What does blockchain have to do with climate change?
Last week, I was asked to present as the keynote speaker at an event called Hack4Climate in Singapore. The Singapore event was a pre-workshop that was one of a number of workshops leading into the main Hack4Climate to be held in Bonn, parallel to COP23 in November. The keynote address was all about climate change, the Paris Agreement and what needs to be done to keep the world within it's carbon budget. What Hack4Climate does is links up climate experts with blockchain/distributed ledger technology (DLT) developers in order to identify solutions to climate change that leverage blockchain. It is an event that has been organised by the Climate Ledger Initiative and they are accepting applications to be one of 100 people to attend the main hackathon in Bonn in November.
When people think of blockchain, they often just think of bitcoins - and other related cryptocurrencies. This begs the question - what does DLT have to do with climate change solutions? Aren't solutions to climate change going to be largely engineering solutions? The answer is - quite a lot! DLT is very new and the technology is changing rapidly but the concept shows a great deal of promise to enable solutions for climate change. Basically, a distributed ledger is a collection of replicated and shared data that is synchronised and distributed across multiple sites, countries and institutions. What this does is create a transparent, immutable record of the data that has no requirement for a central authority to oversee it. This, combined with information from multiple sources that are connected to the internet (e.g., instrumentation connected via Internet of Things) could have huge potential in emissions reporting, distributed generation, transfer of carbon credits, supply chain management and in the transport industry.
Emissions reporting and carbon credits
Instrumentation that records energy and fuel use can be used to calculate GHG emissions in real time and then create a permanent record that cannot be tampered with. This increases the transparency and accountability with emissions reporting and provides a way to get real time information on liabilities associated with emissions. Participants generating carbon credits from their abatement projects can make those credits available in real time to facilities with liabilities. Currently, the veracity of emissions reporting and emissions reduction from abatement projects is verified using regular assurance from third parties. Transfer and purchase of carbon credits is managed by a central agency (usually the Government). The use of a public, transparent, distributed ledger will greatly improve the speed and efficiency of these transactions.
Supply chain management
To be able to link information of a complete supply chain, embedded emissions and sustainability of sources to a product to generate a carbon footprint of that product or a sustainability rating for that product would be of huge benefit with transparency. As consumers make more informed decisions about the products they buy, having good quality and accurate information on the supply chain of a product is invaluable. There is a clear advantage to the distributed ledger in this application. Consumers may be able to track a product's history, manufacture and overall environmental impact to help their decision making. There may also be an opportunity to provide information about the end of life processes for that product and ensure it is recycled correctly. There could even be applications for the manufacturers so that they can apply a high level of product stewardship and move to a more circular economy model rather than the straight through model currently employed for the majority of things.
The use of distributed ledgers for peer to peer energy trading is something that's used right now in microgrids and behind the meter applications. The ledger is used to determine when someone with excess renewable energy, typically from their rooftop solar, sells excess directly to their neighbour. The ledger manages the transaction of the energy and the payment for that energy in a transparent manner. This will have profound implications on the way energy sales will work in the future and will drive the new decentralised model for electricity generation and distribution. The ability to generate an income from excess renewable energy also improves the business case for residential solar PV, and battery storage, even more and will likely see an increase in the number of electricity "prosumers".
These are just a few examples of where DLT can have applications in action against climate change. Events such as the Hack4Climate are essential to link experts in the climate field, who know what needs to be done, and blockchain developers, who can come up with novel ways to apply the technology. It's still early days and things are moving quickly but it's definitely an area to keep a close eye on.