The world has failed to stop global warming. Four years after the signing of the Paris Agreement, the majority of the experts claim that global warming will go beyond the agreed thresholds, with serious consequences. As much as the world faces a climate crisis, it also faces a climate governance crisis: we know what must be done in order to stop climate change but we do not know yet how to reach there.
Several new mechanisms are apparently required. Blockchain is one technology that possesses the ability to increase global cooperation for climate action, as I explore in the new research. Blockchain is a data structure that stores information as a series of cryptographically linked blocks, which are distributed simultaneously to all participants in a network. The information stored on a blockchain is tamper-resistant. This is incredibly useful for generating a single source of truth for any sort of information.
Blockchain technology offers the building blocks for what is known as decentralized autonomous organizations, which have been discussed (and criticized) as possible alternative governance mechanisms at the national level. But the advantages of such a decentralized organization at the international level would be much higher.
Imagine a decentralized climate organization, based on blockchain, in which states, companies, and individuals participate and whose interactions are facilitated by so-called smart contracts. These contracts are merely pieces of computer code running on top of the blockchain, which makes them virtually unstoppable. A common token — let us call it green-coin — enables climate commitments by states to be joined with the flourishing ecosystem of transnational climate initiatives and individual climate action.
Such an organization would greatly help get the world together to act against climate change in three ways.
1. Boosting transparency
Coordinated action against climate change requires better information. One crucial task is to make sure that different stakeholders do not claim carbon credits for the same carbon-offsetting activity, such as two companies paying for the same forest to be planted.
To avoid such double-counting, a publicly shared digital ledger of carbon credits, as currently piloted by the Pacific Alliance nations, would provide a more cost-effective solution than a central agency settling transaction of carbon credits.
Another (more challenging) task would be to authenticate that carbon-offsetting activities have actually occurred. Blockchain technology, combined with information feeds such as internet-of-things devices, could tap new information sources.
Meanwhile, smart contracts provide an efficient way to reward crucial tasks like verifying emission reductions and adaptation measures at the local level.
2. Enforcing commitments
Climate change is an area ripe with broken promises. Consider the decision by US President Donald Trump to withdraw from the Paris Agreement. In other countries, worries have grown that the COVID-19 pandemic will thwart government efforts to honor their climate-related commitments.
Through smart contracts, blockchain technology could diminish the risk of backsliding, provided that states underpinned their commitments with a monetary deposit. If states fail to comply with their emission reduction targets, their deposit could be taken and redistributed as green-coins to those that have abated carbon emissions, for example by planting trees, or other climate action.
More efficient enforcement of commitments through smart contracts is only possible where resources have been staked upon commitments. An extra advantage of eradicating uncertainty around enforcement is to entice more ambitious climate commitments from those who are concerned about being cheated upon by more powerful bodies.
3. Increasing ambition
Business will not be sufficient to confront the impending climate crisis. A decentralized climate organization would enable progressive transnational bodies to “buy” pro-climate transformation in laggard countries.
For example, transnational corporations including Apple, Google, and Walmart, ExxonMobil, BP, Shell, and other firms criticized the US decision to withdraw from the Paris Agreement. Under a decentralized climate organization, they could have devised smart contracts providing compensation to affected workers in exchange for a more robust commitment by the US government to de-carbonize the economy.
A related advantage of this approach would be to make their demands transparent, which would help less powerful bodies hold corporations to account for their climate-related pledges. For example, Microsoft recently announced it would invest US$1 billion to become a carbon-negative enterprise. This is all very well, but it could be rhetoric. If Microsoft underpinned this pledge by a smart contract with an appropriate stake, it would become inevitable, with huge benefits for everyone whose fortunes depend on powerful players like Microsoft following through on their promises.
A decentralized climate organization would combine the resources of billions and unite their efforts in combating climate change. Anyone in a blockchain network connected to the system could earn green-coins by planting trees (like “mining” in the Bitcoin system). This would be profitable because green-coins have actual value — they would be linked to the international commitments by states that have staked monetary resources on them. People could also purchase green-coins to support climate action. By boosting the exchange value of green-coins, these people would offer incentives for more rapid tree-planting. Blockchain technology is ideally suited to settle these transactions automatically, provided appropriate systems for verification, and the incentive system underlying effective decentralized verification is in place.
In Wset Africa, it seems that green energy is proving to be a valuable life source