1.) Completes global transparency throughout the whole CO2 supply chain and the global planned CO2 budget.
2.) Very little bureaucracy.
3.) Stops the tragedy/dilemma of the commons (also known as social dilemma, very important!), as everyone has no other choice, than to buy CO2 certificates. No one within this system would want to trade with a person / company without the according blockchain-CO2 certificates.
Implementing this e.g. on the EU level will automatically force import from other countries like America, China, India etc. to buy CO2 certificates & save CO2, as they otherwise would have no demand from the EU anymore (EU27 = ~450 million people, with 14% of global international merchandise traffic. When counting other nations with trading treaties with the EU, then this would include even more % of global international merchandise traffic).
Question: Does every company that emits CO2 have to have multiple controllers?
Answer: No, not every company has to have multiple controllers. One controller checks the CO2 supply chain and the certificates required at the end of the chain and a second controller can, for example, check only the certificates specifically without having to go through the whole CO2 supply chain again. In case of discrepancies, further investigations can be done directly at the company.
Question: What are the main problems with the current emissions trading system? What are the advantages of this system?
Answer: Too little control, transparency, and secondly, it does not yet have any influence on foreign companies outside the emissions trading system. However, the system presented here has influence on foreign companies because if no CO2 certificates can be presented in the blockchain, the demand falls away because without the certificates at the end of the CO2 supply chain, high penalties would be due for e.g. the link after that.
Question: How could the system prevent manipulation by autocratic states?
Answer: The demand from the EU for products without CO2 certificates could be reduced. Thus, an important market would be closed to companies or states that do not want to buy certificates. Bribery of inspectors cannot be ruled out, but would be economically uneconomical, since the briber would have to fear being inspected at any time by another inspector from the large pool of possible inspectors.
Question: Wouldn't an infinite number of checkers be needed to avoid bribery?
Answer: Correct. A large number of auditors would minimize the bribery risk in this system. The high cost of a detected bribery would discourage companies from bribing the auditor, since they could be audited by another auditor at any time. Importantly, the potential penalties, or thus the profit of an auditor for detecting a penalty, is high enough to make fraud uneconomical.
Question: couldn't bribing just some of the auditors already yield significant savings? And how would traceability be ensured in complex supply chains?
Answer: the risk of bribery cannot be completely eliminated, but high penalties could make it unprofitable. The use of blockchain technology would enable transparent and tamper-proof documentation of supply chains.