COP24: Distributed ledger technology could help enact Paris Agreement
With the carbon costs of travel in mind, key EIT Climate-KIC COP24 session summaries are available online for those who cannot attend—and for review for those present. These summaries aim to extract important debates, dialogues, and learnings from each session.
Distributed ledger technology (DLT) has the potential to efficiently and transparently measure, track, and report on carbon emissions, making it a useful tool for enacting the Paris Agreement, according to the COP24 session “Unleashing the potential for climate action with blockchain and other disruptive technologies” organised by EIT Climate-KIC, INFRAS, Climate Ledger Initiative, and Gold Standard.
DLT enables a new kind of decentralised database, meaning, data is not centrally stored but is distributed over many participating computers. In principle, all transactions in the network are transparent to its participants. All database entries, called “blocks”, are linked using cryptographic processes, thereby creating an immutable chain of data blocks. All participants continuously record transactions and check database records for coherence—an automated process. Blockchain is an example of DLT.
Julie Calkins, Risk Programme Manager, EIT Climate-KIC, said disruptive tech like DLT and blockchain could offer the scope of innovation that’s needed to build a world that works for everyone, address the urgent need to redirect financial flows, and enable rapid experimentation and proof of concept. Specifically, these solutions could help realise the Sustainable Development Goals and Sendai.
What attributes of disruptive tech make it poised to address the aforenoted challenges? First, its unique attributes can be applied to complex problems. Second, it can generate increased transparency and therefore increased trust.
EIT Climate-KIC recently released an assessment of DLT for climate action featuring an overview of the relevant technologies as well as case studies.
The Climate Ledger Initiative (CLI) is an international, multi-stakeholder initiative that’s operated by the Cleantech21 Foundation, LIFE Climate Foundation, INFRAS, and the Gold Standard Foundation. Its mission is to accelerate climate action in line with the Paris Climate Agreement and the SDGs through emergent DLT-based innovations applicable to climate change mitigation and adaptation. CLI focuses on research activities, innovation use cases, and exchange and joint learning.
Juerg Fuessler, Managing Partner, INFRAS, pointed out that the characteristics of the Paris Agreement and of DLT are compatible:
- The Paris Agreement features a decentralised bottom-up and top-down approach and DLT is also decentralised
- Transparency is a key pillar of the Paris Agreement and DLT enables this via peer-to-peer interactions
- Tracking, measuring and reporting are essential to the implementation of the Paris Agreement and DLT enables this via permanent ledger
DLT could be especially useful for measuring and tracking carbon and SDG impact along supply chains (unlocking monetisation opportunities) and DLT can integrate stakeholders into the whole climate finance value chain.
A more detailed account of this can be explored in CLI’s new report, “Navigating blockchain and climate action,” which was launched at COP24.
Sven Braden, Committee Member, CLI, said DLT could also be leveraged for climate finance because it enables different entities to streamline their efforts by referring back to a shared universal ledger instead of individual ones. Such collaborative entities could be: The state budget, development corporation, implementing entity, and recipient. The advantages of this system are greater efficiency, accuracy, transparency, collaboration, automation, etc.
Blockchain could also play a role in corporate sustainability by tracking environmental impact data (e.g. emissions, plastic waste, etc.) across supply chains, from production to handling and storage, to processing and packaging, to distribution and market, and finally reaching consumption.
Owen Hewlet, CTO, Gold Standard, said digitisation of monitoring, research, and verification (MRV) could make use of tokenisation, automate verification through pre-conditioning (powered by artificial intelligence), and automate collection through the internet-of-things, mobile technology, and online applications (potentially using smart contracts).
DLT can securely and accurately hash data from automated collection, make it usable in automated collection apps, make data immediately usable for verification, allow for the possibility of pre-conditioning, and tokenise issuance and tracking of credits.
South Pole, ixo Foundation, and Gold Standard have partnered to develop a blockchain application for carbon credit tokenisation. The new blockchain application will be piloted at a solar PV project in Thailand to monitor, report on, and verify greenhouse gases (GHGs). This project aims to streamline and accelerate the data verification processes for GHG inventory management and carbon credit origination. Moreover, this application protocol has the potential to reduce MRV costs in comparison to current practices and to allow real-time tracking of GHG inventories and and issuance of carbon credits.