We will classify energy markets into two categories: Renewable energy markets and Carbon trading schemes. Renewable energy markets are individuals or companies who are installing solar panels, windmills, biogas generators, or any other source of renewable energy that can be fed back into the energy grid. If it can, then it is a cash flow generating asset for the user, but if the user is either storing the energy or immediately using it for other purposes, it would reduce his/her energy bill but not generate cash flow. In the first case, this can be thought of as an ABS, where the asset is the windmill or solar panel whose value does not greatly depreciate over time, but generates cash flow with low risk.
If these payments can be verified on the blockchain, it would open a world of possibilities for energy financing. Renewable energy financing would become much easier, adoption of renewable energy would grow. In the second case, such renewable energy could be traded peer to peer, hence enabling liquidity of energy that isn’t possible currently.
Carbon Credits
Carbon trading schemes are mainly implemented for companies which generate large amounts of CO2 into the atmosphere, although the argument could be made that customers should also be charged for the release of CO2 since they are the end users of the products of the companies. Carbon credits can be fungible and traded in a transparent manner on WandX. Putting these two concepts together, WandX could create a single source of information on both ABS generated on renewable energy generators as well as traders of Carbon credits.
Energy trading markets can be created on WandX
Plastic recycling markets
Carbon credits was introduced as a scheme for industries to reduce their carbon footprint. However, one of the major causes of enviornmental degradation in asian countries like India, China, Indonesia is plastic. Recycling of plastic is a well developed industry in the west, but it is highly underdeveloped in these countries. Some of the reasons are:
Plastic is cheap to produce
Raw materials for production such as crude oil is available in abundance
Recycling is not a profitable business yet
The reverse supply chain for plastic materials is not developed
Since it is cheap to produce, it is available at a cheap cost for daily use, for example — sealing milk packets or plastic bags used in grocery stores.
We propose a plastics recycling market on WandX, where prices for recycled plastic is decided through market forces, and people are incentivized to recycle plastic through custom tokens created on WandX. Such a market would contain all functions present in an exchange, such as futures, options, bid and ask prices. Development of such a market would enable accurate price discovery for plastics that are available for recycling. The components of this market would involve:
Organizations who collect plastic waste
Different grades of plastic which would constitute different different products, hence would be available at different prices
Companies which would take part in the recycling of the plastic waste, hence collecting it from organizations who aggregate the waste. These would in turn be a different product with different prices
Companies who would use the recycled plastic for their products
Over 75% of plastic waste generated in India is dumped into landfills
Such a system would provide a structure to the market as well as the organizations involved in the industry to get the best prices for their efforts. The problems that such a platform would solve are:
Organization of different players in the market
Standardization of recycled products
Either matching buyers and sellers through forward contracts or through exchange traded standard contracts like a futures market
Price discovery of the different types of plastic products that are recycled
A pilot program can be launched for a standard kind of plastic that is used by every restaurant and every household, every day — milk packets. All milk companies deliver milk in the same packaging — the thin plastic packets. Milkmen for every locality come early in the morning to deliver milk. They collect milk from collection centres, which in turn gets milk from the factories after packaging. The reverse supply chain would be relatively simple in this case, but each person will have to be incentivized to collect the waste milk packets, and the factories will have to find a recycler who would collect the packets for recycling. A blockchain based distributed system solution for this kind of supply chain is ideal for incentivizing users to collect waste, discover prices for the waste, and trade in recycled plastic.
The main objective of using a blockchain to initiate markets is to decentralize market creation, trade, and settlement, with each market having incentives for it’s users to participate. If a market for recycled plastics is created with the right incentives for users to recycle certain types of plastics, then the market forces will ensure that recycling plants come up close to the areas of waste generation, recycled plastics are sold to customers similar to virgin plastics, and the entire ecosystem builds around the market.
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