EIT Climate-KIC shines the spotlight on distributed ledger technology at Innovate4Climate

As it’s a relatively new technology, practical applications for distributed ledger technology (DLT) are still emergent and being iterated on. Two sessions at Innovate4Climate last Thursday explored the current—and potential—role of DLT for climate action.

People sometimes use the terms ‘distributed ledger’ and ‘blockchain’ interchangeably, which is incorrect. A distributed ledger is a database that’s spread across several computing devices. Each network participant replicates and saves an identical copy of the ledger and updates itself independently. The updates are voted—and agreed—on during a process referred to as ‘consensus’. Blockchains are a form of DLT where data is organised in blocks and linked to one another.

DLT and blockchain have gained somewhat of a bad reputation in the environmental sector due to the widespread coverage of the popular cryptocurrency, Bitcoin, and its problematic high energy consumption. Blockchain is used to record Bitcoin transactions and this record-keeping service—known as ‘mining’—is done through the use of computer processing power. A new study estimates this process consumes at least 2.6GW of electric power—almost as much as Ireland.

However, distributed ledger technology doesn’t have to consume this kind of energy and alternative consensus mechanisms do exist. How, then, might DLT be used in the service of climate?

“On one hand, DLT is an excellent tool to enable more effective implementation of the decentralised climate action approach taken by the Paris Agreement. In this area, DLT can work as a ledger of metrics and actions taken and agreed on by all partaking stakeholders. Several organizations, including the UNFCCC and the World Bank are active in this field,” said Robin Born, Emerging Technology Researcher, ETH Zurich.

He continued: “On the other hand, DLT-enabled systems are poised to bring disruptive change into the highest greenhouse gas emitting industries affecting all stakeholders. The power of DLT lies in decentralisation (i.e. redistributing power from central authorities to a wider network) and thus enabling a faster rate of open innovation. While industries like energy and mobility will be affected directly, the impact of DLT on finance will also drive stark changes in these industries.”

At the session “Blockchain to Drive Climate and Development Impacts at Scale,” Cecilia Repinski, Executive Director, Stockholm Green Digital Finance, raised trust as a potential driver for green market development. And, a transparent decentralised ledger could indeed be a more trustful way of recording impact and validating delivery on environmental commitments for various stakeholders.

Nick Beglinger, CEO, Cleantech21, Climate Ledger Initiative, Hack4Climate Innovation Program, emphasised the need to scrutinise the feasibility of decentralised ledger initiatives, specifically as it relates to scalability, technology, and regulation. Discerning this requires collaboration between varied actors.

“The community of developers, they are in the centre,” said Beglinger. “But we also need really strong partners who know their industry as well as regulatory actors.”

Destroying forests releases as much carbon dioxide as the global transit sector. Developed in close cooperation with Cleantech21, REDD-Chain exemplifies how DLT might be used in forest conservation. It posits a global forest ledger where every square meter of land is identified using remote sensing, satellite, and/or drone technology. Then, the forest can be monitored using images taken at different time intervals—to determine whether it’s still intact. Recorded on a publicly accessible distributed leger, this data could be used to stimulate climate finance. For example, countries could be paid to keep their forests intact and plant new trees.

66 per cent of consumers are willing to pay more for credibly climate-friendly goods and services, and digital ledger technologies including blockchain could offer a solution to key issues hindering effective climate action. Marion Verles, CEO, The Gold Standard Foundation, Climate Ledger Initiative, stressed the need for data integrity when it comes to these applications.

“You can only have credible data at the point of sale if you have credible data throughout the supply chain,” said Verles.

Jeff Cohen, Executive VP, Standards & Policy, xpansiv, raised some current challenges with distributed ledgers. For one, it’s still a very early stage technology, with a lot of hype around it. Thus, it’s important to understand the role of governance for efficient verification. xpansiv is using a digital ledger to track externalities in pricing and procurement of commodities to enable downstream users to select ‘low-impact’ gas, for example.

“The green bond market makes up less than one per cent of the global bond market, but has potential with this technology,” said Cohen.

The second session, “Creating a Blockchain Infrastructure for New Carbon Markets under the Paris Agreement” explored how distributed ledger technologies and the Paris Agreement are aligned on many values, such as the importance of transparency, decentralisation, impact and accountability, review processes, and private sector players.

What kind of climate information might exist on a distributed ledger? National policies and actions, country greenhouse gas inventories, nationally determined contributions, and international climate finance are just some examples.

Adrian Jackson, Research Architect, University of Edinburgh, posited a distributed ledger for climate that could connect different markets together: Companies/organisations, a single market, and a networked market. This ‘federation of markets’ could avoid issues such as homogenisation. However, Jackson cautioned against using distributed ledgers simply because they’re en vogue and emphasised the need to build software that will be easy for future developers to work with.

“My mantra is: Can you do this through a central database? If you can, you don’t need a distributed ledger,” he said. “I’m also concerned about legacy. Design well from the beginning.”

Dr. Harald Rauter, Innovation Lead, EIT Climate-KIC, echoed these sentiments and elaborated: “There needs to be an increased effort around how technology and problem-solving align. Both sides are areas of high complexity and thus very information intensive. There is a lack of platforms that convene this relationship.”

He continued, “As the technology is very young, it is still developing. Thus, the decisions taken today will impact the architecture, the potential, but also the degree to which technological decisions culminate in legacy problems in the future. As a consequence, there is plenty of hesitation from the demand side to avoid betting on the wrong horse. The situation is comparable to the established car manufacturers knowing about e-mobility, but being unsure about when the right moment is to jump on the bandwagon—and how.”

 
Location
Germany
Related Goal
Goal 10: Mainstream climate in financial markets
Articles you may be interested in
In The News
EIT Climate-KIC and partners launch Massive Open Online Course on e-waste

EIT Climate-KIC, together with its partners the UN, the...

EIT Climate-KIC and partners launch Massive Open Online Course on e-waste
In The News
Five EIT Climate-KIC innovators featured in Global Cleantech 100

Five EIT Climate-KIC supported innovative ventures included in the...

Five EIT Climate-KIC innovators featured in Global Cleantech 100
In The News
The journey to zero-emissions transport – part three

The transport sector already accounts for a quarter of...

The journey to zero-emissions transport – part three
In The News
The journey to zero-emissions transport – part two

The transport sector already accounts for a quarter of...

The journey to zero-emissions transport – part two
In The News
The journey to zero-emissions transport – part one

The transport sector already accounts for a quarter of...

The journey to zero-emissions transport – part one
In The News
Malaysia and Estonia win Climathon Global Awards at ChangeNOW summit

The city of Penang, Malaysia, and a team of...

Malaysia and Estonia win Climathon Global Awards at ChangeNOW summit
Opinion
Redesigning venture capital (part III): A hypothesis
Dominic Hofstetter Transformation Capital, EIT Climate-KIC
Redesigning venture capital (part III): A hypothesis
Opinion
The Long Time
Beatrice Pembroke & Ella Saltmarshe Co-founders, The Long Time Project
The Long Time
In our community
Mariana Mazzucato on big-picture, high-ambition innovation missions
Mariana Mazzucato on big-picture, high-ambition innovation missions
In The News
Circular Cars Initiative launched at WEF Davos

The Circular Cars Initiative (CCI), supported by EIT Climate-KIC,...

Circular Cars Initiative launched at WEF Davos
In The News
EIT Climate-KIC CEO selected as a top expert to advise the European Commission

Yesterday, the European Commission announced EIT Climate-KIC CEO Kirsten...

EIT Climate-KIC CEO selected as a top expert to advise the European Commission
In our community
Net zero requires just, inclusive and radical transformations
Net zero requires just, inclusive and radical transformations
In Detail
New report: Is Germany ready for the future?

E3G´s new report “Is Germany ready for the future? The case for action in a climate-changed world.”, supported by EIT Climate-KIC, finds that Germany...

New report: Is Germany ready for the future?
Opinion
Redesigning venture capital (part II): A blueprint
Dominic Hofstetter Transformation Capital, EIT Climate-KIC
Redesigning venture capital (part II): A blueprint
In The News
EIT Climate-KIC’s work in Slovenia

Last November, the Slovenian parliament passed a motion to...

EIT Climate-KIC’s work in Slovenia
In The News
Slovenia adopts EIT Climate-KIC Circular, Regenerative Economies Deep Demonstr...

The Slovenian parliament passed a motion to adopt an...

Slovenia adopts EIT Climate-KIC Circular, Regenerative Economies Deep Demonstration
In our community
Cities in a 1.5 degree world: What is there to learn from Leuven’s May...
Cities in a 1.5 degree world: What is there to learn from Leuven’s Mayor Ridouani?
In our community
Slovenia adopts EIT Climate-KIC circular economy proposal: Q&A with Kirs...
Slovenia adopts EIT Climate-KIC circular economy proposal: Q&A with Kirsten Dunlop
Innovation Spotlight
Elemental Water Makers’ solar desalination an asset as climate change ...

EIT Climate-KIC supported Elemental Water Makers is a water desalination scale-up that’s transforming water systems by enabling...

Elemental Water Makers’ solar desalination an asset as climate change threatens clean water
Innovation Spotlight
Zolar’s household solar kit is democratising the energy sector

Energy production and consumption are the largest sources of greenhouse gas emissions in the European Union, accounting for 80 per cent...

Zolar’s household solar kit is democratising the energy sector
In our community
Interview with policy and governance innovation experts at Madrid and Basque...
Interview with policy and governance innovation experts at Madrid and Basque Country Universities
In The News
COP25: Measurement and attribution of climate contribution to financiers

With the carbon costs of travel in mind, key...

COP25: Measurement and attribution of climate contribution to financiers
In The News
COP25: Madrid city side event

With the carbon costs of travel in mind, key...

COP25: Madrid city side event
In our community
Interview about Futures Literacy with Riel Miller, Head of Foresight at UNES...
Interview about Futures Literacy with Riel Miller, Head of Foresight at UNESCO
In The News
COP25: Climate leader insights

With the carbon costs of travel in mind, key...

COP25: Climate leader insights
In The News
OpenSurface land-use tracking platform launches at COP25

Pioneering AI, satellite and ground-sourced data technology drives more...

OpenSurface land-use tracking platform launches at COP25
In The News
COP25: Towards the systemic transformation

With the carbon costs of travel in mind, key...

COP25: Towards the systemic transformation
In The News
Helsinki launches Climate Watch to track city’s emission reductions

The City of Helsinki recently launched the ‘Climate Watch’,...

Helsinki launches Climate Watch to track city’s emission reductions
Opinion
Moments matter*
Michelle Zucker Director, Community Activation, EIT Climate-KIC
Moments matter*
In The News
Naked Energy secures €6.17 million in funding

Naked Energy, an EIT Climate-KIC supported solar energy startup...

Naked Energy secures €6.17 million in funding