BLOCKCHAIN TECHNOLOGY FOR MONITORING AND REPORTING OF CARBON EMISSION TRADING. A case study on its possible implementation in the Danish energy industry.
Author
Osuji, Nkechi Victoria
Term
4. Semester
Publication year
2020
Submitted on
2020-07-31
Pages
180
Abstract
This thesis explores how blockchain can support the monitoring and reporting of CO2 emissions and allowance trading in the energy sector within the EU Emissions Trading System (EU ETS). Blockchain is presented as a shared digital ledger that cannot be altered retrospectively, and smart contracts as self-executing rules that automatically enforce agreements without a middleman. The study combines a literature review with semi-structured expert interviews, guided by stakeholder and network theory as well as requirements engineering and case analysis. The analysis progresses in three stages. First, it outlines current conditions and challenges in monitoring, reporting, and verification (MRV) under EU ETS. Although MRV is legally mandatory for energy operators, many are not fully compliant in practice. Additional issues include lack of transparency, lack of standardized CO2 accounting, and the risk of double counting. Second, it assesses whether blockchain is a good fit to address these issues and how. Based on identified requirements and cases, the research develops a concept: a private-permissioned Hyperledger design (a Process Flow Networked approach). Smart contracts are highlighted as a key feature because they can automate processes, remain immutable, and digitally enforce rules. Together, these properties can improve compliance, transparency, standardization, and help prevent double counting. At the same time, validation through a post-interview with experts indicates that the verification step cannot be fully replaced by blockchain at present; human checks remain necessary. Third, the study identifies factors that may affect implementation: technological constraints, the need for strong collaboration among stakeholders, and the requirement for deep integration with other technologies such as the Internet of Things (IoT) and machine learning to capture and process emissions data. As blockchain capabilities continue to evolve, further research into these integrations is recommended. Overall, the thesis offers a practical design concept for using blockchain and smart contracts to strengthen climate action within EU ETS, with lessons that may also be relevant to sectors such as maritime, aviation, and logistics.
Dette speciale undersøger, hvordan blockchain kan bruges til at overvåge og rapportere CO2-udledninger og handel med kvoter i energisektoren inden for EU’s emissionshandelssystem (EU ETS). Blockchain forklares som en delt digital hovedbog, der ikke kan ændres bagudrettet, og smarte kontrakter som selvudførende regler, der automatisk håndhæver aftaler uden en mellemmand. Studiet kombinerer litteraturgennemgang med semistrukturerede ekspertinterviews og er guidet af interessent- og netværksteori samt kravspecificering og casestudier. Analysen er opdelt i tre trin. Først beskrives de nuværende forhold og udfordringer i overvågning, rapportering og verifikation (MRV) under EU ETS. Selvom MRV er lovpligtigt for energivirksomheder, viser praksis, at mange ikke fuldt ud efterlever kravene. Yderligere problemer omfatter manglende gennemsigtighed, manglende standardisering i CO2-regnskaber og risiko for dobbeltoptælling. Dernæst vurderes, om blockchain er egnet til at afhjælpe disse problemer, og hvordan. På baggrund af krav og cases udvikles et koncept: en privat og tilladelsesbaseret Hyperledger-løsning (en Process Flow Networked tilgang). Her fremhæves smarte kontrakter som en nøglefunktion, fordi de kan automatisere processer, være uforanderlige og digitalt håndhæve regler. Tilsammen kan disse egenskaber styrke compliance, gennemsigtighed, standardisering og forebygge dobbeltoptælling. Samtidig viser validering via efterfølgende ekspertinterview, at verifikationsleddet ikke fuldt ud kan erstattes af blockchain på nuværende tidspunkt; menneskelig kontrol er fortsat nødvendig. Afslutningsvis identificerer studiet forhold, der påvirker implementeringen: teknologiske begrænsninger, behov for højt samarbejde mellem interessenter samt krav om tæt integration med andre teknologier som Internet of Things (IoT) og maskinlæring for at indsamle og behandle data. Da blockchain-teknologi udvikler sig hurtigt, anbefales yderligere forskning i disse integrationer. Specialet bidrager med et praktisk designforslag til at styrke klimahandling i EU ETS ved hjælp af blockchain og smarte kontrakter. Indsigterne kan også være relevante for andre sektorer som maritim, luftfart og logistik.
[This apstract has been rewritten with the help of AI based on the project's original abstract]