Blockchain Technology Can Boost Climate Action
Experts meeting at the recent UN Climate Change Conference in Bonn in May have said that a new technology called “Blockchain” could play a major role in tackling climate change.
A Blockchain is a distributed database that is continuously updated and verified by its users. Each added block of data is “chained” and becomes part of a growing list of records, under the surveillance of network members. This technology enables the transfer of assets and the recording of transactions through a secure database.
“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,” said Alexandre Gellert Paris, Associate Programme Officer at the UNFCCC.
Blockchain technology can be used to develop peer-to-peer trade of clean energy, for certified and facilitated transactions among consumers.
For climate action, Blockchain technology could be used in the following specific ways:
Improved carbon emission trading:
Blockchain could be used to improve the system of carbon asset transactions. For example, IBM and Energy Blockchain Lab are currently working together to develop a Blockchain platform for trading carbon assets in China. Recording carbon assets on a public Blockchain would also guarantee transparency and ensure that transactions are valid and settled automatically.
Facilitated clean energy trading:
The technology could also allow for the development of platforms for peer-to-peer renewable energy trade. Consumers would be able to buy, sell or exchange renewable energy with each other, using tokens or tradable digital assets representing a certain quantity of energy production.
Enhanced climate finance flows:
Blockchain technology could help develop crowdfunding and peer-to-peer financial transactions in support of climate action, while ensuring that financing is allocated to projects in a transparent way.
Better tracking and reporting of greenhouse gas (GHG) emissions reduction and avoidance of double counting:
The technology could provide more transparency regarding GHG emissions and make it easier to track and report emission reductions, thereby addressing possible double counting issues. It could serve as a tool to monitor the progress made in implementing the Nationally Determined Contributions, or “NDCs” under the Paris Agreement, as well as in company targets.