Blockchain-Based Carbon Credit Management Using NFT Tokenization on Polygon for Transparent and Decentralized Carbon Markets

Abstract

In response to growing environmental, economic, and social demands for more accountable carbon markets, there is increasing recognition of the limitations inherent in traditional carbon credit management systems. These systems often rely on centralized authorities, making them prone to inefficiencies such as high administrative costs, slow verification processes, and limited accessibility for small-scale participants. Moreover, issues like double counting, lack of transparency, and data tampering continue to undermine stakeholder trust and market integrity. A decentralized approach powered by blockchain technology offers a transformative alternative by ensuring transparency, immutability, and automation through the use of smart contracts. On blockchain platforms such as Polygon, carbon credits can be tokenized using the ERC-721 standard, where each credit becomes a unique, verifiable non-fungible token (NFT). These tokens allow precise tracking of credit ownership, issuance, transfers, and retirement (burning), effectively eliminating the need for intermediaries and reducing verification costs. This decentralized model not only enhances operational efficiency but also democratizes participation in the carbon economy, enabling even smaller stakeholders to engage meaningfully. By combining environmental accountability with digital innovation and economic inclusivity, blockchain-based carbon credit platforms represent a significant advancement toward more sustainable, transparent, and equitable global climate and resource governance systems.