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How will blockchain technology help fight climate change? Experts answer

Max Yakubowski
SEP 05, 2021
How will blockchain technology help fight climate change? Experts answer




For some time, the global climate crisis was a hot topic to debate. But the discourse has changed and a consensus has been reached, moving the conversation toward how to stop — or at least to lessen — the ongoing issue of climate change. Two pivotal moments in reaching this point were the adoption of the United Nations’ Sustainable Development Goals (SDGs), whose mission is to be a “blueprint to achieve a better and more sustainable future for all,” and the Paris Agreement, an international accord adopted by nearly every nation six years ago in 2015.

The discussion around how to fight against the global climate crisis has turned to emerging technologies and their role in the process. Back in 2017, the United Nations Framework Convention on Climate Change (UNFCCC) highlighted the importance of blockchain technology in helping to combat climate change globally. The secretariat of the UNFCCC detailed some specific use cases:

“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.”

Decentralized technologies indeed have the potential to help achieve the SDGs by recasting conventional approaches to sustainable development via the benefits of blockchain technology, such as transparency and immutability. As 2020 showed us, many countries around the globe are already turning to emerging technologies in their fight against the climate crisis and in their efforts to lessen carbon-intensive practices. Some examples include Russia, India, Qatar, the United Arab Emirates, countries in Africa and the Asia-Pacific region, and certainly the G7 nations — which include Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

Meanwhile, earlier in 2021, concerns about Bitcoin’s (BTC) carbon footprint became a highly discussed topic both within and outside of the crypto community, forcing some major global media outlets to speak up about Bitcoin’s energy consumption and carbon emissions. However, the topic wasn’t a new one, as experts had already been discussing the pros and cons of Bitcoin mining for a while. Bitcoin’s supporters argued that its energy consumption is irrelevant “when compared with global energy production and waste” and that compared with BTC mining, “Processing gold and steel is wasting money, energy and resources.”

It’s best to set aside the problem of who is right and who is wrong in this debate and instead focus on the impact of it. There is a saying that every cloud has a silver lining, and the most important one that came out of this debate is that the crypto industry has accepted that it must prioritize focusing on green technology, offsetting Bitcoin carbon emissions and leveraging renewable energy. 

To find out the impact these technologies can have in the fight against the climate crisis, Cointelegraph reached out to a number of experts in emerging technologies whose goals are directly related to sustainable development and technological innovation. The experts gave their opinions on the following question: How can emerging technologies help achieve the U.N.’s Sustainable Development Goals and lessen the impacts of climate change?


Adelyn Zhou of Chainlink Labs:

Adelyn is the chief marketing officer of Chainlink Labs, a decentralized oracle network.

"While many people are voluntarily altering their consumption habits to combat climate change, a global shift in consumption will likely require significant incentive changes to drive sustainable behavior. Self-executing contracts enabled by a combination of blockchains and oracle networks that pull data from the real world can automate incentive systems to directly reward practices that help our environment.

For instance, the Green World Campaign and Cornell University are building smart contracts that use satellite data to automatically reward people who successfully regenerate tracts of land by increasing tree cover, improving soil and implementing other restorative agricultural practices. When Chainlink oracles pull proof of land improvement (via satellite imagery) onto the blockchain, it triggers the smart contract to release a payout. With this system, land stewards can quickly and efficiently receive their rewards. At the same time, only those making a real impact can earn rewards, as payment only happens when a real-world condition is met and verified on-chain. This entire process is automated, scalable and fraud-proof, and can be replicated across hundreds of use cases across sectors.”


Candice Teo of the Blockchain & Climate Institute:

Candice is the director of communications at the Blockchain & Climate Institute, a not-for-profit think tank comprising an international network of experts working at the intersection of blockchain technology, climate change and sustainability.

“We are currently in a situation where the time for climate action is now. As Mark Carney highlighted to the United Kingdom Treasury Select Committee, ‘We have left it exceptionally late’ to act effectively on climate change. It is thus integral for us to make ‘good bets’ for the future that scale and not worsen things.

Currently, there is a great deal of mistrust among various stakeholders, including donors and recipients of climate finance. Measurement, reporting and verification (MRV) issues have been major impediments to countries fulfilling their climate finance pledges. With blockchain’s consensus mechanism and crucial immutability feature, especially when paired with other emerging technologies such as AI and IoT, it can significantly enhance MRV, driving trust in climate funding that goes to carbon assets management/trading, biodiversity conservation (REDD ), community renewable energy projects, etc. 

According to the International Energy Agency, there is a strong need to reduce peak energy demand. Therein lies a challenge in achieving this while renewables catch up. Local energy trading schemes have proved the value of using blockchain. Paired with AI, peak energy demand could be predicted and managed.

The use of blockchain is also crucial to progress in facilitating circular economies, biodiversity, smart cities, blue economy and oceans, and emissions management and trading.”


Spokesperson of World Bank:

“There is significant scope to apply innovations, including technologies like blockchain, as international carbon markets under the Paris Agreement take shape. In particular, these technologies can increase transparency and improve the overall functioning of future carbon markets in two ways.

Technologies like artificial intelligence, drones and smart sensors could help digitize project-level monitoring, verification and reporting systems. Blockchain encryption can be used alongside these technologies to ensure the immutability and integrity of data collected under a digital MRV system. A major benefit would be a significant reduction in the time and effort needed to generate carbon credits, which would reduce barriers to participation in carbon markets. The World Bank is developing protocols for digital MRV systems in collaboration with partners.

At the global level, blockchain technology could track carbon credit transactions, tokenize carbon credits and link transactions to smart contracts. It could also securely store the information required to track a carbon credit. This is being tested under the World Bank’s Climate Warehouse, a meta-registry that demonstrates how national registries can be connected and uses blockchain technology to track transactions between parties. Eventually, we anticipate this will link with the digital MRV system and create a connected digital ecosystem for credible, transparent and liquid carbon markets.”


Emin Gün Sirer of Ava Labs:

Emin is a computer science professor at Cornell University, the founder and CEO of the Avalanche blockchain protocol, and the co-director of the Initiative for Cryptocurrencies and Smart Contracts (IC3).

“We must ensure that new technologies minimize or eliminate actions that negatively impact our planet — this outlook does not limit itself just to blockchain. Without concerted, intentional efforts to mitigate climate change, our planet cannot sustainably exist.

With the initial introduction of proof-of-work-based blockchain systems, many creators like Satoshi didn’t focus on climate impact. Instead, they simply wanted their technologies to work. 

We’re now in a place where we can reference past innovations to ensure we’re developing sustainable technologies and protocols. Proof-of-stake is a prime example of people collaborating to improve blockchain’s capabilities in a way that helps fight the climate crisis. This is just the tip of the iceberg for what's possible with blockchain-powered technology for climate change.

Many teams are looking to push the boundaries. Minimizing hardware requirements for blockchain nodes, integrating with eco-friendly hardware and collaborating with leading climate change researchers are a few ways blockchain companies can accelerate progress toward a sustainable economy.”


Francisco Benedito of ClimateTrade:

Francisco is the CEO of ClimateTrade, a fintech company helping organizations achieve sustainability by offsetting CO2 emissions.

“Blockchain as a technology is helping to fight the climate crisis on two main levels.

On one hand, we can see how carbon markets have been opaque and prone to fraud. Even though carbon credits have been the first expression of a digital certificate, they have been implemented in different isolated registries and have involved multiple parties that do not trust each other. Sound familiar? 

It seems logical in the current context to utilize a single distributed ledger to record the generation of carbon credits and their movement in the market as true digital assets. 

This is the first level in which blockchain can help us improve existing processes — by making them more efficient, transparent, secure, faster, cheaper, etc. But the true disruption comes when blockchain enables new models that were not possible before blockchain technology, not just improving existing mechanisms but designing completely new ones. 

Blockchain is a very powerful technology, but the biggest advantage that it poses in this context is the ability to shape human behavior. The rise and general adoption of blockchain applications enable us to design financial incentive schemes that will foster the achievement of the decarbonization goals, allowing Earth to continue being a comfortable place to live — and that is precisely what we are doing.”


Linda Kristoffersen of KPMG:

Linda is a manager, advisory, at KPMG — a Big Four auditing firm. She also supports blockchain.

“Companies are making bold commitments to deliver on promises for a net zero carbon future and will need to embrace the use of emerging technologies, including blockchain, to be successful in achieving their goals. Stakeholders, investors and the public are looking for accountability and will increase pressure on companies to disclose real measurements while ensuring trust and auditability in reported carbon emissions data — and to provide the associated proof.

In this transition from reporting emissions estimates to real measurements, blockchain is an excellent auditable system of record that can track emissions data provenance, provide data security, prevent the double-counting of emissions and introduce transparency in data processing steps to prove environmental performance and prevent fraudulent claims. Blockchain can provide the same benefits to carbon offsets and credits where a lack of transparency and the double-counting of credits is of great concern.

In addition, by leveraging smart contracts, you can automate and incentivize participation in sustainable practices that require tight coordination between individuals, governments and companies.”


Marco Schletz of Data-Driven EnviroLab and Søren Salomo of TU Berlin:

Marco is a research associate at Data-Driven EnviroLab, an interdisciplinary and international group of researchers, scientists, programmers and visual designers with a goal of strengthening environmental policy at all levels. He is also an innovation fellow at the Open Earth Foundation, a nonprofit organization that fosters sustainable development and solidarity through art and education.

Søren is a professor of technology and innovation management at the Technical University of Berlin.

“Launched in 2009, Bitcoin was the first application of blockchain or distributed ledger technologies more broadly. Despite both Bitcoin and blockchain maturing tremendously, Bitcoin is still frequently perceived and used as a blanket term synonymous with blockchain. Accordingly, problems explicitly related to Bitcoin, such as its energy consumption, create a halo effect that overshadows the potential positive effects of blockchain technology as a powerful means to accelerate climate action.

Blockchain technology creates a distributed network design that enhances transparency and reduces information asymmetries among heterogeneous climate actors. This design is based on bottom-up data contributions from all actors to allow for the triangulation of independent data sources. These new designs are desperately needed to overcome current legacy system thinking and path dependence in order to incentivize collaboration for major change and enable digital democracy for the Paris Agreement.

The reason we need alternative data governance structures to ensure the validity and accuracy of critical emissions data could be seen very recently when Greta Thunberg called out the U.K. for lying about cutting its emissions. Examples of how blockchain can support and accelerate climate action include Yale Openlab’s Open Climate, the World Bank Climate Warehouse, the Blockchain for Climate Foundation, the Climate Ledger Initiative and the Climate Chain Coalition, among others.”


Tom Baumann of the Climate Chain Coalition:

Tom is the founder and co-chair of the Climate Chain Coalition, an open global initiative to advance collaboration on blockchain/DLT and digital solutions to enhance climate actions.

“In general, digital solutions can be helpful tools to support a low-carbon economy. The World Economic Forum estimates that digital solutions can help achieve 15% of the Paris Agreement goals. These solutions can be used throughout the entire economy, creating smart grids and buildings, smart transportation, integrating with digital services and more.

Digital tools could link sustainable production to sustainable consumption in a more efficient, equitable manner, for a fair transition. Beyond the described carbon trading market, distributed ledger technologies, including blockchain, can enhance international and intersectoral collaboration. 

DLTs can be combined with other technologies, like the Internet of Things, to support digital MRV-based climate action tracking and accounting. They can also facilitate innovative natural resource management. This can lessen market failures by recognizing and preserving the real value of natural resources, all while considering the rights and interests of present and future generations.

In terms of multi-stakeholder empowerment, blockchain has game-changing potential. It enables digital identities and asset management to be linked to people, organizations and businesses in a way that ensures rules are enforced, and it can make governance a community effort. By employing governance tokens and decentralized autonomous organizations, more stakeholders can be brought into decision-making roles.”

These quotes have been edited and condensed.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.