allows for smart contracts to create a trading market place. As part of the emission trading mechanism, mechanism design and nudging techniques are discussed, such as a safety valve system and a feedback mechanism to incentivize users to behave in the intended way.
This work concentrates on the feasibility of rolling out an emission monitoring and trading system on a DLT system in Europe and highlights the specifications, design elements, stakeholders, as well as performance and scalability considerations as information base for further discussions regarding feasibility of DLT systems to fight global warming in Europe.
| Original language | English |
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| Publication status | Published - 2019 |
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Keywords
- Blockchain