The current system of issuing environmental assets, such as carbon credits, is proving far too slow and costly. Blockchain could provide the efficiency we so desperately need to save our planet.
In a recent statement, Greenpeace announced (quite sensationally) that “Bitcoin is fueling the environmental crisis”, in addition to suggesting that a change in its code would solve the problem.
These are somewhat extreme statements: Bitcoin mining emits 114 million tons per year, or 0.15% of global emissions (compared to 1.4 billion for our annual Internet use).
As I mentioned in my previous column for Be[In]Crypto, BTC mining emissions are minimal per asset, and clearing them costs a minimum of 0.05% per asset. Proof-of-stake assets, such as Celo and Polygon, issue 99% less than Ethereum.
Now that we’ve established that the emissions or environmental impact of blockchain is minimal and inconsequential, let’s see why its use is critical to saving the planet.
The overall environmental services system is archaic, analogical, manual and inefficient
The environmental services sector is one of the few that has not yet been disrupted by technology. Take the example of issuing and verifying carbon credits for avoiding deforestation. Global registries define a protocol (a list of requirements) based on scientific work, and collect a fee for each carbon credit generated in order to finance their operations.
Forest owners or promoters of conservation projects use a consulting company, called a certification company, to help them prepare a document called a “DDP” (project design document). The PDD should include several analyzes on the characteristics of the area, such as biodiversity and water fall. However, it must above all include projections on the avoided emissions generated by the protection of this specific area.
The concept is based on the fact that half of a tree is made up of carbon atoms. So when you protect a forest, you are protecting a huge carbon stock and avoiding emissions. When a tree is burned, the carbon atoms in its cellulose molecules are released into the atmosphere as CO2, CH4 (methane) and other polluting gases.
This protection work is a relevant solution to global greenhouse gas emissions: in fact, experts estimate that 20% of global emissions come from the cutting and burning of our forests.
So if we stop burning our forests, we can cut global emissions by a fifth. If people are paid by the sale of carbon credits, they will earn money through environmental protection and align themselves with saving the world’s forests.
The largest cottage industry in the world?
As incredible as it may seem, most of the analysis performed by these consultants is still done by hand on spreadsheets. Establishing the baseline, or benchmark against which forest protection work is compared, is subjective and varies greatly from case to case. In many cases, foresters visit the project several times before completing their analysis. They usually measure tree trunks using a tape measure.
Once the DDP is completed, it is checked (manually) by a previously authorized auditing company. Finally, the document is again subjected to the verification (again manual) of the register. All this manual work implies a slow process and very high costs: thus, it takes 3 years and more than 700,000 dollars to certify an area, whatever its size (the cost is the same for a hectare as for a million). hectare).
This process has not changed much in the past 20 years. The efficiency that blockchain could bring to the procedure described above turns out to be monumental.
To begin with, international registers have 3 functions:
- They set the protocol
- They verify the data and certify the carbon credit process.
- They maintain the database and charge (high) fees for recording transactions.
To begin with, this last point is entirely replaceable by the blockchain. This is one of the main reasons for the creation of the blockchain: to record transactions in a safe, transparent and cheap way. There is absolutely no reason for established ledgers to bear the burden of maintaining an off-chain database (and overcharging for this service).
Currently, the system relies on the credibility and trust of these registries to manage the databases. However, as they use very old technology, they are subject to human error, hacker attacks, power cuts, etc. The blockchain provides decentralized, anonymous management of this information and transactions without requiring authorization. Even better, it eliminates the risk of “double spending”.
In terms of the system’s history, carbon offsets (synonymous with carbon credits) have a bad reputation for being used more than once, or sold more than once, or sold when there is no project behind. Using blockchain eliminates this risk and adds significant value to the chain.
Different sets of data, such as satellite images, can now appear on the blockchain, making any verification of the veracity of the data superfluous. Basically, certification protocols are nothing more than algorithms (a set of rules) in which data is entered on the one hand, while potential carbon credits are obtained as an output on the other.
Currently, especially in the age of artificial intelligence, optical character recognition, and automation through encryption, none of this process and protocol certification work needs to be done by hand. Many institutions, such as NCX Restor and Nori, have started using digital databases and artificial intelligence to determine and issue carbon credits automatically and immediately.
DAOs for the planet
Finally, the best and most appropriate use of blockchain and Web 3.0 is protocol determination. I am convinced that we should carry out this process through a DAO, which is a decentralized autonomous organization.
The use of blockchain governance in a DAO would allow different stakeholders to think critically and contribute to the creation of the protocol, in a collaborative and open source way, as opposed to the arcane and incredibly slow process used by actors current.
Many people like the media wrongly criticize carbon credits because they don’t understand the emissions protocol. If the process of setting emission rules were open and public, with the benefit of dynamic governance, rather than meetings behind closed doors by politically or unclearly elected committees, we would probably legitimize the creation of carbon credits and confidence in the system would be much greater.
Using blockchain, we can make the process of issuing carbon assets and remunerating custody fast, cheap and credible. And achieve the small conservation project that was left out of the system. Let’s hope the world recognizes this in time so we can save the world.
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Why do we need blockchain to save the planet? – BeinCrypto France
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