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The 2021 United Nations Climate Change Conference (COP26) held in Glasgow, Scotland, in November emphasized the need for global action to reduce carbon emissions. This goal of reaching net-zero emissions within the next three decades has led to increased adoption of blockchain for climate tech, purchasing carbon offsets, and a resurgence of interest in carbon capture contributing to climate tech. This blog talks about 10 use cases of blockchain that primarily serve the needs of blockchain for climate tech.
The United Nations Environment Programme (UNEP) recognizes the potential of blockchain technology in advancing climate action, especially in terms of transparency, clean energy, carbon markets, and climate finance. To promote blockchain for the climate, the UN Climate Change Secretariat established the Climate Chain Coalition, a global initiative formed in partnership with multiple stakeholders. The coalition’s efforts highlight the endorsement of blockchain technology by the United Nations.
Additionally, the United Nations Economic and Social Commission for Western Asia, UNEP, and the International Association for the Advancement of Innovative Approaches to Global Challenges (IAAI GloCha) organized the MENA Climate Week to bring together blockchain experts in the Middle East and North Africa region to discuss the technology’s potential in supporting climate action. The Blockchain4Climate event was held to support this initiative further. These events emphasize the role blockchain can play in addressing climate change.
Related Article: Top 10 Carbon-Negative Green Blockchains
Blockchain technology is used for climate tech due to its capability to provide secure and transparent record-keeping, immutable tracking of transactions, and the ability to automate processes through smart contracts. These features make it a valuable tool in promoting sustainability, reducing carbon emissions, and enabling more efficient and effective use of resources in the fight against climate change.
The digital asset industry is often criticized for its energy consumption, but this is a misperception. It’s important to distinguish between cryptocurrencies and blockchain platforms that are energy efficient and support climate initiatives. Only a few climate initiatives use cryptocurrencies. For example, Algorand claims to have a carbon-neutral blockchain, Kickstarter is building a crowdfunding platform on the carbon-negative blockchain platform Celo, and SavePlanetEarth is creating certified Carbon Credit Smart NFTs on Phantasma, a green blockchain for decentralized application development. The trend is moving towards more sustainable energy and consensus mechanisms, and platforms like Polkadot are being recognized as environmentally friendly blockchains.
The growing focus on carbon reporting, sequestration, and capture in the voluntary carbon market has created opportunities for green digital asset solutions, which can be tokenized and traded as commodities. These include green utility tokens, which incentivize reducing carbon emissions; green asset tokens, which represent tokenized carbon credits or biodiversity offsets; green crypto, which can only be used to purchase environmentally friendly products; and green security token offerings platforms that enable proof of impact reporting for environmentally conscious investments.
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Several initiatives are focused on creating tradable carbon credits. Universal Protocol allows certified projects to turn greenhouse gas reductions into tradeable credits. NFT-based carbon credits give issuers access to the blockchain and allow credit tracking, trading, and redemption. Organizations like Evercity and Blockchain Triangle are comprehensive platforms that combine initiatives and carbon credits, connecting them to investors and financial instruments such as digital green bonds through blockchain technology. Efforts are also underway to include these voluntary market credits in national reporting under the Paris Agreement, such as the Blockchain for Climate’s Bitmo platform and the Open Earth Foundation’s Nested Climate Accounting for the Paris Global Stocktake.
Blockchain for climate tech is being utilized to enhance the management and functioning of smart grids in decentralized energy markets. This includes reliable and transparent peer-to-peer power trading. For example, Powerledger allows consumers to directly buy, sell, or exchange excess renewable energy with each other. Solstroem aims to speed up the energy transition in emerging countries by offering off-grid solar energy and micro-carbon credits that individuals or companies can purchase. The UK’s Electron uses Ethereum’s smart contracts to build a smart grid that delivers energy consistently. Grid Singularity and TransActive Grid are also blockchain-based energy marketplaces. Grid Singularity focuses on an energy data exchange platform; TransActive Grid focuses on local home-produced energy trading.
Advances in technology that greatly decrease fabrication costs and the widespread use of mobile phones in developing countries have made it possible to connect solar panels to the blockchain. This allows consumers to benefit from distributed generation. Azuri Technologies, Zola Electric, and Mobisol provide low-cost solar panel solutions for rural off-grid African areas. This smart “pay-as-you-go” system makes solar technology affordable and enables households to own their panels by paying them off, replacing the need for expensive kerosene. This can greatly improve the lives of rural citizens who live off-grid by providing them with cutting-edge technology, a safer home environment, and support for sustainability initiatives.
NFTs are being increasingly utilized in the fight against climate change, from raising awareness to fundraising. These unique digital assets can also serve as a permanent record of environmental impact and carbon credits. For instance, SavePlanetEarth is launching NFTs for certified carbon credits, allowing for the tracking, trading, and burning of credits with blockchain access, preventing double counting. Another company, First Carbon Corp., is developing NFT-based carbon credits.
The use of NFTs for climate change has been growing, with various initiatives aiming to raise awareness, fundraise, and provide an immutable record for impact and carbon credits. One example is the launch of certified Carbon Credit Smart NFTs by SavePlanetEarth. Another initiative is DigitalArt4Climate, which uses blockchain technology to turn art into digital assets or NFTs that can be collected and traded, creating opportunities for resource mobilization, youth engagement, and climate empowerment. Additionally, gamification can be used to incentivize positive climate action. GreenApes is one example that employs gamification to educate people about their carbon footprint. In the future, we can expect more games where individuals can play and earn rewards for taking action on climate.
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Blockchain, AI, and IoT will be vital in measuring and reporting environmental issues such as desertification, deforestation, and weather patterns. Large databases connecting climate, water, and land will facilitate effective action. Smart contracts on the blockchain provide a secure and cost-effective way to link environmental changes with financial incentives or disincentives. For example, a decrease in CO2 levels measured by an IoT network of atmospheric sensors in a village can activate the release of cryptocurrency to the village based on the environmental data collected.
Consumers today are becoming increasingly conscious of the impact of their purchases on the environment, and they are increasingly demanding sustainable products. Research from Accenture shows that since the pandemic, 60% of consumers have started purchasing environmentally-friendly products, and 9 out of 10 consumers are expected to continue with this trend. Supply chain traceability has become crucial for brands to gain consumer trust, which is where blockchain-based tracking systems can be useful. These systems allow for the entire lifecycle of a product to be tracked from the farm to the shelves, resulting in an increase in environmentally-friendly practices among brands and enabling greater action on climate change.
Green financing is gaining popularity as it promotes more environmentally-friendly business practices. However, verifying the authenticity of sustainability metrics and ensuring funds are being used sustainably can be difficult. Blockchain’s unalterable data storage and asset tokenization capabilities can help address these challenges.
Furthermore, blockchain for climate tech can play a role in tackling climate change in other ways. For example, smart contracts on blockchain can encourage countries worldwide to make their climate commitments with a deposit, increasing their enforceability and reducing the likelihood of false commitments. If a country fails to meet its carbon offset targets, its deposit could be retained or given to countries that have fulfilled their commitments.
One of the most significant ways blockchain technology can involve the general public in the battle against climate change is by supporting regenerative agriculture initiatives. These initiatives aim to incentivize local communities to decrease their carbon footprint through more sustainable land-use practices, typically by planting and preserving trees.
Blockchain technology can interact with real-world data to automatically distribute rewards to individuals who care for valuable land. For instance, in partnership with Cornell University’s Initiative for Cryptocurrencies and Contracts (IC3), the Green World Campaign is creating blockchain-based systems that use satellite information to automatically grant awards to those who effectively rejuvenate land by planting trees, enhancing soil quality, and similar actions. These awards are triggered by oracles that retrieve data from satellite images. The blockchain for climate tech guarantees that the rewards are distributed fairly and transparently to those on the ground.
Smart contracts also allow individuals and organizations to take part in environmental action. For example, when a person triggers a smart contract for reforestation, they can be paid with a tokenized carbon credit. They can then sell them to non-profit organizations, crowdfunding initiatives, or companies looking to demonstrate their environmental commitment. Since these tokenized carbon credits can only be created if satellite data or IoT devices confirm successful reforestation to the smart contract, these organizations can be assured that their investments have made a tangible impact.
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Additionally, smart contracts give environmentally conscious consumers more control over their energy consumption. Decentralized energy grids, such as the Brooklyn Microgrid Project, use smart contracts to enable consumers to produce and trade solar energy with their neighbors through a blockchain-based exchange. This allows for buying and selling solar energy credits between neighbors, reducing transportation costs and greenhouse gas emissions.
Financial incentives must be aligned with more sustainable consumer choices to drive widespread behavior change. The blockchain interacting with real-world data can automatically dispense rewards or penalties based on a person’s consumption habits, fostering behavioral changes that education alone would not achieve. For instance, NetObjex is implementing IoT devices in certain hotels to monitor guests’ water and energy consumption during their stay. The resulting data about hotel visits can be analyzed through oracles, and smart contracts can automatically calculate and reward guests based on their consumption habits.
Farmers, who make up a large portion of uninsured individuals worldwide, are highly susceptible to the consequences of climate change, including changes in rainfall, drought, wind, and more. Despite the need for agricultural insurance, traditional insurance companies have failed to provide adequate coverage to small farmers in developing countries, leaving them vulnerable to financial ruin in unfavorable weather conditions. This instability can result in families’ displacement and valuable farmland loss. As the effects of climate change intensify, farmers will likely bear the brunt of the instability it causes.
Fortunately, blockchain for climate tech offers a solution for farmers facing the consequences of climate change. For example, insurance projects such as Arbol and Etherisc provide global blockchain-based crop insurance to farmers. Using blockchain, farmers can purchase crop insurance, establish predetermined conditions for policy activation (such as a certain level of rainfall), and rely on oracles to track weather patterns. If the oracle network indicates that the defined conditions have been met, the farmer will receive a payout automatically. With blockchain for climate tech and weather data through oracles, farmers can secure their financial future with smartphones.
Related Article: The Possibilities And Limitations Of Weather Forecasting Using AI
Peer-to-Peer (P2P) energy trading represents a decentralized energy exchange model where individuals can buy and sell energy directly to each other without intermediaries, such as utility companies. This approach provides multiple benefits, including increased efficiency, reduced costs, and a more sustainable energy system.
The implementation of P2P energy trading relies on blockchain technology, which enables secure and transparent transactions, as well as the creation of a virtual marketplace where buyers and sellers can interact. This technology also allows the implementation of smart contracts that streamline transactions and contribute to effectively managing the distribution grid.
P2P energy trading is gaining momentum worldwide as more individuals strive to become energy self-sufficient and decrease dependence on centralized energy systems. Additionally, it represents a significant step towards integrating renewable energy into the grid and the reduction of greenhouse gas emissions.
While implementing sustainability programs is critical in securing a more equitable future, managing these efforts has proven challenging. More and more data is being created globally, and tracking and tracing that data becomes increasingly difficult. This is predominantly where blockchain for climate tech will play a great role in enabling climate action. As technology advances, new use cases will emerge, further enhancing its usage and benefits.
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