By Omaid Hiwaizi, CMO of the sharing economy To Mobile world
Bitcoin and Ethereum tend to be the blockchains that policymakers outside of industry think of when distributed ledger technology comes up, including when it comes to climate change. The two largest and oldest blockchains have developed a reputation for negative climate impact, notoriously brought to the headlines in May when Elon Musk backtracked on his previous announcement that Tesla would accept bitcoin payments due to the heavy environmental toll of blockchain.
But to dismiss blockchain as harmful to the environment based on its early versions is a mistake, especially when greener blockchains, such as Cardano, already exist on the market. Beyond being more environmentally friendly, these blockchains offer promising potential as tools for actually to fight against climate change.
There are two issues to be resolved. The world is facing a climate crisis, but it is also facing a crisis in climate governance: we know what we need to do to slow or stop climate change, but we don’t know how to go about it. The 2015 Paris Agreement marked a historic turning point for global climate action. Although there has been progress in terms of climate change, global warming is expected to exceed agreed thresholds. New and innovative solutions must be put in place and empower countries that violate the Paris Agreement. By adding blockchain to the list of methods of tackling climate change, we can encourage countries that are genuinely making progress to keep up the good work while discouraging countries that are not.
How can blockchain really fight climate change?
Among the many uses that blockchain can offer to foster better climate governance, it can be used to strengthen global cooperation. The information stored on a blockchain is immutable and tamper-proof. This is useful for generating a single trusted source for any type of information.
We’ve only scratched the surface of what blockchain technology can do. So far, it has provided the building blocks of what are called decentralized autonomous organizations. It has been researched as a potential alternative governance mechanism at the national level. In 2020, government organizations in North America adopted blockchain solutions that have contributed 46% of the growth in the global blockchain market. But the benefits of using blockchain internationally would be much more substantial.
Blockchain can be used to fight climate change in three main verticals:
1. Increase transparency
Fake news for and against climate change is widespread. Better and reliable information is needed to ensure that two different stakeholders do not claim carbon offsets for the same project, for example. Smart contracts on the blockchain can be used to verify ownership.
Another task is to verify that the carbon offset activities have taken place. Blockchain and IoT devices could provide more reliable and real-time information in both of these scenarios.
2. Enforce climate commitments
Using smart contracts, blockchains could mitigate the risk of rollback, by forcing states to make their climate change commitments with a deposit. If a state fails to meet its carbon offset commitments, its bond could be taken and redistributed to those who have met theirs.
By staking resources on the blockchain, meeting commitments is much more important, which is only possible with a smart contract.
3. Supply chain management and verification
The “ReSea Project” is a prime example of why verification is so incredibly effective. The Danish company (ReSea) successfully carried out a clean-up of 305 tonnes of plastic waste from the ocean and rivers in Indonesia, which was verified using VeChain. VeChain’s ToolChain was able to trace the entire cleaning process, tracking plastic waste from where it was collected, how it was sorted and when it was delivered.
The toolchain generates real-time data and records all stages of the verification process. This allows stakeholders to digitally monitor and audit all plastic collections at all times and notify all relevant parties of any irregularities. This creates an extremely efficient verification process without being overly complicated.
Some powerful governments or companies might not want to participate in a system that makes broken promises transparent and automates the sanction process. But as long as there is enough momentum, they might slowly be inspired to get involved. Transparency in tackling climate change will accelerate the process of progressing from structural change towards reducing carbon emissions – and it is important for policymakers to understand the difference between technology and the digital currencies that popularized it.
Omaid Hiwaizi is the Marketing Director of the Sharing Economy at World Mobile. Hiwaizi has over 25 years of management and leadership experience in marketing and business strategy, with a particular focus on the adoption and growth of technology and the opportunities it brings. Previously, he held positions such as Global Marketing & Strategy Lead for Blippar and Chief Strategy Officer for Geometry Global in London, as well as senior strategic leadership positions at global digital agency SapientNitro and integrated agency Chemistry. .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.