Environmental benefits of Blockchain Technology
How can blockchain save the environment?
In terms of attaining greater sustainability and mitigating climate catastrophe, the potential impact of blockchain technology is difficult to overstate. As “green-tech lawyers”, we know that the Bitcoin network generates around 73 million tons of carbon dioxide per year. Notwithstanding, to evaluate blockchain technology’s potentially enormous and transformational effects on society, the economy, and the environment, it is necessary to have a firm grasp of its IT foundations.
Governments and organizations worldwide have recently embraced technology to combat climate change and biodiversity loss. Blockchain is one instrument that has the potential to aid in the fight against climate issues significantly. Why and how can it be possible? A more holistic view of blockchain’s possible uses, such as environmental protection, can pave the way for its widespread adoption.
In this piece, we will cover the following talking points:
- How is blockchain connected with the Environment?
- Why is blockchain important for the Environment?
- Green-tech Opportunities of Blockchain
— Supply chains
— Recycling & Environmental treaties
— Environmental Protection
— Carbon tax solutions
— Green Digital Assets
— Smart grid management
Keep reading for an in-depth exploration of the advantages of blockchain technology for our environment!
How is blockchain connected with the Environment?
From a technology point of view, blockchain has the potential to aid in resolving the environmental crisis and enhancing sustainability in many ways. How so?
By 2030, experts predict that the worldwide crypto sector will be worth $4.94 billion. According to the recent IPCC report, there is an immediate need for a worldwide energy transition by 2030 that achieves net-zero carbon emissions and keeps warming below 1.5 degrees Celsius. To achieve this goal, we must significantly reduce our reliance on fossil fuels, implement broad electrification, boost our energy efficiency, and use renewable energy sources.
Blockchain technology offers great potential in environmental conservation, including conservation planning and wildlife protection program implementation. Environmental conservation programs can achieve their total social return on investment potential with the help of contracted performance verification and efficient compensation distribution. Startups in the field of green tech are essential to this movement. They create blockchain-powered platforms that unite businesses, governments, and other industries.
Strengthening digital infrastructure is necessary to accelerate the spread of innovative technologies like blockchain. However, blockchains like Ethereum have been criticized for their consensus mechanism significantly contributing to the said energy problems. The goal is to improve security, but doing so without compromising on environmental friendliness might be challenging.
Although recent events with Ethereum suggest a significant breakthrough in the environmental-friendliness of the widely utilized blockchain, keep in mind that green blockchain technology is still very much in its early stages.
Why is blockchain Important for the Environment?
United Nations Environment Programme (UNEP) suggests that blockchains and distributed ledger technologies can significantly improve the renewable energy industry. How can it be achieved? By bringing together investors, renewable energy project developers, and purchasers on a single platform that adheres to established global standards for compliance due diligence.
- As a vital tool, blockchain has the potential to significantly enhance the openness, responsibility, and traceability of greenhouse gas emissions. It aids businesses in providing carbon emission information that is more precise, dependable, standardized, and easily accessible.
- In order to more accurately calculate, track, and report on the progress made in lowering the carbon footprint across the whole value chain, blockchain technology can be used through smart contracts. It has the potential to offer instant authentication, real-time data verification, and transparent data records.
- To a greater extent than ever before, blockchain technology has the potential to unite previously siloed corporate operations. Moreover, it can precisely identify various roles in lowering carbon emissions. With healthy competition and market-based incentives, everyone benefits.
- Blockchain’s decentralized method is advantageous in many ways. It gets everyone involved and allows them to contribute to the total. Greenhouse gas emission reductions can be monitored and reported at every stage of the supply chain, from producers to wholesalers to retailers to end users.
Ultimately, advances in blockchain technology provide potent catalysts for coordinated responses to the climate crisis. Acknowledging the unique role that entrepreneurs working on clean technology may play in this process is crucial as well as that of investors in both the public and private sectors.
Green-tech Opportunities of Blockchain
Companies that implement sustainable development, governmental reform, and individual empowerment can benefit from blockchain technology in many ways. The technology can help free individuals from the shackles of onerous contracts, protect victims of power abuse, and address the accountability issues that arise from the complexities of the modern digital world. Let’s take a look at new green-tech solutions that can enhance supply chains, recycling, environmental protection, energy solutions, carbon tax issues, green digital assets, and smart grid management.
There are serious sustainability issues in the global food supply chains, and blockchain technology has been proposed as a solution. Current methods of shipping commodities around the world are inefficient and harmful to the planet. We are on the cusp of a revolution thanks to Industry 4.0 and its proliferation of Internet-connected gadgets, and the advent of 3D printing has made it possible to produce goods in much smaller, distributed batches.
How blockchain can help promote sustainability? A technology can be implemented into ecologically friendly and sustainable supply chain procedures and helps prevent inefficiencies and waste by making supply networks transparent. Consumers will benefit from blockchain’s ability to provide details about a product’s manufacturing and delivery processes. Now industry leaders will be held accountable to making better decisions for the planet.
Additionally, blockchain is being utilized to enhance fish traceability to combat illicit and unsustainable fishing practices. Case in point, to establish a more open, transparent, and responsible seafood sector, Fishcoin is a blockchain-based seafood traceability project that incentivizes supply chain players to contribute data from the moment of harvest to the point of consumption.
Given the enhancements they provide to shipping routes, volume, and the prevention of empty shipments, fewer ships and trucks will be needed. If blockchain technology is used with solar-powered airships and drones, we may witness pollution-free, long-distance solar shipping of individual packages.
Another possibility is a public 3D printer protected, recorded, and monetized through the blockchain. Here, the food industry is making headway in tracing the sources and routes of the food it sells.
One of the most urgent environmental problems today is plastic waste. Current recycling methods are generally inconvenient and fail to provide sufficient incentives for users to participate. Given human nature, even the best-laid plans often fail.
Nevertheless, in 2022, the United Nations Environment Assembly made history by voting to end plastic pollution and forge an international legally binding agreement by 2024.
As a solution, the recycling system of the future may already exist, incentivizing people to simply dispose their plastic wastes at designated recycling points with a seamless identification and verification process using electronic wallets downloaded on their smartphones. The electronic wallet is automatically updated after the deposit is scanned. If appropriately implemented, this method might level the playing field so that customers in nations without local recycling businesses can be compensated similarly to users in places with extensive recycling operations.
Establishing recycling plants would allow businesses to gather the trash from any location. It would be simple to monitor volume, cost, shipping information, and profit for each site, business, or individual involved in the program and to assess their respective contributions.
A good example is Diatom DAO — an initiative that aims to solve the issue of plastic pollution by introducing a tokenized Plastic Removal Credits system. It seeks to utilize the potential of decentralized finance (DeFi) to construct a trustworthy, verifiable, and effective plastic-removal supply chain that promotes greater recycling, lowers consumption, finances high-leverage removal projects, creates novel pathways toward circularity, and stimulates the development of novel materials.
The enforcement of environmental protection as a whole is a logical progression from waste management and transportation. When it comes to keeping track of transactions and rewards, blockchain shines. Environmental protection strategies, agreements, and even international treaties can have difficulty measuring their results.
As blockchain would enable trustworthy recording of crucial environmental data, it might deter parties from backtracking on pledges, exaggerating progress, or caving in to pressure from unscrupulous actors.
The information recorded on the blockchain’s public ledger can be viewed by anyone and followed indefinitely. The issue of environmental preservation boils down to one contract law. Comparable to how blockchain will transform legal records management, it will drastically cut down on environmental scheme fraud.
The effects of blockchain technology in the energy sector will be the most obvious. Today’s power grids are often monopolistic, centralized networks that can only draw power from a limited range of generators (i.e., a few nuclear plants augmented by oil and gas). That leads to inefficient power management, longer than necessary lines of distribution, and potential blackouts in the face of an earthquake or other natural disasters.
The introduction of a blockchain-based, decentralized, peer-to-peer energy system would lower power transmission costs. Using fewer batteries, for example, which is costly, needs a lot of raw materials, and can generate massive pollution because of their extraction, will minimize the need to store energy inefficiently. How different our world would be if every home was equipped with solar panels, wind turbines, or new smart materials that generated electricity for the home.
Put in place all the current infrastructure, including nuclear reactors, oil, or coal, and add road surfaces that produce kinetic or solar energy. Such energy sources are the wave of the future. Now picture an automated computer system handling all this, with blockchain-based, unforgeable records of all transactions. For their efforts, people receive money in their virtual wallets.
In addition, the ocean has become 30% more acidic since the beginning of the Industrial Revolution due to the accumulation of carbon dioxide. Toucan Protocol is developing the framework for a carbon market to finance world-class climate solutions, while Captura is developing solar-powered, floating plants to remove CO2 from the ocean in an effort to hasten the transition to net-zero carbon in line with the Paris Agreement. The collaborative efforts of novel blockchain-based and existing non-blockchain-based projects can further strengthen the fight against carbon emissions.
Carbon tax solutions
The existing system makes it challenging to estimate the environmental impact of any product, and the price of a product does not consider its carbon footprint. Thus, neither consumers nor businesses have much reason to seek out and promote goods with a small environmental impact.
Using the blockchain to keep track of a product’s carbon footprint would prevent any tampering with the data and could be used to calculate the carbon tax due at the register. Consumers would be incentivized to switch to items with smaller carbon footprints if their purchase price increased for those with more giant carbon footprints. Businesses would be prompted to adapt their supply chains to match this demand.
Each business and product might be given a rating using this blockchain-based reputation system. This would result in transparent manufacturing, discouraging wasteful and environmentally unfavorable production methods.
Product barcodes might be scanned to reveal whether they were produced in a clean, low-carbon factory or a polluting one.
Green digital assets
Although this is a mischaracterization, the digital asset industry has been accused of being incredibly wasteful of energy. Energy-efficient cryptocurrencies and blockchain platforms are the backbones of climate change initiatives. Thus it’s crucial to distinguish between the two.
Using cryptocurrency is uncommon in climate change projects. Platforms are switching to more environmentally-friendly energy and consensus processes, and the race is on. For instance, Algorand has declared its blockchain to be entirely carbon neutral. Kickstarter is building a crowdfunding platform on the carbon-negative blockchain platform Celo. SavePlanetEarth is establishing certified Carbon Credit Smart non-fungible tokens (NFT) on Phantasma, a green blockchain for developers to build decentralized applications, and Ethereum’s recent transition is expected to bring about just over 99% reduction in energy consumption.
Smart grid management
Peer-to-peer power trading that is both reliable and transparent is already being made possible by blockchain technology, which also helps develop and manage smart grids in decentralized energy markets. For instance, Powerledger facilitates peer-to-peer trading of excess renewable energy, allowing customers to directly buy, sell, and swap power. Solstroem’s off-grid solar and geo-tagged, timestamped micro-carbon credits are designed to hasten the energy transition in underdeveloped and emerging countries. Electron is another project in the United Kingdom that uses smart contracts on the Ethereum blockchain to create a smart grid that reliably provides electricity. Grid Singularity is a platform for exchanging energy-related data and operating as a decentralized energy marketplace.
With all of these blockchain-based energy-related solutions, solar panels can now be connected to the blockchain as a single hub, allowing users to reap the benefits of distributed power, thanks to new technologies that drastically lower fabrication costs.
The complexity of investing in large-scale international sustainable development projects has increased over the years. However, there would be no hiding from the obvious environmental consequences of consumer choices, corporate decisions, or governmental policies. Hence, investors want to put their money into projects that help the environment and the climate.. Using blockchain-enabled procedures and infrastructures, it would be easier to coordinate the efforts of multiple types of stakeholders. As a result, productivity will rise, and waste will decrease.
The carbon footprint of each product, the greenhouse gas or waste emissions of a facility, or an organization’s comprehensive compliance history with environmental requirements may all be tracked transparently with the help of the blockchain. One can only hope that information systems, tokenized credits granted for taking particular activities, and reputation systems built on the blockchain can all motivate businesses and individuals to behave in ecologically sustainable ways.