Can Blockchain Be a Boon For Climate Change Initiatives?

Climate change is one of the greatest challenges that humanity faces today. Human-induced climate change has caused long term shifts in global temperatures, mass extinctions, and even desertification in some areas.

And economic activity has been singled out as one of the greatest causes of such climate change. Of that, cryptocurrency and crypto mining has probably seen one of the most criticisms in recent times.

Earlier this year, Greenpeace commissioned an art piece called “skull of satoshi” to highlight the environmental impact of cryptocurrency, and the New York Times has focused on the electrical consumption of bitcoin mining operations in the US.

Yet, this is only half the story. While crypto is seen as pollutive, the tech itself is not necessarily pollutive. It can very much depend on which companies we are talking about- and today at All That Matters Singapore 2023, several experts were invited to discuss how th Web3 world could actually help, rather than harm, the environment.

Traditional carbon markets are outdated

Climate initiatives in the Web2 world don’t always have a good reputation. In fact, there are plenty of criticisms of how governments and corporations have tried to reduce carbon emissions over the year.

Caps on carbon emissions and carbon markets have been criticised for simply shifting carbon emissions into industries who are already pollutive, and for actually rewarding them for doing nothing.

But probably the most significant problem is the issue of tracking carbon credits and double spending. Because carbon credit systems are separate, companies have been known to actually spend the same unit of carbon credit more than once, and get doubly rewarded without actually reducing additional units of carbon emissions.

Simon Schillebeeckx, founder and Chief Strategy Officer at Handprint, pointed out that this is where blockchain technology can actually help.

Because blockchain transactions are transparent and immutable, blockchain-based carbon credits cannot easily be spent more than once, since anyone can easily verify if the credit has already been spent or retired.

Blockchain isn’t the perfect solution, but it can help

That being said, blockchain isn’t a perfect solution, especially given how there are so many different blockchains out there.

Marcus Aurelius, a contributor at KlimaDAO, noted that as of now, cross-chain bridges are necessary to ensure that credits retired on one chain cannot be spent again on another chain.

Additionally, Simon also argued that while immutability may be a good quality to have, it is not an unmitigated good as well.

Rather, it also matters what is put on the blockchain and made immutable.

“We talk alot about how blockchains are immutable and transparent. But the context of it matters as well. What happens when we put incorrect information on the blockchain, and it becomes immutable?

Before we put things on the blockchain, especially information, we need to make sure that its correct and accurate first. Otherwise, that same immutability will work against us.”

Blockchain’s challenges

Victor Tay, Group CEO at RHT Consulting Asia, also pointed out that to some extent, the image of blockchain as a very pollutive industry is really just that- an image.

While Bitcoin is still a proof-of-work blockchain, Victor explained that most blockchains are not. Instead, many of them are now proof-of-stake blockchains, which uses far less electricity.

Blockchain, therefore, is not necessarily a pollutive industry. As we have seen, context really matters as well. While we still do have some cryptocurrencies like bitcoin that are widely seen as pollutive, and in some sense deservedly so, we should also not paint the industry as purely pollutive. As we can see, the industry also holds immense promise for climate initiatives as well. Climate initiatives may well be better off with blockchain, than without- if we can harness blockchain technology properly.