From a technology point of view, blockchain is a digitally distributed, decentralized ledger that helps track and verify transactions. Even though blockchain is well known for the technology behind cryptocurrencies such as Ethereum and Bitcoin, environmental researchers are now finding its use in solving the climate crisis, ranging from tracking the sustainability of products to monitoring pollution.
Let’s explore how blockchain technology can help to combat the environmental crisis.
Guide for investors
Investments that involve large, international sustainable development projects have become highly complicated, causing delays and backlogs. Blockchain-enabled processes and platforms can manage transactions highly effective and efficient. Due to this reason, sustainable development and other climate-related initiatives are desirable for investors. Blockchain-enabled processes and platforms can help manage stakeholders that work in different capacities. This will help increase efficiency, reduce transactions and make climate-related sustainable development highly beneficial for private investments.
According to a report by the United Nations Environment Programme (UNEP), blockchain’s distributed ledger technology can provide significant improvements by allowing investors, renewable energy project developers, and purchasers to collaborate on a common platform with established global standards for compliance due diligence.
South Africa-based renewable energy startup Sun Exchange allows anyone with an internet connection to purchase solar panels online and rent them to hospitals, schools, businesses and other companies in Africa. Sun Exchange uses the Bitcoin blockchain for making cross-border payments. This eliminates any potential intermediaries between investors and beneficiaries. Through Sun Exchange’s solar panels, companies in South Africa have reduced their energy costs by nearly 30%.
Power Ledger, a technology company in Australia, has started to explore the impact of blockchain. The organization established a pilot project in India’s Uttar Pradesh. They allowed homeowners with solar panels on their rooftops to sell power to others on the grid. This involves setting up prices in real-time and implementing transactions over the blockchain. These systems can help increase the deployment of renewable energy.
Blockchain technology can also be used for sustainable and environmentally friendly supply chain practices. The technology can track products from the manufacturer and help prevent inefficiency and waste by making supply chains transparent. Blockchain can also help consumers better understand how the products were made and shipped. This will allow them to make environmentally friendly choices.
Foodtrax is a Blockchain-based dApp that plans to track food from its origin to the shelf to eradicate food waste due to storage and improper handling. Through their Blockchain-based dApp, Food Trax has interlinked data temperature loggers and equipment measuring and monitoring, focusing on developing a flexible solution that covers all steps related to the supply chain with transparency.
An area of environmental sustainability where blockchain can have a significant impact is recycling. By implementing a recycling program on the blockchain, organizations can give financial incentives to individuals in the form of a cryptographic token. This could be in exchange for depositing recyclables such as plastic cans, bottles, containers etc. This helps to track essential data such as cost, volume and profit and also helps to evaluate the environmental impact of an individual or company participating in the program.
Many organizations are already working on such Blockchain-based recycling programs. For instance, an organization named The Plastic Bank leverages Blockchain and IBM cloud technologies to create an application that can help to monetize ocean plastic. Through its sustainability project, Plastic Bank turns plastic into currency by successfully setting up collection centres across third world countries. This allows people to deposit used plastic in exchange for different incentives such as cash benefits, phone charging etc. The organization is now working on a blockchain-powered application that allows users to exchange plastic for cryptographic tokens.
A blockchain-based decentralized application (dApp) called RecycleToCoin (RTC) provides users with a reward and incentive system for recycling aluminium, plastic and steel cans. By partnering with global offset and reward partners and utilizing the app-based collection points, RTC incentivizes people to recycle more and be rewarded for it.
Although there are several benefits of blockchain technology when it comes to solving the environmental crisis, there are many pitfalls associated with it. A significant amount of electricity and computing power is required for processing certain transactions on bitcoin and Ethereum blockchains. This is a crucial challenge in many countries where energy can be prohibitively expensive.
There is also a requirement for regulatory frameworks that will be key to addressing the high cost of processing power. Electricity tariffs would be required to change, so energy consumers are highly likely to participate in surplus energy trading through blockchain platforms.
Digital infrastructure key
It is evident from the report that Blockchain technology can certainly help in solving the environmental crisis and improve sustainability in various ways. However, driving the penetration of emerging technology like blockchain will require improving digital infrastructure. As blockchain and related digital technologies develop rapidly, policymakers are needed to adjust regulations that can help design future energy systems and mitigate environmental risks.