The Flipside of Blockchain’s Energy Hunger: A Plus for Conservation
While bitcoin is raising concerns about its large and ever-growing energy — and carbon — footprint, other blockchain applications could help, rather than hurt, sustainability and conservation efforts.
Bitcoin’s bad rap stems from its use of a public blockchain model where consensus is reached via proof of work. That means large numbers of miners around the world are all expending energy simultaneously to solve the cryptographic challenge to create the next bitcoin block. But many other types of blockchain are private, which means fewer nodes on the network, while others use less energy-intensive consensus mechanisms.
“In fact, there are at least as many ways to structure blockchain as there are to send a text, and most of them do not require very much energy,” writes Ethan Rogers, industry programme director for the American Council for an Energy-Efficient Economy. “When built into the security of a network that is connected to the appropriate data sources, blockchain can enable the tracking of energy generated by renewable energy technologies, reporting of cost savings from energy efficiency investments, or trading pollution-mitigation credits.”
Other blockchain systems, advocates say, could enable clean-energy-based microgrids, marine biodiversity protection, improved food security, greater financial inclusion and many other environmental benefits. A number of organisations are already testing such applications.
“In the pilot cases implemented to date, more than half of which have been in Europe, blockchain has proven to be a huge cost-saver and efficiency-enabler,” according to Schneider Electric’s Philippine de T’Serclaes. “By letting go of intermediaries, blockchain transactions lower costs, speed up processes and result in greater flexibility throughout the entire system. It leads the way to a systemically more efficient, flexible and decentralised energy system.”
In New York City’s Brooklyn neighbourhood, for example, homeowners with rooftop solar panels are able to sell their excess power to fellow residents via a distributed energy system created with the help of Siemens, next47 and a startup called LO3 Energy. The Brooklyn Microgrid project uses blockchain to keep track of every peer-to-peer transaction, ensuring that producers are accurately credited for the energy they send back into the grid.
In fact, that’s one of the appealing benefits of blockchain for conservation: it allows users to track and monetise assets and activities that, up until now, have been difficult to manage or assign value to.
“In a post-Kyoto Protocol era, carbon-constrained world, GHG [greenhouse gas] mitigation in all its forms increasingly has financial value,” notes a recent paper from the World Bank. “Blockchain technology can synthesise and support the transaction of all types of emission-related data (e.g., facility level, projects, programmes, quantified production, and life cycle attributes) in a shared, globally accessible environment. A blockchain-based architecture can accommodate data that is captured automatically or manually to support an integrated network of climate markets over time without disruptive action.”
As this Deutsche Welle article notes: “Tracing the entire supply chain behind ‘green’ products is often close to impossible. But blockchain-based apps like Foodtrax enable consumers to follow products from source to store shelf.”
What’s more, the article adds, projects such as the WWF’s Blockchain Supply Chain Traceability Project are helping consumers to “avoid products linked to illegal fishing and human rights abuses by tracing Pacific catches from vessel to supermarkets around the world”.
Eventually, blockchain-supported smart contracts could support even further environmental and conservation benefits, according to the World Bank: “[S]mart contracts can be used to internalise governance (e.g., standards, policy, verification, data sources and commercial terms) between two or more jurisdictions or counterparties to prevent negative consequences (e.g., leakage), inhibit ‘bad actors’ in the marketplace and ensure the environmental integrity of the market.”
