Three simple uses of blockchain in the fight against climate change

Blockchain technology is already being used to track and monitor carbon emissions. In fact, Alexandre Gellert Paris, from the United Nations Framework Convention on Climate Change (UNFCCC), stated recently:

“As countries, regions, cities and businesses work to rapidly implement the Paris Climate Change Agreement, they need to make use of all innovative and cutting-edge technologies available. Blockchain could contribute to greater stakeholder involvement, transparency and engagement, and help bring trust and further innovative solutions in the fight against climate change, leading to enhanced climate actions.”

In addition to tracking carbon emissions, blockchain technology is potentially able to help in the following ways:

Simplifying clean energy trades

The blockchain is a perfect platform for peer-to-peer (P2P) renewable energy trading allowing consumers to purchase, sell or trade renewable energy with one another. They can do this by utilising tokens or digital assets which illustrate a specific quantity of energy. In many countries the current production of electricity is dominated by large power stations run in a very centralised manner. Blockchain technology facilitates a move towards P2P energy trading which would encourage micro-power generation and make the economics of many renewable power projects look far more attractive. While there has been an EU directive encouraging members to ensure that P2P trading is introduced, it would seem some way off still. The situation in the US looks even worse.

Improving the flow of climate finance

Blockchain can aid in the development of both crowdfunding and peer-to-peer financial transactions, which can provide support for climate action. All this happens while simultaneously guaranteeing that financing goes to projects in a transparent manner. This would give investors more trust and confidence that their investment is going into the project that they intended, as well as using smart contracts to give up-to-date reports of progress.

Enhancing emissions reporting and eliminating double counting

Blockchain could administer more transparency concerning greenhouse gas emissions. Moreover, it is able to simplify the tracking and reporting of emission reductions, thus addressing so called “double counting” issues. It could be a tool to monitor the implementation of the Nationally Determined Contributions (NDCs) under the Paris Agreement.

• This article was taken from Digital Bytes, a weekly analysis of developments in the blockchain and digital assets sectors, taking real examples of how, why and where blockchain technology is being implemented around the world.
• For more information, please email: WBEF@rics.org