UN Embraces Bitcoin Technology For Climate Data Integrity
Guest essay by Eric Worrall
The UN wants to embrace Blockchain, the technology behind Bitcoin, to improve the integrity of climate data such as carbon credit transactions.
UN Supports Blockchain Technology for Climate Action
New Climate Chain Coalition Launched, Seeking Members
UN Climate Change News, 22 January 2018 – Suppose information important to tackling climate change – such as an industry sector’s greenhouse emissions – were continually updated from a multitude of sources and shared in an open and transparent way. Crucial information would be readily available, up-to-date, transparently displayed and reviewed for accuracy.
This is the promise of so-called distributed ledger technology (DLT), the benefits of which seem limited only by the imagination of people familiar with the technology. The most well-known application of DTL and blockchain technology has been for creation of e-currencies, such as Bitcoin.
To encourage exploration and eventual use of this technology in support of climate action, the UN Climate Change secretariat initiated and facilitated the creation of the Climate Chain Coalition and contributed to the writing of its charter of principles and values (below).
“The UN Climate Change secretariat recognizes the potential of blockchain technology to contribute to enhanced climate action and sustainability,” said Massamba Thioye, who is leading UN Climate Change’s work exploring DTL and blockchain.
DTL and blockchain could:
- strengthen monitoring, reporting and verification of the impacts of climate action
- improve transparency, traceability and cost-effectiveness of climate action
- build trust among climate actors
- make incentive mechanisms for climate action accessible to the poorest
- support mobilization of green finance.
“To fully and promptly mobilize this potential, broad collaboration among stakeholders is needed to direct resources to priority areas, avoid duplication of effort, and help avoid the pitfalls of working on a new technology with countless unknowns,” said Mr. Thioye.
There are currently about 32 members signed up to the coalition, and membership is open. (See below.) For more information on DTL and blockchain, see How Blockchain Technology Could Boost Climate Action.
How does the UN intend to actually use Blockchain technology?
… A Blockchain is a distributed database that is continuously updated and verified by its users. Each added block of data is “chained” and becomes part of a growing list of records, under the surveillance of network members. This technology enables the transfer of assets and the recording of transactions through a secure database.
“As countries, regions, cities and businesses work to rapidly implement the Paris Climate Change Agreement, they need to make use of all innovative and cutting-edge technologies available. Blockchain could contribute to greater stakeholder involvement, transparency and engagement and help bring trust and further innovative solutions in the fight against climate change, leading to enhanced climate actions,” said Alexandre Gellert Paris, Associate Programme Officer at the UNFCCC.
Blockchain technology can be used to develop peer-to-peer trade of clean energy, for certified and facilitated transactions among consumers.
For climate action, Blockchain technology could be used in the following specific ways:
Improved carbon emission trading:
Blockchain could be used to improve the system of carbon asset transactions. For example, IBM and Energy Blockchain Lab are currently working together to develop a Blockchain platform for trading carbon assets in China. Recording carbon assets on a public Blockchain would also guarantee transparency and ensure that transactions are valid and settled automatically.
Facilitated clean energy trading:
The technology could also allow for the development of platforms for peer-to-peer renewable energy trade. Consumers would be able to buy, sell or exchange renewable energy with each other, using tokens or tradable digital assets representing a certain quantity of energy production.
Enhanced climate finance flows:
Blockchain technology could help develop crowdfunding and peer-to-peer financial transactions in support of climate action, while ensuring that financing is allocated to projects in a transparent way.
Better tracking and reporting of greenhouse gas (GHG) emissions reduction and avoidance of double counting:
The technology could provide more transparency regarding GHG emissions and make it easier to track and report emission reductions, thereby addressing possible double counting issues. It could serve as a tool to monitor the progress made in implementing the Nationally Determined Contributions, or “NDCs” under the Paris Agreement, as well as in company targets. …
My question, what motivates expensive peer verification of a green blockchains?
Bitcoin peer verification of transactions is expensive. Verification is a competition between peers to be the first to generate an electronic signature with the right characteristics. Typically with Bitcoin you have to burn thousands of dollars worth of electricity cranking specialised computer equipment to win the race once. The payoff for all this effort when you finally win is that you receive some bitcoins.
Would verifiers of carbon credit blockchains receive newly minted carbon credits? Or carbon credit transaction fees? What would people who verify climate data blockchains receive?
The difficulty of this process verification is the keystone of Bitcoin’s security – it maintains the electronic integrity of Bitcoin’s distributed ledger.
Imagine bitcoins were carbon credits. According to Morgan Stanley, in 2018 Bitcoin verification will burn 0.6% of the global electricity supply.
Using green energy on a similar scale, to verify the transactional integrity of green blockchains, would essentially burn all the green energy used to produce those carbon credits and more just on the carbon credit transaction verification processes.
There is a solution. Cheap coal power stations could be used to supply electricity to people who want to verify carbon credit transactions. That way dirty coal power would be used for an environmentally acceptable purpose, cheap power would keep the costs down, and the clean energy would be available for end users rather than frittering it all away verifying carbon credit and green energy transactions.
If you think this idea is too ridiculous to be taken seriously, I’ve just got one word to say to you. Biofuel.
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