Renée Pinto da Silva Barton

Scott Onder

Despite years of criticism regarding our industry’s environmental impact, the reality is that Web3 is emerging as a powerful tool in the fight against climate change. Developed economies would greatly benefit from adopting the innovative, decentralized approaches that are already proving effective in our emerging market. Failure to learn from these examples risks exacerbating climate-related disasters and falling behind in the global effort to mitigate the impact of climate change.



Climate change disasters are expected to put millions of people across the global south at the frontline of risk. Approximately 3.6 billion people <a href="https://www.who.int/news-room/fact-sheets/detail/climate-change-and-health#:~:text=Research%20shows%20that%203.6%20billion,diarrhoea%20and%20heat%20stress%20alone.">already live</a> in high-risk zones, particularly in regions along the equator and in coastal areas. Despite contributing minimally to the phenomenon — only one-tenth of the world&#8217;s greenhouse gasses are <a href="https://www.weforum.org/agenda/2023/01/climate-crisis-poor-davos2023/#:~:text=The%20World%20Bank%20reports%20that,in%20the%20past%2010%20years.">emitted</a> by the 74 lowest-income countries — these regions stand to be among those most affected by the consequences of climate change.



By 2050, unrestrained climate change may force 200 million people to <a href="https://www.weforum.org/agenda/2023/01/climate-crisis-poor-davos2023/#:~:text=The%20World%20Bank%20reports%20that,in%20the%20past%2010%20years.">migrate</a> within their own countries, <a href="https://www.worldbank.org/en/news/feature/2023/12/02/for-the-poorest-countries-climate-action-is-development-in-action">pushing</a> millions more into poverty and decimating decades’ worth of progress and economic development. Vulnerable populations in these regions are often subjected to damaging health, poor access to food and water, poor education and limited financial outcomes.



Because of the scale and multifaceted dimension of the climate crisis, centralized top-down approaches cannot address all the impacts of climate change on their own. These approaches mainly involve the creation of policies that reduce emissions and establish sustainability goals in an effort to shape their respective markets.



For example, governments around the world <a href="https://news.un.org/en/story/2018/11/1026851">came together</a> back in December 2015 for the United Nations Climate Change Conference (COP). During these conferences, they <a href="https://unfccc.int/process/the-paris-agreement/status-of-ratification">settled</a> on the guidelines that would govern the international treaty known as the Paris Agreement. This commitment, ratified by <a href="https://unfccc.int/process/the-paris-agreement/status-of-ratification#:~:text=195%20Parties%20out%20of%20198,Parties%20to%20the%20Paris%20Agreement.">195 international parties</a>, aims to lower emissions and create a set of rules to help countries implement their national contributions.



However, the lead times for such efforts are long, and the path to implementation is not always clear. Cooperation across a broad range of stakeholders is required to achieve identified targets. However, long-term policy goals do little to address common climate impacts, including extreme weather events, drought and supply chain challenges.&nbsp;



For this reason, decentralized approaches are critical to addressing the climate disaster. These initiatives broaden their focus beyond national policies to engage local governments, the private sector and individual community members. They can include new business models that support lower emissions, campaigns to influence individual behavior and consumption and new mechanisms to deliver support to impacted communities and businesses.&nbsp;



Emerging economies, home to billions of people, have demonstrated remarkable innovation in decentralized climate adaptation strategies. Builders in these regions have implemented initiatives such as community-based resource management, early warning systems for natural disasters and localized renewable energy projects to great effect.



The fact is, much of this innovation has been driven by necessity. These regions are already bearing the greatest <a href="https://www.worldbank.org/en/news/feature/2023/12/02/for-the-poorest-countries-climate-action-is-development-in-action#:~:text=No%20country%20is%20immune%20to,fold%20increase%20in%20economic%20damage.">burdens</a> of climate change and are <a href="https://www.brookings.edu/articles/renewing-global-climate-change-action-for-fragile-and-developing-countries/">impacted</a> to a much greater extent by related disasters, despite contributing minimally to global greenhouse gas emissions.



For governments of emerging economies, coordination around critical resources including water and clean energy can be complex and costly. Additionally, disaster responses such as insurance and aid payments often occur too late to mitigate the worst impacts for residents and communities. There is also an urgent need for transparent monitoring and assessments to guide understandings and allocate key resources. The cost of climate adaptation in developing countries is expected to <a href="https://www.weforum.org/agenda/2022/11/climate-change-climate-adaptation-private-sector/">reach $300 billion per year by 2030</a>, while global finance flows to developing countries for climate adaptation were only $28.6 billion in 2020. This presents both an enormous challenge and untapped opportunity for those building solutions on the ground.



Web3&#8217;s unique capabilities offer a number of superior solutions. For example, instant settlement and smart contracts can automate and streamline processes, ensuring timely responses to climate-related challenges. Meanwhile, immutable ledgers provide transparency and accountability by offering clear visibility into the flow of funds and resources. This reduces corruption and ensures that aid reaches those in need. Additionally, token-based ecosystems can incentivize positive environmental behaviors and support local markets. These systems enable diverse stakeholders to collaborate and participate in community decision-making.



One such innovation is DIVA Donate. This project uses onchain smart contracts triggered by satellite data to automatically disperse cash transfers to communities in rural Kenya at the earliest signs of drought. Many Kenyan communities rely on rainfall and are <a href="https://www.usaid.gov/climate/country-profiles/kenya">highly susceptible</a> to extreme weather events. DIVA Donate allows pastoralists to receive funds before the impacts of the dry season are felt. This proactive approach helps to mitigate adverse seasonal effects, which are becoming increasingly common within vulnerable communities.



Another critical issue involves delivering humanitarian aid to disaster victims. This process is often hindered by a lack of transparency and distribution frictions, which can lead to delays and inefficiencies in getting aid to those who need it most. Rahat, an open-source blockchain platform developed by the digital innovation firm Rumsan, has successfully <a href="https://www.centerforadigitalfuture.org/blog/60kqfdgb4f8kljqy1j4ujvaqr1bx5y-364pg-bskhw-58gfs-c9t7w-fr286">addressed</a> many issues of this kind across Nepal, Pakistan and Indonesia.



The platform’s pilot project utilized an immutable ledger to increase transparency and expedite the transfer of funds to victims. This model was found to lower transaction costs while allowing stakeholders to openly track the impact of aid to beneficiaries, creating greater accountability in the spending of recovery funds.



Web3 technology also offers tools for coordinating diverse groups of people. By leveraging token-based ecosystems, these solutions help shape local markets and incentivize environmentally positive behaviors. Token ecosystems allow relief organizations and the communities they serve to create a unified platform for various stakeholders. Doing this allows them to reward positive actions while engaging participants in community decision-making.



An example of this in action is Atlantis DAO, which launched a pilot in rural India with local partners. Its goal was to build a decentralized peer-to-peer network to address existing water management challenges, including providing underserved groups with access to clean water and increasing earning opportunities.



The pilot, which focused on approximately 45,000 people across five remote villages in the Chikmagalur district of Karnataka, India, enabled participants to take on tasks related to clean water production. They could buy and sell clean water, use water filtration and testing devices and earn income for completed tasks once successfully recorded onchain. As a result, 84% of participants reported improved access to clean water.



These examples illustrate how innovative builders are leveraging many of the benefits of Web3 to address climate-related challenges. Lower transaction fees, automated smart contracts and immutable ledgers are already making a significant impact at the hyperlocal level. They have been widely effective at addressing some of the most pressing climate-related challenges, especially around resource coordination and aid deployment.



Developed economies have much to learn from these innovations. By adopting similar strategies, communities around the world can bolster their efforts in the fight against climate change. Ignoring these proven advancements risks exacerbating the climate crisis and missing out on the transformative potential of Web3.



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Global players risk climate disaster if they keep ignoring Web3

Ben Strack

<div id="highlights-block_625efbaff8465" class="highlights">
 <ul>
 <li>By storing carbon credits as digital tokens, they can be more easily tracked and traded</li>
 <li>Companies using blockchains and smart contracts to advance climate change initiatives to become “industry norm,” according to Chainlink Labs</li>
 </ul>
 
</div>



Blockchain technology will play a key role in combating climate change by managing clean energy solutions and enabling enhanced automation, a report by Chainlink Labs and Tecnalia says.



<a href="https://chainlinklabs.com/" target="_blank" rel="noreferrer noopener">Chainlink Labs</a>, which offers open-source blockchain interoperability solutions, and European research institute <a href="https://www.tecnalia.com/en/" target="_blank" rel="noreferrer noopener">Tecnalia</a> posited in a <a href="https://chain.link/resources/managing-climate-change-energy-industry" target="_blank" rel="noreferrer noopener">report</a> Tuesday that the energy industry can make clean energy investments more efficient by leveraging blockchain technologies.  



By tapping blockchains, the power business can better digitize and value clean energy investments, according to the report. That would likely lead to additional capital deployed to green investment opportunities, more transparency and stronger accountability when it comes to meeting climate-friendly commitments, the two companies found.&nbsp;



The report labels “hybrid smart contracts” as the new backend framework necessary for building clean energy solutions. The framework uses blockchains to track and settle multi-party processes and smart contracts to define the rules for involved parties.



It also uses oracles — or interoperability solutions for blockchains built on smart contracts — to integrate data and non-blockchain infrastructure into the contracts.



More than 140 research projects and startups had begun studying, testing and deploying blockchain-based solutions as of 2019 to improve energy industry processes, the report says.



“As more and more companies recognize how blockchains, smart contracts and oracles can advance climate change initiatives, we’ll begin to see a trend that will only grow with time until it becomes an industry norm,” a Chainlink Labs spokesperson told Blockworks.&nbsp;



Among the use cases outlined in the report are tokenized carbon credits, which companies buy to offset emissions. By storing carbon credits as digital tokens, the thinking goes, the tokens can be more easily tracked and traded, and oracles can then issue and audit them.



Oracles can use satellite and remote sensing data to measure the carbon sequestration in a certain region to verify a project’s stated carbon offset before issuing a credit.



Hybrid smart contract system Hyphen, for example, uses Chainlink oracles to bring verified greenhouse gas data on-chain and prove stated corporate climate commitments.



“We can now supply validated real-world measurements to dynamic carbon assets,” Hyphen CEO Miles Austin said in a statement. “This gives confidence to investors, capital markets, banks [and] regulators.”



Like the tokenization of carbon credits, climate bonds and green bonds — fixed income instruments that raise money for environmental projects — can also be tokenized on blockchains.



Ethereum-based climate risk solutions platform <a href="https://c212.net/c/link/?t=0&amp;l=en&amp;o=3508495-1&amp;h=1682524004&amp;u=https%3A%2F%2Fwww.arbolmarket.com%2Fenergy&amp;a=Arbol" target="_blank" rel="noreferrer noopener">Arbol</a> uses smart contracts to help energy businesses hedge power demand and revenue fluctuations around changing temperatures.



Individuals could also be incentivized to reduce emissions through rewards programs, according to the report. Consumers could be compensated with crypto or NFTs in exchange for meeting the requirements of a smart contract designed to minimize their carbon footprint.



Going forward, clean energy industry leaders must assign researchers to focus on the benefits of blockchain technology and how they can leverage smart contract and oracle technologies before competitors, the Chainlink Labs representative said.



“What they discover will motivate them to act,” the spokesperson added. “And that momentum on an industry-wide level will help facilitate the inflection point we need to realize a more sustainable future.”



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