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Can Blockchain Technology Save The Environment?

Solar Bankers uses blockchain technology to develop digitalized electricity systems. Decentralised energy system on the foundation of new solar modules can create highly efficient energy, even in places with weak infrastructures or conflict areas. This enables less developed countries and emerging nations to avoid high setup costs of a traditional, centralised electricity network.  (Solar Bankers via AP Images) Photo credit: ASSOCIATED PRESS

The findings from the Fifth Assessment Report created by the World Meteorological Organization (WMO), and United Nations Environmental Progam have shown that temperatures have reached a new high due to carbon pollution that is a direct result of human activities. The summary report shows that each of the last three decades has been successively warmer on the Earth’s surface than any preceding decade since 1850.

In September 2018, the World Economic Forum issued the Building Block(chains) for a Better Planet report, that identified 65 existing and emerging blockchain use-cases that could repair some of the world’s global environmental challenge. A few of the changes the report says blockchain could enable are next-generation sustainability monitoring, reporting and verification potential, automatic disaster preparedness and humanitarian relief and earth-management platforms like blockchain-enabled geospatial platforms which are already being explored.

The Blockchain for Climate Foundation is a non-profit that says it is ‘putting the Paris Agreement on the blockchain’ and wants to use blockchain to connect the national carbon accounts of the world which they believe will enable cross-border collaboration and investment in emissions reductions.

Joseph Pallant, Founder, Blockchain for Climate Foundation said Article 6 of the Paris Agreement lays the basis for international collaboration on emissions reductions.

“Article 6 conceptualized the Internationally Transferred Mitigation Outcome (ITMO) which is the Paris Agreement unit of exchange. This one-tonne of CO2e reduction unit can be issued, transferred and used up,” said Pallant.  “A key component of the system is a double-entry bookkeeping mechanism to track emissions reductions outcomes (the ITMOs) across borders.”

We are building on the public blockchain because any tool for global action needs to be widely available; built for ease of collaboration, transparency and extensibility. If we’re asking countries big and small to link efforts with both friends and rivals, this tool needs to belong to the world,” said Pallant.

“Annual emissions recorded in a National Carbon Account are just numbers in a database. But ITMOs are individual assets and blockchain allows the issuance of secure, digital assets that are not simply numbers on a spreadsheet,” said Pallant. “Whereas one can copy and amend a database at will, a blockchain’s ledger is cryptographically secured so that issuance, transfer and destruction of tokens can only happen according to the embedded rules.”

Pallant says that if humanity is serious about stopping climate change, then these carbon assets will be some of the most valuable, economically fundamental assets in the world.

“There is a clear imperative to develop a strong, resilient system,” adds Pallant.

However, Arun Ghosh, Blockchain leader, KPMG US points out that blockchain is still maturing.

“While still maturing, blockchain solutions are driving increased levels of trust, transparency and transferability between people and organizations that originate, distribute and consume goods and services,” said Ghosh. “The decentralization and digital verification enabled by blockchain are accelerating environmental governance which is at the core of rebuilding and addressing environmental challenges such as rising sea levels, toxic waste and measured use of fossil fuels.”

“The chain of custody is central to why sustainability is easier to implement via blockchain solutions,” added Ghosh.

But some experts say that blockchain and the environment have no clear lines citing the precedent that big companies will endorse initiatives that are just smoke and mirrors and putting them into practice in the real world would be irrelevant.

“I completely disagree with this report and the idea that blockchain is a promising environmental solution,” Dr. Jonathan Foley, Executive Director, Project Drawdown and part of the new series, Let Science Speak.  “In fact, I think the best thing blockchain can do to help the environment is to simply not exist.”

“First of all, blockchain systems — especially those used for Bitcoin and other so-called cryptocurrencies — are enormously energy intensive.  All those billions of calculations chew up computer power and electricity, often powered by coal and other fossil fuels,” said Foley. “Altogether, blockchain and cryptocurrency computations use more electricity than the entire nation of Ireland and far less than all of Google.”

Foley believes that turning off those computers, and shutting down all blockchains and cryptocurrencies, would have an immediate, positive impact on the environment — while losing nothing of real value.

“Second, the idea that energy-intensive blockchain systems are needed to ensure the world shifts to clean environmental practices — like sustainable land use, legitimate carbon offsets, and environmentally-friendly supply chains — is ridiculous,” added Foley. “No one has ever said, ‘Gosh, we could give the world sustainable forest products and food, environmentally-friendly materials, and a low-carbon energy system, but we can’t because our databases aren’t secure enough’. Computer records are not the thing keeping us from building a sustainable future.”

“Even if we used blockchain for “secure” record-keeping on environmental practices, what’s to stop the original data record — about an acre of land cleared in the rainforest, an illegally harvested tree, or an unsustainable supply chain — from being a lie? Blockchain systems might be reasonably secure — although not any more than many good databases — they still suffer from the idea of ‘garbage in, garbage out’ — if the original record is a lie, it’s still a lie,” said Foley.

Foley says that all in all, blockchain is just a solution in search of a problem.

“Let’s move on, skip the hype, and focus on environmental solutions that really matter, not energy-intensive computer farms that have yet to show any real benefits,” said Foley.

But James Wallace, Co-Founder, Exponential University sees it differently and says that directly, blockchain can restore balance to the environment by removing all of the waste in the supply chain (of everything).

“Unintentional waste is caused by simple tracking, accounting and processing inefficiencies, which are largely due to inoperability across differing systems and error and waste caused by human interaction. Intentional waste is caused by unnecessary third-party intermediation encouraged (and protected) by crony capitalism,” said Wallace.

“Indirectly, and profoundly more impactful, blockchain will naturally create environmental benefits by ensuring the significant reduction of corruption in government and its collusion with the financial and energy industries,” said Wallace. “Much of the damage to the environment is caused by unnecessary intervention by these three parties, with the sole intention of generating profits for private businesses with no care or consideration for the cost to the ecology and communities.”

“At a time when our political votes don’t represent our views and result in legislation that protects our environment, our dollar votes do move business mandates that can improve the environment,” said Wallace. “A growing number of consumers will buy products with an audited supply chain that shows the ecologically friendly harvesting of natural resources by workers in safe environments, purchasing and importing of goods done via fair trade agreements, and the low energy cost transportation of the product to the consumer.”

“People love the story, and blockchain can (effortlessly) prove that story,” said Wallace.


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