Climate change is arguably the defining issue of our times. Secretary-General Antònio Guterres recently labeled it the first of four biblical ‘horsemen’ that threatened our world.
A UN Climate report released in 2018 stated absolutely that the global community has 12 years to correct our behavior and significantly reduce carbon emissions (to net-zero) if we had any hope of avoiding the worst consequences of climate change. Since then, a variety of actors across the world have sought to coordinate a global response to the impending existential disaster.
One significant solution addressing climate change originating from Silicon Valley is blockchain. Tech moguls have argued that the distributed ledger technology can offer a quick fix for climate change.
However, reports on the immense carbon footprints generated by the mining of Bitcoin – and by extension, that of other cryptocurrencies – has brought into question whether the social and environmental costs of using blockchain for climate change solutions outweigh the benefits.
This article examines how platforms are using blockchain tech in the energy, climate, and environment sector and the potential applications as the tech evolves. It also investigates the risks that the operational costs of blockchain-based systems pose to the natural ecosystem to determine whether we should be pursuing them at all.
Tech Innovations and Climate Change
There is no question about the fact that a key tactic to effectively combat climate change is through technological innovations. Although the international community needs to achieve carbon neutrality by 2050, we can’t deny that the demand for energy is going to increase by a staggering 48 per cent in the next 20 years.
The only way to meet this demand while staying (somewhat) on track to achieve the goals set in the Paris Agreement of 2016 is through the acceleration of climate tech innovation and moving towards a green economy.
The UN is already working towards this. Institutions and bodies created under the UN climate change process, such as the Technology Executive Committee (TEC) and the Climate Technology Center and Network (CTCN), are working to provide policy and technical support to countries in the development and deployment of novel tech.
A Blockchain-based Solution?
At the COP 23 (in 2017), UNFCCC Program Officer Alexandre Gellert Paris stated:
“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.”
The UNFCCC has also declared its’ belief in the potential of blockchain to provide essential solutions for the environmental challenges we face:
“The United Nations Climate Change (UNFCCC) secretariat recognizes the general potential of Blockchain technology. In particular, transparency, cost-effectiveness and efficiency advantages, which in turn may lead to greater stakeholder integration and enhanced creation of global public goods are currently viewed as the main potential benefits. The secretariat, therefore, specifically supports initiatives that lead to innovation at the intersection of Blockchain and climate.”
IOs are not alone. In the private sector, 12 percent of total cataloged blockchain initiatives are energy, climate and environment-related. Companies like Grid Singularity, ClimateTrade and Power Ledger are testing blockchain products which, if successful, could optimize and expand energy delivery, potentially benefiting millions of people.
There are several ways in which blockchain could be beneficial:
- Improving efficiency: Since utility companies operate in highly regulated markets and employ dated tech, there are significant inefficiencies in terms of overhead energy losses during transmission. Not only can Blockchain improve the efficiency of existing grids, but it can also provide more data control and micro-optimization of energy to both users and facilities.
- As a smart contract tool: The tech can enable peer-to-peer energy transactions and create micro-grids in deregulated markets.
- Encourage clean energy: Blockchain would enable the trading of clean energy as well as carbon assets securely and transparently. Moreover, consumers can be rewarded with tokens or digital assets for producing renewable energy.
- Boosting climate finance: Blockchain can help develop a transparent platform for crowd-funding and P2P transactions, allowing people to donate to climate projects while being reassured that the financing reaches end-users directly.
- Tracking GHG emissions: The tech could also be used to simplify the tracking and reporting processes involved in recording greenhouse gas emission reductions while avoiding double counting. The transparency of the process ensures entities cannot tamper with the data. It can thus help monitor the progress of states towards goals set by international treaties and that of corporations towards achieving their targets.
More Harms than Gains?
A research study published in October 2018 found that the immense electricity consumption of Bitcoin alone could produce enough GHG emissions to push global warming above 2°C within three decades.
More recent reports have argued that although crypto mining does use considerable energy, most (over 74 percent) is powered by renewable sources – more than almost all other large-scale industries in the world. Computing power investments in maintaining the cryptocurrency network are slowing down, thus indicating that miners were moving towards more efficient, next-generation technologies.
Such contradictory reports beg the question: should we be pursuing blockchain at all?
The impact blockchain can have on innovating solutions to environmental challenges is undeniable. In fact, the tech has demonstrated how it can disrupt industries and affect exponential change.
On the other hand, reports on blockchain’s negative impact on the environment have many criticisms. They do not acknowledge the shrinking footprint of the tech or the progressive energy-efficient solutions that cryptocurrencies are adopting. Furthermore, they are restricted by the limited data available regarding where and how mining takes place.
Blockchain is arguably a game-changer for sustainability: it can empower citizens by giving them control over their data, bypass central authorities that only serve to heighten costs and inefficiency, and generate trust where none exists.
It would be nothing less than dangerous and irresponsible to ignore the potential blockchain holds for solving many of our environmental challenges and for building a more sustainable society.
Therefore, perhaps the right way forward is by investing in better understanding how to best harness the environmental benefits from blockchain tech while curtailing their potential adverse effects and mitigating their risks.
Global and regional bodies, including the United Nations, must engage in blockchain governance as a part of their sustainable development efforts so that we can exploit the tech for all that it has to offer.