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Blockchain and Climate Change: The Transition from ‘Villain’ to Unsung Hero

cryptoknowmics.com 14 April 2022 20:06, UTC
Reading time: ~5 m

Blockchain is rising to prominence as the world looks to digital technology to speed up responses to challenges such as climate change. One of the primary uses of blockchain technology is to validate and track complex multi-step transactions. Although it is best recognized for its function in Bitcoin, blockchain technology is being used in a variety of applications, from monitoring the environmental impact of products to real-time pollution monitoring. There are two main points to consider. Even if we know what to do to slow or stop climate change, we don't know how to achieve it. We confront a climate-governance crisis at the same time. The 2015 Paris Agreement marked a historic turning point for global climate action.  The pace of climate change has slowed a bit, but it is still expected to rise over the previously agreed-upon thresholds. It's time to come up with fresh ideas and push nations who aren't following the Paris Agreement to account. Things get a lot simpler when blockchain is included in the arsenal of tools used to address climate change. How, then, can this be done?

Going Green with Smart Contracts

Until recently, the inability of blockchains to interact effectively with real-world data, particularly environmental data, impeded the creation of green smart contracts. Recent years have seen the development of 'oracles' — entities that can shepherd facts about the world into blockchains. In recent times, these oracles are broadcasting agricultural data sets straight onto blockchains, allowing smart-contract developers to construct applications around crop yields and more. As additional environmental data sets — such as weather patterns or IoT sensor readings – are put into blockchains, developers are starting to construct an array of eco-friendly smart contract apps. These are three instances.

  1. Regenerative Farming

Smart contracts can help everyday people battle climate change by facilitating regenerative agricultural initiatives. These include attempts to encourage communities worldwide to minimize their carbon footprints by conserving and growing trees. Automated payments for land stewardship can be made feasible via smart contracts that interact with real-world data. Examples include the Green World Campaign's smart contracts, which use satellite data to automatically compensate people who effectively regenerate land by increasing tree cover, improving soil, and other ways. Payouts are made when oracles use satellite data to activate smart contracts on a blockchain, ensuring that individuals on the ground are compensated appropriately.

  1. Conscious Consumption

Smart contracts can also empower eco-friendly people and groups. In the case of reforestation, an individual may be rewarded in the form of tokenized carbon credits, which could be sold to charities, crowdfunding campaigns, or even enterprises trying to demonstrate their green impact. Because tokenized carbon credits can only be issued if satellites or IoT devices report considerable reforestation to a smart contract, these organizations can verify that their funds have truly had an impact. Smart contracts can also provide eco-friendly consumers with greater alternatives for energy use. Using smart contracts, decentralized energy networks like the Brooklyn Microgrid Project are allowing users to create and trade solar power with their neighbors through a blockchain-based exchange. Solar energy trading between neighbors can cut energy transit costs and greenhouse gas emissions. While many consumers are already adjusting their own consumption patterns, a social transition will likely involve linking financial incentives with more sustainable buying decisions. Using smart contracts and real-world data, users may automatically receive incentives or punishments depending on their consumption patterns, triggering behavioral changes that education alone would not have achieved. Another project working on such initiatives is NetObjex is placing IoT sensors in hotels to track guests' water and energy usage. Using oracles, smart contracts may automatically compute and compensate visitors depending on their consumption stats.

  1. Using Crop Insurance to Mitigate Risk

Global climate change is already affecting weather patterns. Agriculture is particularly vulnerable to changes in weather patterns, such as droughts and winds, because it is largely uninsured and unregulated. The traditional insurance firms have failed to adequately cover small-time farmers in emerging nations, despite the fact that 75% of agricultural risks remain uninsured. As a result, most have highly uncertain circumstances. Bad weather may cause farmers to lose money, causing families to be relocated and crops to be destroyed. Agricultural producers will be hit hard if the effects of climate change continue to escalate. Fortunately, smart contracts that use oracles to adjust to changing weather conditions can help mitigate risk for those with limited resources. For example, Arbol and Etherisc provide smart contract-based crop insurance to farmers worldwide. For example, farmers may utilize smart contracts to specify requirements for contract execution (such as a specific quantity of rainfall) and then use oracles to track weather patterns. The farmer is paid automatically if the oracle network reports a given measure has been reached. A farmer may now safeguard their financial future with only a smartphone and smart contracts that can connect to meteorological data through oracles.

  1. Enforcing Climate Commitments

Using smart contracts, blockchains could minimize the risk of moving backward, by pressuring states to make their obligations to climate action with a fund. If a state fails to meet its carbon offset promises, its deposit may be seized and redistributed to those who have. Commitments are more easily enforced when they are staked on the blockchain.

Closing Thoughts!

Similar to how the internet today is far more than just emails and databases, blockchain technology is much more than just decentralized money. This new era of smart contracts powered by blockchains and oracles can offer totally new forms of incentives for sustainable human consumption. As climate change continues to be a heated topic of discussion, we must emphasize that the environmental effect of this budding ecosystem will be determined by more than just one project's consensus mechanism.

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