Is it an oxymoron – climate-friendly blockchain? Green NFTs? Low carbon crypto?
Climate activists have slammed the digital asset industry for its energy consumption, often compared to the energy consumption of whole countries. There is a move now for Bitcoin miners to find green energy sources for their operation and for innovators to build eco-friendly blockchains.
However, no matter how we dress it up, it’s hard to see how proof-of-work’s energy intensity and environmental footprint are compatible with a climate-neutral world. In April, Algorand declared its blockchain to be entirely carbon-neutral.
With the recent COP 26 backdrop – companies, celebrities, cities, countries, and organisations have committed to curbing their contributions to carbon emissions, if not eliminating them. The aim of achieving a net-zero world in less than 30 years is causing many to turn to the blockchain, buy carbon offsets, and spark renewed interest in carbon capture. Voluntary Carbon Markets hit a record $1 billion in 2021.
Voluntary carbon credits can also provide direct private financing to climate-action projects and investment into the innovation required to lower the cost of emerging climate technologies. The UN Climate Change Secretariat supports blockchain for climate solutions as the co-founder of the Climate Chain Coalition.
This interest has resulted in creating a particular class of Fintech, Green Digital Asset Solutions, which operate mainly in the voluntary markets. They comprise the carbon credit and environmental or biodiversity registries that track information about projects generating carbon credits, biodiversity credits, or environmental benefits used as commodities in a market system.
Green Digital Asset companies tokenise green assets, or issue green asset classes in tokenised form and green security token offering platforms for fractionalised green asset ownership. These include:
- Green utility tokens – a reward for lowering carbon emissions
- Green asset tokens – a tokenised carbon credit or biodiversity offset
- Green cryptocurrencies – programmed only to be spent on green products
- Green STO (Security Token Offering) issuance platforms – designed to enable green proof of impact reporting and a green STO framework as part of the issuance process
We are seeing a proliferation of such projects. Treecoin sells asset tokens tied to eucalyptus trees, and reinvests 50 percent to purchase land and seedlings to grow eucalyptus trees in Paraguay. Universal Protocol has launched a retail tradable carbon credit, allowing certified projects to turn their greenhouse gas reductions into tradable carbon credits.
SavePlanetEarth is setting up certified Carbon Credit Smart NFTs on the Phantasma, which plans to be a provably green blockchain for developers to build their decentralised applications. First Carbon Develops Proprietary NFT Based Carbon Credits leverages NFTs providing carbon credit issuers access to the blockchain and enabling users to track, trade, and burn credits.
Others are using blockchain to fund regenerative solutions. For example, Carbonland Trust creates a tokenised carbon credit-producing asset and forest conservation. Cambridge Centre for Carbon Credits is working on a solution to purchase carbon credits to fund nature-based solutions preserving biodiversity.
ClimateCoin incentivises the offsetting of carbon emissions by awarding tokens to persons who plant trees or reduce CO2 emission in exchange for carbon offset receipts. Carbon Offsets To Alleviate Poverty (COTAP) pools contributions and supports projects which compensate farmers for planting and maintaining trees on under-utilised portions of their land.
Cointelegraph highlights the World of Waves which aims to restore oceans and combat climate change, and Solarcoin which distributes tokens as a reward to people to install solar. Samsung Electronics America announced its partnership with Veritree, a blockchain-based climate solutions platform, to plant two million mangrove trees in Madagascar.
Gamification will be the next frontier for Blockchain and Climate action. Gamification with a nudge can help encourage people make better choices, and reward desired behaviour. 2Games could incentivise actions for avoiding nature loss; nature-based sequestration, reducing emissions, and technology-based removal of carbon dioxide from the atmosphere.
Rvolt and GreenApes are using gamification to help people understand their carbon footprint. GreenApes has developed a game that allows consumers to earn points for engaging in low carbon behaviours. Rvolt enables users to visualise their impact through a small planet that they take care of by engaging in low-carbon activities. Crypto entrepreneur and e-Sports founder Adi K Mishra pointed out that the gameplay used in eSports play to earn games can also be used to incentivise widespread positive climate action: “We now have the tools to create tokenized incentivization to architect people’s choices on a global scale, we just need to apply them to climate action”.
This is all well and good – but it doesn’t change the nub of the problem. The carbon footprint of the world’s poorest billion people is only about 3 percent of the world’s total footprint, yet death rates are about 500 times more excellent climate change poses an extreme threat to the livelihood, food security, and health of the poor, especially women and children.
It is estimated that up to a billion people will be forced out of their homes by 2050 due to climate change. Impoverished communities tend to depend on climate-sensitive sectors and natural resources for survival. Our climate response needs to consider the world as a whole, not just a way to allow emissions creators to atone for their harms by buying carbon credits.
Using a DAO, blockchain is able to create new digital economies where tokens can unite and economically align people around a common purpose. It is possible to create economies that value climate action. Blockchain can enable:
- Direct financing for community-scale climate actions
- Simplification of results-based climate finance
- Decentralised carbon trading benefiting the poor at the household level
- Crowdfunding for climate projects for the poor
- Gamification to incentivise climate-friendly action
Dr Miroslav Plozer of the GloCha United Citizens Organisation makes the point, that technology alone will be insufficient: “Even if Blockchain can offer the solutions to scale up climate actions, they won’t be developed and operated on the ground if there are barriers such as policies, regulations and local capacity for using them. Young people from emerging economies will be vital partners in addressing the challenge.”
Social impact and global commons issues require greater cooperation and collaboration than usual, among ecosystems that don’t typically collaborate or converge. We need close collaboration to develop a new global economic system that is human-centred, preserves the planet, and is fairer and more equitable for all.
Let’s go green , let’s go global, let’s gamify and ‘DAO -up’ climate action before COP28!
Can we use blockchain tools to collaborate on a global scale and reach out across sectors and geographies and build global innovation communities to address climate action?