Future Sustainability: How Can Blockchain Contribute?
Sustainable Blockchain And Environment
In the history of mankind, there has never been a time at which it has been more essential for major businesses to maintain a sustainable environment. This has been the case at the present time. It is no secret that the Earth is undergoing dramatic changes, and the public has been calling for enhanced accountability from all industries in relation to these changes. The blockchain community is often depicted as part of the problem, but this is mostly due to a misrepresentation of how this community actually operates. A sustainable future can actually be achieved through the use of this technology in lieu of conventional methods of creating energy.
Sustainable blockchain is an innovation with a wealth of potential, and the benefits that it can bring to the environment are far too substantial to ignore. In any industry, there are still challenges to address, as there are in any other, but these are recognized and are being handled in an active manner. How many industries can boast that their second-largest company has reduced its energy consumption and emissions by more than 99% in less than 10 years since they were founded, far exceeding industry standards?
2022: The Year Of Sustainability
Nowadays, ecologically sustainable business practices have become a central element of the popular narrative when it comes to the importance of sustainable entrepreneurship. A lot of renowned companies announce that they will be launching various sustainability programs to address issues related to sustainability. In most cases, they do exactly what they say they will do. Some of these businesses – however – are also inclined to hide behind opaque metrics as well as interpretive goals if they wish to conceal themselves from the public’s eyes. As a result, there is a lack of transparency in oversight and a lack of explicit standards to help prevent this. Several companies have been found embellishing the truth about their efforts to become greener in an effort to merely improve their image with the sole purpose of enhancing their image (also known as “greenwashing“). In essence, this is meant to instill mistrust among the public as a whole, which serves nobody but the executives of the companies.
Does Blockchain Technology Have Long-term Sustainability?
The negative environmental impact of blockchains is often cited as the reason for their stigmatization. Despite the fact that Bitcoin and related proof-of-work (PoW) chains may have some ecological consequences through their own proof-of-work (PoW) nature, proof-of-stake (PoS) chains have vastly superior energy efficiency when compared to proof-of-work chains. A recent upgrade of Ethereum’s network to PoS recently saw Ethereum’s energy use drop by 99.9%, resulting in a reduction in the network’s operational costs.
As a result of the newly formed Ethereum Climate Platform (ECP), efforts are already underway to address and rectify Ethereum’s historical carbon consumption. This group, which includes Ethereum Enterprise Alliance, ConsenSys, Microsoft, AAVE, and Polygon, is a collaboration of industry luminaries. It was launched at the U.N. Climate Change Global Innovation Hub during the COP27 conference.
In the context of improving emissions tracking and verifying, blockchain networks can be put to efficient use by leveraging the latest green credentials. In addition to being immutable, accountable, and transparent, blockchain technology can track carbon balances and other environmental measures. Hold companies that claim they are sustainable to account because of their inherent immutability, accountability, and transparency.
The implementation of smart contracts for example can automate the process of determining exactly how many tons of carbon are produced at every step of a business’s operation. Through smart contracts, this can be accomplished. It would be possible to relay this information to various monitoring services and then relay it, subsequently, to the general public. Despite the fact that the nature of this data is verifiable, and cryptographically enforced, it will remain invulnerable to any attempted falsification or obfuscation at any level.
By the way, it is also worth pointing out that the same cryptography will also guard against any leak of the company’s confidential information. Zero-knowledge (ZK) technology offers a way to create unfalsifiable proofs of the underlying information without divulging the underlying data. It is common for companies to provide evidence that they meet various thresholds for the consumption of energy or the emission of carbon dioxide. However, they do not disclose the underlying data supporting the claim. This is an issue that currently blocks company transparency when it comes to reporting the details of specific carbon-generating activities conducted by the company.
Moreover, the tokenization and digital distribution of digital environmental assets is another way in which environmentally friendly blockchain technology can be utilized as a sustainable solution. In recent years, it has been shown that the carbon credit market is accelerating at an incredible pace, which has attracted a great deal of attention from leading organizations all over the world, from the largest registries for accreditation to international bodies like the World Economic Forum, including Verra and Gold Standard.
There are several projects out there delivering tokenization of carbon credits. Projects such as KlimaDAO and Toucan provide this tokenization process. This brings about an insightful discussion regarding the future of carbon markets, and if and how blockchain technology can be used to facilitate them.
Even blockchain-native iterations of carbon markets are beginning to emerge, aiming to solve the scaling problems of current carbon markets, as well as the shortages presently experienced by carbon market participants. One of these examples is Nori, whose novel approach recognizes the need for measurable drawdown alongside carbon avoidance. In the recent past, Nori has been widely recognized for its future-oriented focus, which was not widely acknowledged in previous years. However, they have managed to cement a partnership with Bayer, which has the potential to deliver unprecedented scale and reach.
In fact, the United Nations has invited blockchain applications to be used for climate action, announcing that it will support projects driven by the Web3 community.
Stepping Up To The Challenge
It has been shown that blockchain’s contribution to the environment can extend far beyond that of reducing energy footprints and carbon credits, as well. Our forecast for 2023 is that we will see an increase in sustainable-focused systems launching, which will allow things like water usage and plastic creation to be tracked and reported, along with a number of other sustainability-focused systems that will be launched. These blockchain systems could be employed as a means of monitoring the levels of environmental impact that are acceptable across various industries by governments and regulators. This could be implemented by utilizing these systems to create clear standards for what is acceptable. As well as benefiting the planet itself, this would have a direct impact on business processes due to clear expectations for the emission levels mentioned earlier.
In fact, blockchains and smart contracts can even be used to manage electrical grids in the future. As a result of these advancements, it will become much easier to monitor and automate how power is routed. This will make our energy use far more equitable by allowing for more reliable routing. There is potential to provide incentives for grid users when it comes to applications that improve the energy demand management process. In the future, blockchain has the potential to make it possible for investors to have more access to renewable energy infrastructure investment.
Web3 is adamant that tackling this monumental challenge is a priority, as evidenced by the aforementioned ECP as a prime example. Additionally, the ECP aims to mitigate Ethereum’s previous carbon footprint through investments in carbon-reducing technologies that leverage blockchain technology for the purpose of achieving a positive impact.
Another significant application of blockchain, such as Defi (decentralized finance), is that it can serve as a tool for the empowerment of communities most affected by climate change and business-generated consumption, including those most exposed to its effects in the global south, by providing tools to empower them. Other applications, such as supply chain management, are proving to be more reliable and effective at distributing revenue and providing better treatment to people; they are the next generation of fair trade.
It is going to be a panacea for dealing with the effects of climate change in the near future. Even so, more industry sectors must consider what this technology has to offer in order to reap the benefits. Among sustainable practices, accountability is perhaps the most significant and significant factor that companies should maintain, yet there is so much more that could be done. There is a need for the global audience to understand blockchain and let go of the myth that it is a problem. In reality, it is a technology problem. It is in the solutions to the problem.
Prachi, an accomplished Chief-Editor at The Sustainable Brands Journal, has 15+ years of experience in Europe, the Middle East, and India, managing 90+ global sustainable brands. She’s a prolific writer in sustainability, contributing to various publications. Prachi’s unwavering passion and expertise make her a recognized authority, driving positive change and inspiring a sustainable future.
