By Omaid Hiwaizi, CMO of Sharing Economy at World Mobile
Bitcoin and Ethereum tend to be the blockchains decision makers outside the industry think about when distributed ledger technology is raised—including as it relates to climate change. The two largest and most veteran blockchains have developed a reputation for negative climate impact, famously brought to mainstream headlines back in May when Elon Musk walked back his earlier announcement that Tesla would accept bitcoin payments due to the blockchain’s hefty environmental toll.
But dismissing blockchain as environmentally harmful based on its earliest versions is a mistake, particularly when there are already greener blockchains, such as Cardano, on the market. Beyond being more eco-friendly, such blockchains offer promising potential as tools to actually fight against climate change.
There are two issues at hand. The world faces a climate crisis, but it also faces a climate-governance crisis: We know what we need to do to slow or halt climate change, but we don’t know how to actually go about it. The 2015 Paris Agreement marked a historic turning point for global climate action. While there has been some progress in terms of climate change, global warming is set to exceed the agreed thresholds. New and innovative solutions need to be put in place and hold countries accountable who are breaking the Paris Agreement. By adding blockchain to the list of methods to fight against climate change, we can encourage countries who are actually making progress to keep up the good work while discouraging countries who aren't.
How can blockchain actually fight climate change?
Of the many uses blockchain can offer in fostering better climate governance, it can be used to boost global cooperation. The information stored on a blockchain is immutable and tamper-proof. This is useful for generating a single source of trust for any kind of information.
We have only scratched the surface as to what blockchain technology can do. Until now, it has provided the building blocks for what is known as 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 contributed to 46 percent of the growth of the global blockchain market. But the benefits of using blockchain at the international level would be far more substantial.
Blockchain can be used to tackle climate change in three main verticals:
1. Boosting transparency
Fake news for and against climate change is widespread. Better and reliable information is required to ensure two different stakeholders don’t claim carbon-offset credits for the same project, for example. Smart contracts on the blockchain can be used to verify ownership.
Another task is to verify carbon-offsetting activities actually took place. Blockchain and IoT devices could provide more trustworthy information and in real-time in both of these scenarios.
2. Enforcing climate commitments
Using smart contracts, blockchains could mitigate the risk of going backward, by forcing states to make their commitments to climate change with a deposit. If a state fails to comply with its carbon-offset commitments, its deposit could be taken and redistributed to those that have upheld theirs.
By staking resources on the blockchain, there is far greater enforcement of the commitments, which is only possible using a smart contract.
3. Supply chain management & verification
The “ReSea Project” is a perfect example of why verification is incredibly effective. The Danish company (ReSea) executed a successful 305 metric ton plastic waste cleanup in the ocean and the rivers in Indonesia, which was verified using VeChain. VeChain’s “ToolChain” was able to trace the entire clean-up process, tracking plastic waste from where it was taken, how it was sorted, and when it was delivered.
The ToolChain, mints real-time data and records all the steps within the verification process. This enables stakeholders to digitally monitor and audit all plastic collections at all times and can notify any involved parties of any irregularities. This creates an extremely effective verification process without being overcomplicated.
Some powerful governments or enterprises might be unwilling to participate in a system that makes broken promises transparent and automates the punishment process. But as long as there is enough momentum, they might slowly be incentivized to get involved. Transparency in the fight against climate change will accelerate the process of advancing structural change toward reducing carbon emissions—and it’s important decision makers understand the difference between the tech and the digital currencies that popularized it.
About
Omaid Hiwaizi is the CMO of Sharing Economy at World Mobile. Hiwaizi has more than 25 years of management and leadership experience in marketing and business strategy, with a particular emphasis on the adoption and growth of technology and the opportunities it brings. Previously, he has held positions such as Global Marketing & Strategy Lead for Blippar and Chief Strategy Officer for Geometry Global in London, as well as serving in senior strategy 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.
