Deep Dive

Diving Deep

A note on the research we did in the lead up to the creation of this website as a resource and a platform to facilitate further dialogue: This work is being done in the context of the need to cut global emissions in half in less than a decade and by over 90% by 2050 to avoid catastrophic and irreversible consequences. The consequences, without radical intervention, will be dire. While blockchain technology is not the be-all and end-all that some make it out to be, there is without a doubt, not only a place for blockchain technology in the work that is needed but perhaps even a necessity for it.

There is a chance that this technology can dramatically shift not only our long term choices, but more importantly, our long term outcomes.

“Long-term decision-making is the most important thing we need for effective climate change solutions.” - Aaron Baker, Renewable energy consultant

Our conclusion, in short, after conducting over 100+ interviews and examining both promising and less promising use cases, is that blockchain technology has considerable potential for enabling climate solutions because of its fundamental characteristics: verifiable trust-ability, composability, interoperability and censorship resistance.

“There are 3 reasons why not enough carbon is being removed from the atmosphere. The first is that there is a lack of incentive.  The second is that there is lack of clarity on the gain and the third is a lack of collaboration between global entities. Legacy carbon markets are notoriously opaque and are slow to adopt new technologies. If we want to scale up carbon removal we need to mobilize the global community to innovate on these solutions. All this requires is trust.” Alexsandra Guerra,  Nori 

Blockchain technology can give the assurance of trust in a world where trust has been eroded by treachery and deceit is beneficial in and of itself, to say nothing of the potential for creating opportunities to remove middlemen and protect limited resources. At scale, the use of blockchain technology in the service of climate solutions has the theoretical potential to transcend existing structures and disrupt existing industries. That being said, many of the biggest hurdles appear to be a combination of policy and public perception. 

“A lot of people refuse to even talk or learn about blockchain because of the bad press around the fact that it is bad for the environment.” - Xavier Damman, All For Climate DAO

Many of the people we talked to highlighted that they could conceive of ways, if need be, to achieve what they were trying to achieve with an existing database structure or even a series of Excel spreadsheets but that they favoured the inherent benefits of using open source public blockchains. Many also pointed to the reduction or elimination of middlemen that can put more control directly in the hands of people at the local level as well as incentivize action that has been difficult to achieve. 

“For us, blockchain is acting as a trust mechanism by providing a third party system so that electrons, that are being given from drivers and participants in the program to the building or the grid to use, are able to be accurately tracked. Drivers can then trust that they will be properly incentivized financially.” - Carter Li, CEO, SWTCH – Using blockchain as a ledger for bi-directional EV charging 

When we asked them to describe why they were using blockchain technology, people building these projects generally started with trust-ability (which enables removing middlemen) and then commonly shifted to composability (seamlessly combining and integrating different decentralized protocols) and interoperability (the capability of different blockchain networks to communicate and share data). There is also a focus on finding creative ways to leverage market forces to generate microeconomics that can potentially self-finance climate solutions and other public goods. 

Looking at the projects currently using blockchain technology for climate solutions, it is clear that those funding and coordinating “on the ground” activities are having an impact already. This includes projects focused on using blockchain technology to help finance and coordinate solar and wind projects as well as some early explorations of local grid infrastructure with blockchain as its backbone. There are also projects making headway with location-based micro-loans or other crypto-enabled lending or decentralized financing. And carbon offsetting is already improving because of blockchain technology and has opened up a whole new world for new forms of tokenization of mitigation efforts. 

“We enable users to fund solar installation natively in Crypto. Those solar installations are all over the world in places like India, Africa and South America. They generate clean energy and we sell that energy to commercial customers.” - William Skinner, Helios Protocol

Countless projects are incentivizing direct action on the ground that are coordinating their activities and allocating funds via a DAO or a project with a token focused on their activities. Some even think of themselves as the new decentralized ‘Greenpeace’ enabled by Web3 technology and micro economies. Although the underlying values of the emerging Web3 social movement, which are focused on digital rights on the open web, are a powerful driving force in the kind of change we are discussing, for the sake of this report we will focus more narrowly on use cases that are directly enabled by blockchain technology. DAOs and their role in social change are topics worthy of additional research.

Different types of projects require different types of support in order to maximise their impact, for example; those projects with bigger potential outcomes but also more structural impediments such as the need for policy change. 

The largest obstacles and opportunities that we identified were government policies of various shapes and sizes as well as public perception. Not only are government policies and regulations being influenced by public perception but public perception is in turn, being influenced by government policy (or the lack thereof). This applies both to blockchain technology providers and also to the specific climate solutions use cases in their own ways.  

Developers working on blockchain enabled climate solutions highlighted opportunities to nourish and support the growth and expansion of the sector. This kind of direct support of those building the essential infrastructure layers is vitally important to the growth of the space overall, yet still, some of the largest obstacles to the effective use of blockchain technology are the result of policy and public perception barriers.

“Blockchain technology, to its own detriment, has been very, very insular. Both in language and in communication style. We revel in our complexity and in our codified language and acronyms. And I get it, it just means we’re going to play small ball for a lot longer versus building more sophisticated relationships…” - David Fortson, LOA Labs

Use Cases - An Overview

1. Logistics and Supply Chain Management
2. Freight and Transportation Infrastructure 

• Rideshare
• EV charging and bidirectional charging market infrastructure

           3. Clean Energy Infrastructure and Grid Technology

• Solar and Wind efficiency and financing 
• Decentralized Grids 
• REC’s

          4. Local, National and International Carbon Accounting 

• Decentralized record keeping for GHG accounting
• GHG Reduction commitments on chain
  

           5. Tokenization of Carbon, Carbon Markets and MRV

• Bringing traditional markets on chain
• “Horizontally integrated” new on-chain standards
• Retired vs traded
• Monitoring, Reporting and Verification infrastructure (oracles)

NOTE: Much of the discussion of the use of blockchain technology as it relates to climate change is usually about markets for trading carbon offsets. There may be significant opportunities for blockchain technology to both improve transparency and verification of existing carbon emissions trading platforms as well as increasing the financing of climate tech projects of various kinds using these or other mechanisms. Our intent with this project was to highlight non-financial use cases of blockchain applications such as public databases for carbon accounting, supply chain management and energy consumption. 

Local currencies and “tokenomic” are an important layer to the discussion of how these technologies could play a role in climate solutions and as this site evolves more will be added in relation to these areas as well as other topics where there is an interest emerging from the community.