A European Emissions Trading System Powered by Distributed Ledger Technology: An Evaluation Framework

Rahel Mandaroux, Chuanwen Dong and Guodong Li
Additional contact information
Rahel Mandaroux: Department of Finance, ESCP Business School, 14059 Berlin, Germany
Chuanwen Dong: Department of Information and Operations Management, ESCP Business School, 14059 Berlin, Germany
Guodong Li: Wolveshill Consulting Ltd., Orpington BR5 3QB, UK

Sustainability, 2021, vol. 13, issue 4, 1-21

Abstract: The European Union Emissions Trading System (EU ETS) is a major pillar of the European energy policy to reduce greenhouse gas emissions. However, the reportedly pervasive frauds in this market are constraining the beneficial role of the EU ETS. In this conceptual paper, we propose to digitalize the EU ETS by distributed ledger technology (DLT), enabling the verification of authenticity and provenance, proof of ownership, and lifecycle traceability of carbon certificates and assets. Our platform allows verifiable credentials to validate emission allowances, real-time tracking of trading participants’ emissions, and the audit trail reporting of the decentralized trading records. Furthermore, we complement the DLT application concept with a structured interdisciplinary evaluation framework. Our framework and analysis aim to stimulate further interdisciplinary research in this area to support regulators, such as the European Commission, in designing effective digital emissions trading systems.

Keywords: European Trading System; distributed ledger technology; digitalization; blockchain; trading platform; decentralized identifiers; verifiable credentials; wallet-to-wallet (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www.mdpi.com/2071-1050/13/4/2106/pdf (application/pdf)
https://www.mdpi.com/2071-1050/13/4/2106/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:4:p:2106-:d:500245

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().