Saving the planet could be blockchain’s killer app

“Putting Paris Agreement carbon markets on Ethereum and connecting the national carbon accounts of the world, is blockchain’s killer app.”

The sustainability movement has emerged as a 21st century megatrend, and it shows no signs of abating. Record heat in Europe, wildfires in the U.S. West, floods in Pakistan, drought in China, and accelerating ice cap melt in Greenland and Antarctica have driven home to many the looming threat of climate change.

Meanwhile, the New York Times declared in December “the sustainable industrial revolution is just getting started,” and even heavy industries like shipping, steel, and plastics are beginning to grasp the importance of an ecologically sustainable future developing products like “green steel,” which is a fossil-free steelmaking process.

But hurdles remain, including questions about transparency, accountability, traceability, trust, data integrity, and even greenwashing (making false or insincere environmental claims.) Or as the Times asked: “Can some of historys highest-polluting industries be trusted?” in spite of their professed good intentions.

This is where blockchain technology could make a difference. Like the sustainability movement itself, blockchain tech is global, 21st century, and mostly unformed though likely to be shaped soon by new laws and rules. Blockchains can simplify and lower costs of ESG (environmental, social and governance) reporting, build trust in “collected” data, develop new eco-related trading markets, and suggest new sources of innovation.

 

In March, for instance, automaker Volkswagen announced that it was using blockchain technology to help ensure that electric vehicle (EV) charging stations were using sustainable sources to recharge their electric cars. This move is aimed at consumers who want validation that the energy being used to recharge their vehicles isn’t coming from brown coal-powered electric companies or the like. BMW is said to be developing something similar.

Elsewhere, energy giant Shell announced in June the launch of Avelia, a sustainable aviation fuel (SAF) solution for business travel. The project uses a public blockchain to promote and validate SAF, which can reduce lifecycle emissions by up to 80% compared to conventional jet fuel.

Many now foresee a blossoming partnership between environmentalists and blockchain developers, especially as Ethereum with its big Merge, as well as other networks, move closer to carbon zero and even carbon negative platforms.

I continue to believe that putting Paris Agreement carbon markets on Ethereum and connecting the national carbon accounts of the world, is blockchains killer app, Joseph Pallant, climate innovation director at Ecotrust Canada and founder and executive director of the Blockchain for Climate Foundation, tells Magazine.

But if this promise of a blockchain/ESG alliance is to reach fruition, some questions need to be resolved, including:

  • Are public permissionless blockchains sufficiently scalable to handle the sheer amount of data to be tracked for sustainability use cases?
  • Looking off-chain, do blockchain-based sustainability-related projects face an oracle problem? Who is going to attest, for example, that carbon offset credits entered on the blockchain are legitimate and that they are really doing something beneficial for the environment?
  • Finally, blockchain technology might be a useful tool in the quest to develop a global sustainable future, but is it a necessary one? Does the sustainability movement really need public blockchains to succeed?Tokenizing for more efficient markets

Many think that blockchain tech can make ESG-related markets more efficient, including the rapidly growing Voluntary Carbon Market, or VCM, where parties voluntarily buy and sell carbon credits that represent certified carbon removals or reductions of greenhouse gasses (GHGs).

Corporations can purchase carbon credits to meet their carbon neutrality commitments. A significant proportion of carbon credits issued this year have been minted on-chain, Charlie Moore, head of Carbon and ESG Solutions at Chainlink Labs, tells Magazine, adding:

The carbon credit market has historically been manual, slow, opaque, and inefficient. By moving carbon credit markets on-chain, the market inherently becomes automated, fast, transparent, and highly efficient.

Globally, carbon dioxide (CO2) permits grew to $851 billion in 2021, a gain of 164% compared with the previous year, according to Refinitiv, with most trading taking place within the European Union.

But multiple challenges remain in scaling Web3 carbon markets, adds Moore, including the lack of market standards. In addition, there are hundreds of layer-1 blockchains with little interoperability between them.

The blockchain trilemma looms, too. In building networks, its commonly believed that developers must choose among three key benefits decentralization, scalability and security. They can have two but not three. So a project can have decentralization and security, but not scalability. Or scalability and security, but not decentralization, etc.

 

 

John Bulich, Technical Director and co-founder of Powerledger, along with Dr Jemma Green, Executive Chairman and co-founder.

 

 

Powerledger, for example, is an Australian company that uses blockchain technology to enable neighbors in Indias Uttar Pradesh state to trade solar energy on a P2P basis. Its secure network is able to process an impressive 50,000-plus transactions per second, the projects founder and CEO Jemma Green tells Magazine. But Powerledger uses a permissioned network not a public, decentralized one.

By comparison, Nori, an innovative carbon removal marketplace, has expanded using secure, decentralized platforms like Ethereum and more recently Polygon through creating and selling NRT tokens, each one representing one tonne of removed CO2 stored. The idea is that farmers are paid for adopting regenerative agricultural techniques while other stakeholders, including consumers, can purchase tokens to reduce their carbon footprint.

Scaling up is still a challenge, however. We can scale up the amount of supply/inventory that we have by further partnering with agriculture companies who can source large numbers of farmers for us, Nori CEO Paul Gambill says, though we’re sold out at the moment [in mid August] because the demand for carbon removal has outpaced the new supply enrollment. Projects like these may take time to reach a global scale.

Beyond carbon removal

Carbon removal isnt the only sustainability use case, of course. Indeed, a system like Noris which uses two assetsan NRT as a reference token, and NORI as medium of exchange token — could arguably be used in other ecological contexts, like ocean plastic recycling in the developing world.

 

 

Can blockchain help alleviate the effects of drought? 

 

 

Yes, I would love to see this two-asset model adopted in other social impact areas, Gambill says. Another intractable problem is wildfires that grow to such huge sizes because of low brush and debris on the ground that acts as kindling. It should be possible to incentivize removal of that in a similar manner. Ocean plastic is also applicable.

Blockchain technology can also help to alleviate a water shortage in parts of the U.S., where water is being diverted away from lakes, reservoirs, and rivers at unsustainable rates, says January Walker, a U.S. Congressional candidate in Utah. Often there is no accountability as to where it goes, she tells Magazine:

Blockchain distributed ledger technology can be combined with IoT water parameter monitoring to track where the water is going, who is using the most, and provide a means of collaboration across state lines to drastically reduce water usage.

The sustainability movement needs to harness the power of frontier technologies like blockchain to help reach its goals in a faster and more efficient way, Amna Usman Chaudhry, a founding member of the Oxford Blockchain Foundation tells Magazine. Blockchain offers various advantages such as increased transparency, security, immutability, and decentralization which can be utilized to find new innovative solutions to age old problems, including plastic pollution, particularly in oceans.

Similarly Blockchain offers immense potential for sustainability for smart cities, such as is the case with Dubai, which through its implementation of the Dubai Blockchain Strategy aims to save USD $3 billion in operational costs, 398 million printed documents per annum and 77 million work hours annually, Chaudhry adds.

 

 

The Dubai Blockchain Strategy aims to save $3 billion in operational costs. 

 

 

Volkswagens EV pilot: Pick your energy source

Then theres Volkswagens smart-charging electric vehicle (EV) pilot project which enables car owners to specify their favored source of energy. Drivers pulling into charging stations can select to charge using wind and solar resources, from energy assets within a 10 km radius […] with an accurate breakdown of their sessions carbon footprint, says project partner Jesse Morris, CEO at Energy Web, a firm that claims to have built first enterprise-grade, public blockchain tailored to the energy sector.

An algorithm determines the optimal charging schedule to maximize usage of clean, locally sourced electricity, while a smart-contract deployed on Energy Webs network issues to the EV owner after charging an ERC1888 NFT, a fractionalized renewable energy certificate that proves the provenance and volume of clean electricity generated and consumed. VWs innovation group is now working out how to roll this out at production scale.

A huge catalyst for renewal energy

Solutions like these can help solve the sustainability movements greenwashing problem. Some are skeptical that EVs are really carbon neutral given that they require recharging from electric sources that as far as they know could be generated by brown coal, Anthony Day, global head of ecosystem stewardship at Parity Technologies, commented in a recent LinkedIn post.

This is consistent with Web3 project designs that, generally speaking, seek to make owners out of users and users out of owners. The EV is generating information all the time for the grid — temperature, traffic conditions, and so on, Day tells Magazine. Your vehicle becomes an oracle. It could be identifying potholes on the road.