Incorporating seller/buyer reputation-based system in blockchain-enabled emission trading application

Authors: Khamila Nurul Khaqqi, Janusz Sikorski, Kunn Hadinoto, and Markus Kraft*


Highlights
  • A blockchain-enabled system is proposed for emissions trading application.
  • The objective is to improve management and increase abatement investment.
  • Financial incentive is used to motivate industry participants.
  • Multi-criteria analysis emphasizes the benefit of the system against established ETS.
Abstract

Emission Trading Scheme (ETS) has dual aims to reduce emission production and stimulate adoption of long-term abatement technology. Whilst it has generally achieved its first aim, its issues are hindering the accomplishment of the second. Several solutions have been proposed to improve ETS's efficacy, yet none of them have considered the advancement of Industry 4.0. This paper proposes a novel ETS model customised for Industry 4.0 integration. It incorporates blockchain technology to address ETS's management and fraud issues whilst it utilizes a reputation system in a new approach to improve ETS efficacy. Specific design of how the blockchain technology and reputation system are used to achieve these objectives is showed within this paper. The case study demonstrates the inner working of reputation-based trading system - in which reputation signifies participants performance and commitment toward emission reduction effort. Multi-criteria analysis is used to evaluate the proposed scheme against conventional ETS model. The result shows that the proposed model is a feasible scheme and that the benefits of its implementation will outweigh its drawback.


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Keywords: Blockchain, carbon trading, carbon emission, energy economics

Associated Project: Numerics

*Corresponding author:
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