Blockchain x Tokenized Carbon Credits: The ESG Trend You Can’t Ignore in 2025
July 24, 2025
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“ESG isn’t optional—it is the new unavoidable standard for business. ”
Paul Kavuma, CEO, Jubilee Allianz has quoted this many times in an interview, on TV and social media whenever he appears in the media. But why is Paul Kavuma saying that recently? You need to look at the WEF chart to understand that.
As per the chart, consumers prefer to buy from companies actively contributing to protecting the environment in 2025 and investors like to invest in such companies which are environmentally sensitive to put ESG goals as their top priority.
Thereby, leading to a race condition building up to buy carbon credits to build trust in the market. But in the process, most corporations like Exxon Mobile, HSBC Bank, Shell, Nestle, Volkswagen have indulged in unethical practices to exploit this trend by either releasing fake carbon credits or buying into the fake ones.
In this blog, we shall see how tokenizing will counter that and for that blockchain’s role will be pivotal. But before we do that, it is important to first let readers know about tokenized carbon credit.
To understand tokenized carbon credits, first you need to understand what are normal carbon credits. A normal carbon credit is like a license allowing you to emit carbons in the atmosphere at par with the threshold limit mentioned/ allowed in the carbon credit license. For example, 1 Ton against a single carbon credit.
But the problem with traditional carbon credit is that you don’t know as a corporation whether you have got a verified or fraudulent carbon certification / or credit, which could lead to unfavorable outcomes. Tokenization changes this upside down by allowing corporations/ regulators/ investors to verify and validate carbon credits.
Thereby allowing them to stay compliant with the ESG practices and actively contribute to safeguarding the environment through a superior version of the carbon credit, which is tokenized credit on-chain. But why is this needed?
To understand why tokenizing carbon credits is necessary in 2025 for carbon markets, you will have to look at the present state of the market. For example, the global carbon credit market in 2024 has remained stagnant due to the quality issues of the carbon credits.
And this is happening because of the sub-standard quality of the carbon credits associated with projects and lack of means to validate the same. Due to this, most of the projects like (i) Verra & Gold Standard Carbon Credits Scam (ii) Zimbabwe Carbon Credit Licensing Scandal have indulged in scandals to profit from the same. As a result, there’s consolidation/ lack of interest in the carbon market in 2025 as evident from this graph;
As you can see, most of the carbon projects are retiring or getting shelved due to lack of means to verify their credibility. But despite the challenging conditions, more than 2,700 companies have still expressed their intent to use carbon credits nonetheless to meet their ESG goals in 2025. How can they be guaranteed a free passage and that’s where the role of blockchains begin to tackle this consolidation and take it forward;
Blockchains can help restore credibility of the carbon credits by doing the following things;
At the moment, out of all the carbon credits issued, 11% have failed to directly contribute to controlling the environmental impact. This is majorly happening because of the lack of means to validate them first hand.
But tokenizing the same on chain using blockchains helps fix that. For example, there are certain aspects that a carbon credit must meet to fit in the ESG role like;
But due to the absence of any specific technology at the moment, it is hard to validate a carbon credit on these parameters that you have either received or claim to have created.
But through the use of the blockchain technology, now it will be possible to experience additionality, monitoring, or permanence of the carbon credits but putting all the data on-chain and allowing to legitimize the carbon credits through distributed verification. Thus, restoring legitimization and credibility of the carbon credits via tokenization and even streamlining their global mobility to deal with fragmentation.
Transparency is a major concern in the carbon market at the moment. But traditional carbon credits in the market couldn’t deliver the level of transparency required due to their technology bottlenecks. For example, more than 70% to 80% are lacking integrity which tokenization can solve.
Because if tokenization isn’t coming to rescue the carbon markets, we shall have no more carbon markets in action in any capacity moving forward. At the moment, Australia is already struggling because of lack of means to verify the carbon credits. But integrating blockchains can quickly change the equation and help the sector scale.
If you look at the present carbon market, you will find that it is fragmented and diversified. Which means, there’s no means to equate and validate the impact that the carbon credits in circulation can generate. That’s why scams are rampant in the carbon market.
But through tokenization, a unique standard can be created where specific issuing standards can be written in a code form and only after certain criteria are met, the carbon credit token can be created. When such things are integrated, they can eliminate grievance or non-conformity which happens at the moment because different carbon credits follow different standards, which are themselves conflicting and non-standardized. And when that happens, there will be change in how we look at the carbon markets which itself has been showing up where more than $70 B worth of carbon credits are on the verge of tokenization.
AirCarbon Exchange has been the first to integrate blockchains to aid in trading in tokenized carbon credits. The platform has procured the license from Financial Services Regulatory Authority of Abu Dhabi. Now, their operations are not just limited to Abu Dhabi and Singapore but they are catering to Canada and other parts of the world as well. Thanks to blockchain technology, allowing them to create carbon credits and supply carbon credits across the planet. Due to blockchains, the problems of double spending are not there in the carbon credits offered by them. At the same time, it has also allowed securely trading in carbon credits through tokenization on top of blockchains using the ACX platform.
Toucon protocol is also providing a platform using the blockchain technology to tokenize carbon credits in the form of Base Carbon Tonnes (BCT) and Nature Carbon Tonnes (NCT). So far, the protocol has tokenized more than 20 million tonnes of carbon credits using blockchain technology. These numbers are enough to prove that the tokenized carbon credit trend is picking up pace in 2025 and with time, this will further progress to go mainstream.
DeepMarkit is also using blockchain technology to create a proprietary platform to streamline the sale of carbon credits. Using the platform, anyone can create a carbon credit, mint the same in NFT form and leave it open for verification to be used thereafter. Due to the DeepMarkit platform, the carbon credits are tokenized, opening up new realms to use the carbon credits for a variety of purposes. As a result of carbon credit tokenization using blockchains, DeepMarkit has opened the doors for numerous companies with ESG goals to use carbon credits in the best interest without diluting transparency, security and efficient transactions.
In the near time, as carbon markets are planning to scale up to $250 billion by 2050, the need for tokenized carbon credits will undoubtedly go mainstream. So, if you are planning to build an onchain carbon marketplace to help investors, corporations and others launch their credits, you need experts for the same.
Prolitus has hands-on expertise with the blockchain technology needed for tokenizing carbon credits to help launch your tokenized carbon market. Since we understand your business and provide the best solution that can help you meet the desired outcomes, we can help build the carbon market which is verifiable and scalable as per the changing market trends. With a seamless integration interface, we also ensure that as a business, you can also integrate other features like regulatory guidelines, compliances, verification and others for your carbon market.
So far, we have been serving clients of all shapes and sizes scattered across various geographical locations. Using our seasoned professionals with years of experience, we have provided the best outcomes to clients. If you are looking for expertise, innovation, and comprehensive support to streamline a smooth digital transformation, we are always eager to help.
For queries about how we can streamline the process and help you with developing your carbon market on top of blockchain for your specific business goals, we are just a call away from you.
