Could We Save the Environment with Blockchain?
While the topic of climate change is controversial in this day and age, it is generally accepted that mass production efforts can do more to clean and maintain the lands and oceans of our planet. As catastrophes like wildfire, famine, and powerful storms drive discussion and incite passion in the world’s population, great minds are finding ways to utilize the latest technologies in hopes of creating positive outcomes for the environment. One such technology making the leap from idea to action is blockchain.
A concept first applied to the cryptocurrency Bitcoin, blockchain is a “distributed ledger technology” that is designed to make transactional data transparent, decentralized, and verifiable. Applied to projects focused on helping to sustain the environment, blockchain could allow for the creation of currency systems based upon trackable data, like carbon emissions from mass production.
Trading in these currency systems, producers and consumers would be incentivized to make wiser choices for the environment, and they could trust that the data used in making such choices was free from manipulation by any particular group or interest. Seeing near-term positive results in the blockchain-provided data could motivate producers and consumers to continue making ethical choices, giving conservation efforts a much-needed momentum boost.
Discussion about blockchain’s potential as an environmental difference-maker has been ongoing for a few years and has recently started gaining momentum. Just this past September, blockchain was a topic at the World Economic Forum’s (WEF) Sustainable Development Impact Summit. In tandem, Future Thinkers, a series of podcasts and videos presented by Mike Gilliland and Euvie Ivanova, takes an especially intriguing dive into the ways blockchain can help save the environment. The self-proclaimed “futurists, explorers, creators, and geeks” propose seven realistic ways blockchain can be applied to the world’s most pressing environmental issues:
- Supply chain management
- Environmental treaties
- Carbon tax
- Changing Incentives
Explored in greater detail, the ideas put forth by Gilliland and Ivanova are not only exciting but also quite realistic. With additional research, one can see how blockchain is not only a great tool for saving the planet but also evolving a greener, more sustainable global economy. Using Future Thinkers’ list as a starting point, let us delve further into blockchain’s possibilities.
Supply Chain Management
In 2015, Nielsen conducted a global online study which found that the majority of consumers, particularly Millennials, are willing to pay extra for products that are produced in a sustainable manner. In the write-up about their report, Nielsen states “For those willing to spend more, the findings show that personal values are more important than personal benefits, such as cost or convenience.” These findings signal an evolution of the global economy, where conscientious consumerism is quickly becoming the new norm.
Despite this demand, data about how products are produced and distributed can be difficult for the average person to find. With blockchain, such data would be more transparent, allowing consumers to verify the source of the goods they purchase and gain insight into how the members of the supply chain operations. Using their purchasing power, consumers would demand producers operate in ways that better align with their moral leanings.
According to a 2017 report compiled by Eunomia, a global environmental consultancy, Germany leads the world’s nations in recycling, though the firm admits “different measurement methods make comparisons difficult; some eye-catching recycling rate claims need to be treated with caution.” Blockchain would allow for a more transparent and trustworthy reporting of metrics, such as individual participation in recycling programs, the number of materials recycled, and the outcomes of recycling efforts. Upon these numbers, incentive programs could be created to encourage honest participation by the general public, corporations, and governments.
Currently, traditional power grids are centralized and woefully inefficient at distributing surplus energy to areas of the world that are experiencing outages. Additionally, there are prohibitive factors such as energy loss, bureaucratic roadblocks, and a monetary cost associated with transmitting power over distance. Initiatives such as D3A, or “decentralized autonomous area agent” aim to make energy transactions more efficient by connecting a wider variety of producers and consumers to a new type of power grid based on the blockchain. Decentralizing power production and allowing it to be distributed peer-to-peer would not only remove the aforementioned difficulties but also reduce reliance on carbon-emitting mass-production methods.
Several hundred international environmental agreements exist, but tracking compliance amongst participants can be difficult – for example, not all agencies calculate the cost of maintaining their part of the bargain in the same way. Furthermore, the incentives for governments and corporations to adhere to such treaties can be ambiguous or even nonexistent. Blockchain technology can help make compliance data more transparent and resistant to fraud, encouraging signatories to keep their promises and track their progress consistently.
Donations to charitable organizations worldwide number in the billions annually: Charity Navigator reports that in 2017, $410.02 billion dollars were given by a combination of individuals, foundations, corporations, and bequests. Of that, charities whose efforts focus on the environment/animals received $11.83 billion. Most donations are made by individuals, who historically rely on legacy reports to learn how their dollars were utilized. With blockchain, givers could see more clearly the path of money through non-profit organizations, in real time. They could even give directly person-to-person, avoiding middlemen who may charge fees for handling transactions.
In the current marketplace, the carbon footprint – the amount of carbon dioxide and other carbon compounds released in the consumption of fossil fuels during mass production, transportation, etc. – is not factored into the price of goods sold to consumers. With blockchain, carbon footprint data could be calculated and collected, then used to levy a carbon tax at the point of sale. Knowing that their customers face such a tax, producers would be motivated to choose more environmentally friendly methods, or risk losing customers.
The trend toward rewarding businesses and governments for environmentally sustainable behavior, rather than simply regulating it, is growing. Here in the United States, the Environmental Protection Agency (EPA) acknowledges that “While traditional regulatory and voluntary approaches are valuable policy tools for some types of environmental problems, incentive-based policies are becoming increasingly popular as tools for addressing a wide range of environmental issues, from acid rain to climate change.” Internationally, the United Nations (UN) initiative, Clean Development Mechanism, reduces some carbon emissions by offering credits to developing countries who implement greener means of energy production. In both cases, however, the efficacy of the programs is unclear. Blockchain can provide the unbiased, real-time data needed to administer such policies and make their results transparent to citizens.
With greater exposure and developmental momentum, blockchain is poised to disrupt the way that global businesses and governments operate, and assist with the drive toward more environmentally friendly policies and actions. Momentum continues to grow through spirited discussion, coalesced efforts of world leaders across industry and government sectors, and demand by consumers. Not only will the global economy shift to accommodate this new environmentally conscious way of doing business, but humans will hopefully see tangible, short-term results in the data made visible via blockchain.