With an estimated 2.6 billion people living under restrictions and scores of industries halted in historic standstills, decentralization is being forced on global workforces that grapple with the virus pandemic. The devastating effects of Covid-19 on communities across the globe cannot be overstated. Some of our world’s most vulnerable citizens — the elderly and the infirm — have been hit the hardest, and this virus has reinforced social and economic disparities. Despite the unprecedentedly adverse health, personal and economic circumstances we face, the global slowdown has offered surprising visibility to the ability of the natural world to replenish itself in the absence of global travel and manufacturing.
As we celebrate the 50th Earth Day today, despite short-term carbon declines, there is a real risk that the pandemic will relegate and overshadow climate agreements and actions that are urgent we take now. According to the Financial Times, climate talks have already been delayed and new policy initiatives postponed, as “Governments and world leaders have attention for only one crisis right now.”
The 2020 United Nations Climate Change Conference is crucial to the implementation of the landmark Paris Agreement, but has been postponed due to the coronavirus pandemic. This follows last year’s Madrid meeting that already left us on the back foot, having ended in stalemate. Most delegates, press, and observers (including myself) agree that the negotiations were paralyzed mainly by the inability to find consensus on robust accounting for the new greenhouse gas (GHG) markets being created by the Paris climate accords.
Indeed, some delegations have sought to manipulate the terms of the Paris agreement, in such a way that could essentially allow them to avoid application of their own emission reduction credits and instead sell these to another country to be used toward that country’s targets. This would allow some countries to achieve their climate commitments without reducing global emissions by a single ton.
The inability to reach accord will result in untold ecological consequences. However, I believe that some hope is offered in the form of a consensus-based protocol that could reconcile pledges with implementation via tamperproof recordkeeping.
Robust accounting is essential to providing accuracy, consistency and preventing double-counting, as well as creating transparency and comparability between mitigation efforts. To keep track of emissions successfully, each country’s carbon account needs to be connected to all the other carbon accounts in the world.
Blockchain-based reporting and exchange for offsets could offer an immutable, single source of truth for all stakeholders. As such, a consensus ledgering system could be the decisive enabler for global bodies, nations, cities, business and industries to implement the Paris goals.
There is generally a separation between ownership of a mitigation project and the right to trade the associated emissions units. A project such as installing rooftop solar panels, or upgrading a business process, for example, may be owned and managed by one company, while another acquires the legal right to trade any carbon benefit which is generated. Blockchain technology could empower parties to directly trade their carbon benefits and offer enhanced market transparency in doing so.
The distributed architecture of blockchain networks also allows for increased interoperability. Depending on the chosen protocol, a blockchain-based exchange could serve as the gateway for a network of connected national exchanges. The increased interoperability would also make it possible to link to other distributed data, such as those processing “know your customer” and anti-money laundering (KYC/AML) information of the involved parties. The latter aspect would make corruption of KYC/AML more difficult, since any entry to the ledger would need to be signed with a cryptographic private key. In addition, ID measures for signing transactions (fingerprints or iris scans) combined with cryptography will improve online security, while retaining data privacy.
Automating the processes via the internet of things (IoT) for verification can lead to even lower transaction costs than blockchain on its own and may be attractive to regulators. Decision-making via smart contracts makes IoT a very attractive addition; verification can become a rolling process where emission monitors by IoT sensors are checked in real time.
Moreover, blockchain technology can provide a higher level of trust and security than conventional registries with differing tracking systems. Relationships between countries come in many different flavors, ranging from close ties to sworn enemies. Blockchain would allow all countries to work cooperatively together in a transparent manner.
A blockchain registry that is jointly run by countries pursuing cooperation under Article 6 of the Paris Agreement would ensure that every outcome issued and internationally transferred is coded and reconciled with the relevant national registries. In this way, such a network would also ultimately decrease the risk of double-counting of emission reductions.
In summary, blockchain would address four of the key implementation challenges of the Paris climate accords:
- Keep account of each country’s emission reductions in a transparent and secure way.
- Let countries, businesses and citizens of the world link their climate actions.
- Incentivize countries to reduce their GHG footprint by making emission reductions a tradable asset.
- Allow countries, even when they don’t trust each other, to cooperate and work together.
As Covid-19 looms large, we must not ignore the existential climate crisis that awaits us as global economies resume. As UN Climate Change Executive Secretary Patricia Espinosa reminds us all: “Covid-19 is the most urgent threat facing humanity today, but we cannot forget that climate change is the biggest threat facing humanity over the long term.”