Blockchain: Secret weapon in the fight against climate change | RenewEconomy

Blockchain: Secret weapon in the fight against climate change

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While hackers wreak havoc on the climate, blockchain, the bleeding-edge technology behind Bitcoin, could help clean up the mess.

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Nexus Media

Source: Pexels

Bitcoin, the much-hyped cryptocurrency, made headlines recently for driving a surge in power use. Around the globe, digital entrepreneurs are ‘mining’ Bitcoins by solving complex math problems, using supercomputers to get the job done. Those supercomputers use a ton of power, which largely comes form coal- and gas-fired power plants spewing gobs of carbon pollution.

But, while hackers wreak havoc on the climate, blockchain, the bleeding-edge technology behind Bitcoin, could one day help clean up the mess. Climate wonks say blockchain has a role to play in the clean-energy economy, helping homeowners sell electricity, allowing businesses to trade carbon credits, and making it easier for governments to track greenhouse gas emissions.

To understand how it all works, let’s start with a quick explanation of blockchain.

Typically, if you want to send someone money over the internet, you need a third party to validate that transaction. That party, typically a bank, certifies you are not trying to send the same money to two different parties simultaneously, or otherwise trying to deceive the system. Blockchain allows users to do business directly with each other without involving a central authority like a bank.

In this instance, blockchain acts like a digital ledger that simultaneously exists on every computer belonging to the same network, and the ledger is updated with every transaction. Because the ledger exists everywhere all at once, it is incredibly difficult to hack. Because it belongs to everyone, all the information is verifiable, though the privacy of individual users is preserved.

Since users don’t need a bank to validate their transactions, they can do business faster without the help of a bank. Additionally, there’s no need to staff up and maintain all the personnel and infrastructure costs associated with a bank. These are the chief appeals of blockchain — security, speed and savings. The exciting part is that blockchain can be used to authenticate transactions of any kind. That’s where climate change comes in.

A wind turbine. Source: Pexels

A major obstacle to addressing climate change is that our energy system is highly centralized, while the technologies we will need to cut carbon pollution, by and large, are not. Currently, most people buy electricity from a coal- or natural gas-fired power plant. As the price of solar panels continues to drop, more people will generate their own electricity from rooftop solar.

Rooftop solar owners want a way to sell their surplus power. Currently, in many places, they can sell that electricity back to the power utility, but this undercuts the utility’s core business of generating and selling electricity. In parts of the country, utilities have gone to great lengths to curtail this practice.

Brooklyn startup LO3 Energy, however, is a company that cuts out the middle man, using blockchain to make it possible for rooftop solar owners to auction off their surplus power to an apartment down the block. “Traditionally, your money really goes towards large corporations. The generating stations probably are located a distance away,” Scott Kessler, Director of Business Development at LO3 Energy, told Nexus Media. “Now, you can make sure that’s staying local.”

Blockchain could also be used to simplify carbon trading. A growing numberof countries — and a handful of U.S. states — have set up cap-and-trade programs. Governments put a cap on carbon pollution and then auction permits that allow businesses to generate a certain amount of carbon pollution. If a company pollutes less than its permit allows, it can sell the rest of its allowance to another firm.

IBM is working with Energy-Blockchain Labs, a Chinese firm, to streamlineChina’s carbon trading scheme using blockchain, allowing businesses to transfer allowances directly to each other without needing a government to verify those transactions. Blockchain makes the whole process transparent, allowing regulators and businesses to monitor transactions.

“Blockchain technology is expected to become an important means for effective control of carbon emissions, which is of great significance to China, the world’s largest source of carbon emissions,” said Cao Yin, Chief Strategy Officer of Energy-Blockchain Labs.

Shanghai, China. Source: Pexels

Carbon trading is just one example. Blockchain is being used for everything from crowdfunding renewable energy projects to creating apps that incentivize people to use less energy. The possibilities are nearly limitless, but experts don’t expect a revolutionary transformation overnight.

“Bear in mind that most things that could be done with blockchain technology could also be done with centralized computer systems, too, so the real question is whether blockchain offers a more efficient, or more democratic, way of doing these things,” said Brett Scott, author of The Heretic’s Guide to Global Finance: Hacking the Future of Money. “There are a lot of organizations right now feeling that they need to say something about blockchain tech in order to show that they are considering new innovations. You should be critical-minded when reading these claims though.”

It remains to be seen how blockchain will be deployed. The technology is in its infancy. But experts say it could be used to track emissions, cut pollution and sell clean power. At every turn, it could make that work cheaper, faster and with more transparent.

Source: Nexus Media. Reproduced with permission.

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  1. Steve 2 years ago

    The irony is that it is the blockchain technology – specifically the proof of work requirement to ‘solve complex mathematical problems’ – which is power hungry. So the more prevalent the use of blockchain tehcnology the more power needed to drive it. Blockchain has uses but seems more than a little oversold, as the article seems to imply towards the end.

    • Tony Pfitzner 2 years ago

      The high energy requirements of Proof of Work will eventually be phased out with Proof of Stake, where mining is replaced by validators who collect fees for processing transactions on the relevant block chain.
      e.g. Power Ledger, an Australian entrant in the peer to peer trading market, has developed an application using tokens based on the Ethereum network. (this is one of many applications using what are called ERC20 tokens trading on the Ethereum backbone)
      The Ethereum developers are well aware of the lack of scalability, and are in the process of implementing Casper, a software upgrade which will implement Proof of Stake.
      This will dramatically reduce the power requirements.

      • Pixilico 2 years ago

        “validators who collect fees for processing transactions”

        • Tony Pfitzner 2 years ago

          Actually the miners. They have a change of role from mining to validation.

    • Kim Wilkinson 2 years ago

      hi all – there is a major difference between the power used to “generate” Bitcoins and the power used to use the underlying technology block chain. The first (generating Bitcoin) uses increasing larger amounts of energy, as there is a deliberate intention to make it more difficult as the maximum number of Bitcoins is approached (21 m I believe). The energy used by block chain technology (other than when “mining” for Bitcoins) is very small by comparison.

  2. Radbug 2 years ago

    I can see a salesperson from Brooklyn Microgrid (or something similar) making a presentation to our Mobile Home residents’ Association. It goes like this: “You have a Community Centre with a huge, unshaded, north-facing roof. We shall install a PV array on that roof and offer to supply all those residents, who do not already have rooftop PV, solar electricity at a lower tariff than their existing Origin etc suppliers. These residents, who elect to join in, remain connected to the existing grid, so that, when output falls, eg., overnight, the system seamlessly switches over to grid supply. We promise that this electricity will always be cheaper than that supplied by Origin during that time of day.” If Brooklyn Microgrid sees a role for Blockchain in this arrangement, then well and good.

    • Angus 2 years ago

      There’s alot I don’t understand about crypto, but I am learning bit by bit.
      The way I see it. It’s essentially a new software system that is cheaper to maintain than more traditional systems used currently by business. Major businesses are currently reluctant to use it as aspect of it are still a little experimental. Right now there are a few small companies that are willing to experiment with it. That’s all well and good.

      Fast forward to a decade from now, if the software really does prove to stable and cheaper than all the Major banks etc will be rolling it out themselves. A tradition electricity company might buy the Brooklyn Microgrid company.

  3. PaulC 2 years ago

    Blockchain provides a redundant inspectable ledger for transactions. If those transactions are for digital assets, that allows transfer between counterparties without an intermediary.

    But emissions and energy are not digital assets, so some trusted authority is still needed to verify the real world versus the digital record. That’s why there’s so many centralised systems rather than distribured ones today – somebody needs to provide the governance and compliance to certify that transactions are truthful.

    Blockchain might speed processing a bit, but I can’t see personally how removing an intermediary in record-keeping adds much when the real game remains tracking and verifying real-world actions. NSW irrigation is an excellent case in point!

  4. mick 2 years ago

    conservative governments worldwide,starting with south korea,seem to be trying to ban kryptos

  5. MaxG 2 years ago

    This is all well and good that I can charge you for my few kWh I send you; but… how can your meter tell it is receiving my few kWh without the network operating claiming their share, let alone decide whether it routes my energy to you?

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