The Blockchain and Climate Intersection — a primer
This collection will explore the path towards a blockchain-enabled mechanism for global consensus on climate change —
As we move to a stricter management of carbon in our atmospheric commons — to prevent global warming from exceeding a dangerous threshold— we must revise the process of transparent carbon and climate accounting.
If we were to consolidate and maintain a single record-keeping ledger with global consensus (i.e. where all parties agree) the task would be far from a simple under a trustless and competitive world. Decades of climate negotiations among countries attest to the intricacy of this challenge.
The rise and maturity of blockchain and its cryptographic science, paired with internet-connected sensors, offers promising tools to devise a system that can cater to a credible and streamlined accounting effort.
Whilst the initial application of blockchain focused on digital currencies (e.g. Bitcoin), other non-financial applications quickly followed. In fact, its core promise of decentralized consensus eventually caught the attention of the climate world.
In the past two years, several organizations and initiatives have advanced discussions and proposals in the blockchain and climate intersection. Some of these include the Climate Chain Coalition, the Climate Ledger Initiative, and a suite of startups proposing different climate or carbon related services — Nori, Swytch.io, Veridium and EWF’s Origin, to name a few.
Eventually, the United Nations Framework Convention on Climate Change (UNFCCC) declared its support for research on blockchain and distributed ledger technologies.
To date, however, there hasn’t been a compelling direct application of the technology, at least not on a global framework for carbon and climate accounting implemented by internationally recognized institutions.
As will be explored in this publication series, blockchain’s application should focus on two general tracks, each with a fixed and variable component:
The PLANET‘s accounting track—
This must consider Earth as the physical planet devoid of human created political divisions, and purely based in physical science. Its two core components are:
- A consensus mechanism to determine the remaining carbon budget and its unavoidable uncertainty range. Whilst this number may need to be constantly updated, this is an agreed fixed value.
- The process to track the aggregate rate in which this budget is consumed, in real-time or another practical time period. Whilst the aggregate number is the key variable value to monitor, efforts should be placed to track emissions provenance (i.e. their root sources and path).
The WORLD’s accounting track —
This must consider the self-defined boundaries in the human civilization: countries, states, cities, organizations, individuals, etc. As such, it involves a more intricate political and subjective process. The two core accounting components should be:
- Open climate pledges taken by all the relevant actors. Pledges are also fixed numbers that state an intended positive climate action in the future.
- The process to affordably certify what indeed was and was not emitted by the respective actor. This, in combination with the other components, is the basis to roll-out global mechanisms to incentivize a behavior change (eg. through penalties and rewards).
good news
Most of the ground-work and scientific basis of these mechanisms has been significantly developed thanks to decades of international climate efforts. Blockchain development efforts, therefore, should concentrate on complementing existing frameworks; adding a protocol and standards layer for decentralized record-keeping and contractual automation (i.e. smart contracts).
The key, as I will present throughout this series, is to innovate on the process by which we collectively develop the open source projects that must underpin this global effort and opportunity.
Before proposing this highly collaborative process, let me lay down in this article the basics of the challenge at hand and how emerging technologies fit in the equation.
A CLIMATE ACCOUNTING PRIMER
Earth’s carbon and climate ledger challenge
Our single global budget
Planet Earth’s atmosphere can hold a limited amount of carbon dioxide equivalent (CO2e) emissions before average global temperatures unleash the most costly and damaging impacts of climate change. The 2015 Paris Agreement set a global goal of holding global warming well below 2⁰C and aiming for a 1.5⁰C limit of warming, relative to pre-industrial levels.
The limited quantity of emissions relative to this 1.5/2⁰C threshold has been termed our global ‘carbon budget’. Scientifically, the carbon budget is not a fixed number and never will be — it has an uncertainty range and the data and knowledge used to calculate it is updated every year. However, scientists estimate around 600 GtCO2e remains in the budget, while global annual emissions are around 40 GtCO2e.
The key take away when looking at the carbon budget science is that if present emission pathways are left unchecked, the budget could be consumed in as little as 15 years. After this, we’ve crossed an irreversible threshold in planetary resilience.
Why transparent accounting and budget management is hard: The benefits of spending
The role of energy —
Almost 75% of global emissions correspond to the combustion of fossil fuels (i.e. coal, oil, gas and their derivatives) in energy related activities. Energy production and consumption are closely tied to economic development. The extraction and supply of energy-related commodities (eg. raw or processed hydrocarbon resources) in the global market is a key source of revenue and thus economic advantage, both for energy rich countries and multinational energy corporations. Furthermore, higher industrial outputs and more prosperous socioeconomic lifestyles raise both GDP and energy demand.
In essence, powerful supply and demand economic interests resist an energy transition consistent with a fixed carbon budget. Phasing out fossil fuels completely — as required by Paris’ sustainability challenge — presents a significantly unprofitable endeavor for firmly established energy actors.
What about renewables? Whilst renewable and low-carbon energy practices have increased in the past decades at an unparalleled and even exponential rate — introducing multiple profitable economic opportunities — demand for fossil fuel products is expected to remain well past 2035. To-date, global greenhouse gas emissions show no sign of peaking.
Land-use change and non-energy emissions —
An analogous scenario can be traced for the other 25% of global emissions, which are tied to agriculture, forestry and other land-use changes. Both supply and demand economic interests place pressure to consume natural resources, such as native forests, and resist changing the status quo. An important difference between energy and land-use change, however, lies in the degree of certainty in the accounting process of budget consumption (i.e., proven emissions).
Energy data and statistics are quite consolidated and linear. These accounted emissions have around a 5% margin of error. With land related emissions, the accounting uncertainty can be as high as 50%. This uncertainty reflects environmental processes involving non-linear effects, and the fact that the accounting and reporting mechanisms also suffer from distorted incentives.
In short, facing a single global carbon budget introduces economic tensions where individuals, corporations and countries are competing in a constant zero-sum game.
THE CHALLENGE: Parties are not fully incentivized to have a 100% transparent accounting system.
THE TECHNOLOGY STACK
Open source blockchains and the internet of things: tech components for climate consensus
Blockchain basics
So, when it comes to climate change, the erosion of trust has made tracking a global budget with a single ledger — in a world of constant economic competition — a fundamental challenge. However, a combination of emerging technologies can be applicable to this trustless problem.
Blockchain specifically emerged as a system to produce consensus of transactions on a shared ledger. In other words, a way to undertake bookkeeping among parties that can’t be expected to trust each other.
Information stored in public blockchains exists as a shared, continually reconciled database — whose records are open, easily verifiable and immutable. Transaction records within the blockchain are organized in chronological order using a decentralized time-stamping system so that no one party can control the network’s internal clock.
The cryptographic process to link records makes it easy to check if someone changes part of the overall chain — thus securing the system against unauthorized transactions or from tampering with records and their order once they are settled.
(See this Reuters graphics for a clear animation of blockchain’s core technology.)
Bad database, good ledger
Blockchains, contrary to popular belief, are not designed to store large amounts of data, and are not a replacement of a traditional cloud database. In other words, don’t expect to use a blockchain to store your emails and images. In fact, a blockchain is a very poor database if weighed against the standard metrics of a traditional database — it is slow and costly. The combination of a blockchain and a database, however, is extremely valuable. For example, you can store the ‘hash’ (an alphanumeric digital string) of the information on a database onto a blockchain to track if it has been tampered with.
Think of a hash as a unique digital fingerprint of the underlying information. So, if you hash last month’s email content, you get a unique alphanumeric fingerprint. Change but one letter on one of those emails, and the fingerprint will change.
From Bitcoins to Planetary data
Research on the application of blockchain for carbon and climate accounting is taking its early steps. But it must be taken seriously and must be given the necessary resources to quickly discover its role on the technological stack underpining climate frameworks.
The rise and crash in the valuation of most cryptocurrency does not help. But this is only due to lack of knowledge; misunderstanding the difference between blockchain and cryptocurrencies, and the natural hype a bust cycles of emerging technology. Climate requests that we push through the trough of disillusionment.
Open & Integrated Technology
For blockchain to stack up to its climate promises, development efforts need to allow a seamless integration with other key tech components. These include:
- Secure internet-connected sensors (i.e Internet-of-Things technology or IoT for short).
- Oracles equipped with machine learning to verify data prior to its link with the blockchain.
- Open source code, data and architecture — in user-friendly accessible wiki platforms for easy audit-abilty by the global community.
- Intuitive end-user interfaces and data visualization of the ledger’s state at any point in time.
Ubiquitous Earth monitoring IoT sensors
Climate science and Earth system monitoring depends heavily on sensor data, both from ground measurements and satellites (i.e. remote sensing). CO2 data from the Mauna Loa Observatory in Hawaii, for example, triggered the first red flag and evidence on climate change. However, whilst Earth system data has been historically sourced and managed by national scientific institutions, now, virtually anyone can contribute climate-relevant data sets.
The ubiquitous nature of sensors has been driven by a significant reduction in their price (including those in satellites), but also by the ease to streamline their information to the internet, and the reduced cost of adding the capability to process and perform computational functions on the data before a sensor broadcasts it. A more decentralized pool of IoT data can allow for more robust verification and attestation of environmental conditions and its variation over time — either positive or negative.
For this growing marketplace of IoT data to be relevant in a global framework for climate and carbon accounting, security standards need to be in place in both the hardware components and communication channels. A promising outlook in IoT hardware security is the compartmentalization of secure enclaves, independent to the sensor’s operating system so as to reduce vulnerability to external hacking.
Oracles for contractual automation
A second crucial component that specifically complements IoT data and blockchains is that of an oracle. Oracle machines are abstract computers that can solve decision problems by executing complex mathematical formulas and act as an impartial untampered third-party agent.
In their blockchain use, the oracle’s role is to filter, verify and harmonize real-world data so that it can safely integrate into the blockchain and be used, for example, in the execution of smart contracts.
When equipped with machine-learning functionality, oracles can help rapidly resolve contradicting inputs or data anomalies prior to its entry on a blockchain. Again, the blockchain is not used to store the environmental data from IoT sensors (that would be very costly!), but it can store its hashes, relate it to specific actors on the network and execute actions based on the underlying meaning of the data.
Oracles can act as the middle agent ensuring these steps are following a protocol, particularly if multiple sensors are attesting to the same event and an impartial resolution is needed.
Open means open
An important clarification in regards to these technological components, is that to apply them on a global carbon and climate mechanism they must be open source. This means that the underlying code and architecture of each layer must be publicly available online — the IoT protocols, the oracle, the blockchain and it smart contracts. This not only allows crowd-based audits, it also enables constant improvements that can harness collective intelligence.
Intuitive interfaces and information symmetry
A final point to highlight, is that developing a robust tool for global consensus on a delicate topic is insufficient if its output and logics are practically and intellectually inaccessible to the average planetary citizen.
For this, advances in design of intuitive user interfaces (UX/UI) across multiple platforms can enable the information of a planetary ledger to have more symmetric communication channels with the rest of the world. In other words, even if the technology stack and application is robust and open source, it loses effectiveness if interacting with it and/or understanding its output is inaccessible to citizens — all of which are stakeholders of climate change.
Outlook and final comments
Having laid out some necessary concepts, upcoming articles will dive deeper into: the logic and architecture of the two accounting tracks mentioned at the beginning, an innovative process to develop the blockchain ledger via scalable collaboration, and the outputs of specific events that our network organizes to forward this research and development effort, among other topics.
An important final remark must be made. The elephant in the room, whenever climate change and blockchain are discussed, is the high carbon footprint of Bitcoin’s mining process due to its consensus protocol (Proof of Work). This is an important topic but one that requires differentiating blockchain ecosystems and their underlying framework.
For now, let me clarify that the energy consuming mining dynamics of the Bitcoin network are not a fate encompassing all blockchains — other lower carbon solutions already exist. More importantly, as the technology progresses (out of its current infancy stage), I expect more efficient consensus protocols will emerge.
