Blockchain can help the world manage climate change: Report

With the annual Earth Day coming this week, undoubtedly, the focus will once again be one of the key objectives: environmental protection.

And as it is, with climate change a global engagement, a new report looks to outline just how important blockchain technology could be in “the race” against global warming.

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Titled Managing Climate Change in the Energy Industry With Blockchains and Oracles, the report examines how the blockchain sector can take a leading role in the transition from fossil fuels to clean energy.

According to the study, these blockchain applications can help “accelerate” the use of clean renewable energy – thereby aiding the energy sector’s broader goal of addressing concerns around climate change.

Use of smart contracts and oracles

In the research, the two firms point out what blockchain can help achieve in the push for clean energy. They say the blockchain can be used as a database, smart contracts can help create key applications, and oracles can add to the use cases by providing the bridge needed to securely share climate data.

The report’s researchers from Chainlink Labs and Tecnalia highlight that some of the ways to implement blockchain tech is through carbon credits, tokenization of energy commodities, and contracts for parametric energy conversion.

Chainlink Labs’ managing director William Herkelrath said in a press release shared with Invezz:

By using Chainlink to bridge some of the highest-quality climate data in the world onto blockchains for energy and climate initiatives, we can give the clean energy sector the tools it needs to expand its impact.“

Herkelrath said that this hinges on the accessibility to “a data-driven backend infrastructure.” The goal is to boost collaboration among different players, he added.

Blockchain-based incentive systems

As noted in the report, blockchain technology can be a critical component in the infrastructural development and the digitisation of climate change tools. And quite simply, the technology can be used in assigning of “value to clean energy investments.”

Once various players, including governments, assign value to climate-focused goals, blockchain can help provide “fully automated incentive systems.” It’s a process that will see activities and practices aimed at environmental protection and sustainability rewarded accordingly.

An example of a project already tapping into blockchain to help battle climate crisis is Ethereum-based climate risk solution Arbol. The platform relies on smart contracts to offer energy businesses a solution that helps them hedge against unexpected temperature variations.

Hyphen is another project that leverages blockchain to validate climate data and help corporates achieve accurate emissions reporting. Elsewhere, the Lemonade Crypto Climate Coalition offers insurance to small farmers by accurately quantifying weather risks. The platform also automates claim assessment and provides funding and reimbursement. Lemonade recently launched in Africa.