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Bitcoin‐Based Decentralized Carbon Emissions Trading Infrastructure Model

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  • Enas Al Kawasmi
  • Edin Arnautovic
  • Davor Svetinovic

Abstract

This paper presents a system‐of‐systems architecture model for a Decentralized Carbon Emissions Trading Infrastructure (D‐CETI) with focus on privacy and system security goals. The structure and behavior are implemented as a solution to the problem of trading carbon emissions anonymously among the trading agents. Privacy and security of the trading agents and their carbon credits are the main requirements behind the architecture of D‐CETI. The decentralized structure of multiple systems and distributed behavior are the two main features of D‐CETI that distinguish it from the traditional carbon trading schemes and protocols. D‐CETI is based on Bitcoin, a peer‐to‐peer digital currency with no central authority, and Open Transactions, a system that simplifies the use of cryptography in financial transactions. The architecture of D‐CETI is evaluated and compared with the architecture of five other carbon emissions trading platforms.

Suggested Citation

  • Enas Al Kawasmi & Edin Arnautovic & Davor Svetinovic, 2015. "Bitcoin‐Based Decentralized Carbon Emissions Trading Infrastructure Model," Systems Engineering, John Wiley & Sons, vol. 18(2), pages 115-130, March.
    • Handle: RePEc:wly:syseng:v:18:y:2015:i:2:p:115-130
    DOI: 10.1002/sys.21291
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    2. Kruger, Joseph & Oates, Wallace E. & Pizer, William A., 2007. "Decentralization in the EU Emissions Trading Scheme and Lessons for Global Policy," RFF Working Paper Series dp-07-02, Resources for the Future.
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    4. David Malueg & Andrew Yates, 2009. "Strategic Behavior, Private Information, and Decentralization in the European Union Emissions Trading System," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 413-432, July.
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