Net-Zero 2050
Vanessa McCulloch
Vanessa is a Business Analyst at Hygge Energy. She has a Masters of International Business with a minor in Big Data from EAE business school in Madrid, Spain. She is interested in cross cultural business development and growth strategies. Vanessa believes innovative ideas are key to solving major world issues and is excited to work with her Hygge colleagues as they redefine the way communities use energy.
Climate change is a global issue; the adverse effects of air pollution affect our health, lead to extreme weather disasters, and contribute to the destruction of our ecosystem. This news is not new, the climate crisis has been discussed in length for decades. Although we aware of the severity of rising temperatures, we have still seen an increase in the earth’s global temperature of approximately 0.13°C each decade. Industrialized countries, and the people who live within them, have grown accustomed to a specific lifestyle that consists of an abundance of readily available options at the lowest possible price point. Eco-friendly consumption options do not often fit these characteristics and villainizing everyday consumers for not making sustainable decisions pressures people to live outside of their means. Walmart contributed over 17 million metric tons of carbon dioxide equivalent in 2019, and we can see comparable emissions from similar major corporations. However, a low-cost mass production strategy is often the only option for lower income families, especially with the rising cost of living. We can all make small changes, but municipalities and corporations are key to seeing real advancements.
Since the industrial revolution, the low-cost, mass production strategy has been an integral part of society. Shifting the entire production chain to sustainable resources would be a costly and time-consuming process that would ultimately be pushed back to everyday consumers. So, how can governments and massive corporations reduce their carbon emissions to net neutral without complete disruption of current operations? The carbon credit market allows corporations and municipalities to buy carbon credits that balance out the internal carbon emissions produced. Let’s start with the basics: a carbon credit acts as a permit that is granted to owners allowing them to emit a pre-determined amount of CO2, carbon credits can be bought or generated through ESG initiatives. A carbon credit is equal to 1 tonne of CO2 emissions and is meant to be representative of an equal amount of carbon reduction, this allows corporations to buy credits as a way to emit greenhouse gasses while still mitigating the amount of CO2 released.
The carbon credit market allows corporations and municipalities to buy carbon credits that balance out the internal carbon emissions produced.
The influx in commitment to reaching a global net-zero goal by 2050, post-COP 26, has introduced an opportunity for corporations and municipalities to utilize the carbon credit market and for entrepreneurs to capitalize on the many gaps within the industry. The market is already worth over $760 billion USD, and this number is expected to increase over 30% annually for the next 5 years. The growing demand for carbon credits needs an equally thriving supply. There are two main strategies for generating carbon credits: (1) they can be generated through ESG projects such as forestry or agriculture initiatives, or (2) they can be generated by substituting carbon-based energy sources with renewable energy. Sustainability initiatives are extremely important to the success of forests, but when it comes to being an accurate representation of carbon offsets and reaching net-zero, these initiatives present large corporations with the opportunity to generate undeserving carbon credits while being technically seen as sustainable. Greenwashing is a major issue with corporations and generating carbon credits based solely on vague forecasts of potential success allows corporations to inaccurately present themselves as carbon neutral. The main issue within the carbon credit market is the complete lack of digitalization within the calculation process. Before we can utilize carbon credits as a credible tool for fighting climate change, there needs to be a modern, digitalized marketplace that provides accurate calculations.
Before we can utilize carbon credits as a credible tool for fighting climate change, there needs to be a modern, digitalized marketplace that provides accurate calculations.
So, how do we modernize the way carbon credits are calculated? To determine an accurate calculation, we need to track the exact unit of renewable energy being used in replacement of a carbon emitting source. This is possible to do through blockchain; by imbedding individual blockchain nodes at the source of generation and the place of consumption, we would be able to create an auditable trail of renewable energy that provides accurate, real-time calculations of carbon credits. This set up would allow for the implementation of an AI software that is able to identify the highest carbon emission source in the community and allocate renewable energy to that specific destination to maximize carbon credits.
Corporations and municipalities are tasked with the seemingly impossible job of achieving net-zero, without completely disrupting the lives of the communities they serve. The solution, in theory, is the carbon credit market, but it’s possible that this method of carbon neutrality is only showing results on paper and not where we need it, in our atmosphere. While the current carbon credit market is exceedingly inaccurate, it is still our most viable solution: we just need to incorporate a digitalized calculation method. Using power tracking to generate real-time carbon credits will allow corporations to purchase credits that accurately represent the carbon they offset removing the possibility for greenwashing and taking real steps to net-zero. While this solution is not currently industry standard, it is the required next step for the marketplace.
