By Daniela Barbosa, Executive Director at Hyperledger Foundation
To many, the idea that blockchain can be a force for good in the climate fight seems contradictory. The predominant narrative is about the mindblowing energy consumption of proof-of-work blockchains like Bitcoin. But that’s far from the whole story. For all the attention rightly focused on the resource drains of the crypto market, there is an equally missing level of attention paid to the many ways the underlying distributed ledger and verifiable credential technology is already at work affecting change.
Addressing climate change will take large-scale, coordinated efforts. One important step is to have accurate, up-to-date and trusted data that is widely accessible and interoperable. Blockchain technology is increasingly being utilized by organizations to accurately track, measure, and report on climate-focused data. This is made possible by the transparent and immutable nature of distributed ledger technology and enhanced by verifiable credentials, smart contracts and other related technologies.
Open source blockchain technologies are particularly valuable at uniting parties to collect, validate and innovate with climate data. There is a growing range of applications leveraging DLT and related technologies, including green finance, sustainability reporting, climate accounting and supply chain traceability.
One such example is the work being done by the BIS Innovation Hub and the Hong Kong Monetary Authority in developing different digital platforms for tokenization of green bonds. The most recent project, Genesis 2.0, in collaboration with the UN Climate Change Global Innovation Hub, involved two prototypes for digitizing bonds with future carbon benefits included in the value. These mitigation outcome interests (MOIs) were tracked, delivered and transferred using blockchain, smart contracts and other related technologies.
Another compelling example is the Government of British Columbia’s Energy and Mines Digital Trust pilot, which is building out verifiable credentials-based sustainability reporting. Under the pilot, Copper Mountain Mining Company, one of the current network participants, can submit a digital credential from their environmental auditor, PWC, that verifies their greenhouse gas data as part of their GHG emissions report to British Columbia’s Climate Action Secretariat. Copper Mountain can use the same digital credential to complete voluntary reporting to organizations such as the Open Earth Foundation.
Botanical Water Technologies (BWT) from Australia is leveraging blockchain to tackle a very different but urgent issue: severe water shortages that are affecting populations around the world. BWT found a way to recover the water usually wasted making alcohol, juice, ketchup, and sugar. The process involves capturing, purifying and creating sustainable drinking water with technology housed in shipping containers and connected up to existing systems that process fruit, vegetables, or sugar cane. BWT teamed with Fujitsu to develop a blockchain-based marketplace for buyers and sellers of this plant-sourced water, opening the door to the sale and donation of this water or of “water impact credits” (WICs) to help fulfill corporate water stewardship goals.
The long-term value of using blockchain to drive sustainability will only grow with scale. The more people are working collectively to capture and verify actionable data from across their operations, the more opportunities there are to identify and ensure best practices. This holds true whether you are looking to increase access to renewable energy, remove supply chain inefficiencies, minimize carbon emissions, reduce food waste, bolster adoption of new business models or even improve regulatory reporting.
Open source enterprise blockchain is one the keys to collective climate action. One of the most ambitious examples is the work by the Hyperledger Climate Action and Accounting Special Interest Group (SIG) to help create a global and open climate accounting system aimed at achieving net zero carbon emissions.That requires decarbonizing the entire supply chain. The starting point is pooling and verifying emissions data across that supply chain using DLT and related technologies. That sets up numerous paths to incentivize players to tackle their carbon footprint.
For a cross-industry example, take the drive towards EVs. There is no doubt of the long-term climate value in transitioning from petroleum-powered to electric transportation. However, managing the lifecycle of the materials required to manufacture EV batteries is its own environmental challenge. There are industry and regulatory efforts to tackle that challenge, including the new requirement in the EU of a “battery passport” that aims to document the carbon footprint of every industrial grade battery. This mandate builds on the innovative work of Circulor, which has already united electric vehicle OEMs and supply chain participants to track the physical flow of critical battery materials from extraction to final production and into second life and recycling.
We all know that the excessive energy consumption at the heart of Proof of Work blockchains is highly problematic for the climate. In my view, it is also adding insult to injury as it turns many people away from underlying technology. That association is hindering a wider understanding and adoption of DLT as a valuable tool for fighting climate change. Businesses and government entities will place themselves at a disadvantage when they discount blockchain as a vehicle to help achieve their climate-focused goals.
It is imperative that we embrace global cooperation and open platforms in our efforts to save our planet. We need to act quickly, efficiently, and collaboratively in order to make a meaningful difference. We don’t have a lot of time, but thanks to what blockchain technology can enable, we do have the resources.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.