Guest blog | Blockchain: distributed databases to help deliver decarbonisation

Globally, we are seeing growing evidence of the effects of climate change: from droughts, heat waves and wildfires, to melting glaciers and extreme rainfall.¹ Nations worldwide have committed to reducing their greenhouse gas emissions to help address climate concerns, decarbonising their industries and taking steps to capture and store their carbon dioxide.

Innovative technologies have a key part to play in delivering these decarbonisation activities: supporting the creation of low-carbon solutions from electric vehicles to heat pumps.

One innovative technology that could play an increased role in the journey towards global aspirations of net zero emissions by 2050 is blockchain. Blockchain is a digital ledger that is shared across the internet. Decentralised, there is no single person or group that has control over it, ensuring that the data is open and secure from manipulation. Every transaction or action is recorded permanently and transparently for all its users. As it rapidly moves from cryptocurrency and niche applications, towards becoming a more frequent sight in logistics and energy distribution, blockchain offers capabilities that can support our drive towards decarbonisation.

Low-carbon logistics management

Through providing a distributed database of transactions that cannot be tampered with, blockchain can help create a transparent supply chain, enabling more effective understanding of assets and raw material resources. This improves security and traceability throughout the supplier’s manufacturing to distribution journey, and provides the customer with guaranteed quality assurance through the reduction in counterfeit products. Blockchain could support net zero objectives in many ways – for example, through highlighting unsustainable deforestation or poaching, as well as the management and disposal of waste. Its distributed ledger systems can also help efficiently manage energy grids and renewable energy systems, optimising energy use.²

By improving the efficiency of logistics management, blockchain can enable better maintenance of assets, providing enhanced awareness of inventory, asset history and resourcing. It could be used to inform asset maintenance schedules, specifications and routine servicing, utilising smart contracts to trigger alerts. Through an Internet of Things (IoT) network, blockchain can enhance knowledge of asset ownership, location, and specification – a digital twin model, for example, where device information and real-time tracking and monitoring are stored on the blockchain for transparency, could aid fleet management. Good asset management can help track the through-life carbon emissions of an asset, can inform risk management and carbon reduction interventions, and can strengthen business cases for future asset investment policies.

Paper-free Dubai

Some countries have already successfully adopted blockchain technology: the use of blockchain to deliver a ‘paper-free’ Dubai is one impressive example. Blockchain has enabled a streamlined approach to the country’s internal and external transactions, reducing administrative time burdens and thus improving overall efficiency. This shift towards digitalisation aligns with sustainability goals, by reducing paper waste and delivering energy savings during paper manufacturing, as well as conserving trees and curbing carbon emissions. In addition to these important benefits, it helps raise public awareness of these and broader environmental objectives, including reducing carbon emissions during document transportation, and water conservation – paper mills use 54,000 litres of water to produce around 200,000 sheets of A4 paper.³ ‘Smart Dubai’ has used its paperless strategy to eliminate one billion pieces of paper annually, describing these savings as enough to "feed four million children, prevent 130,000 trees from being cut down, and save 40 hours of productivity to give people more time to spend doing what they love”.⁴

Blockchain could further be embraced by nations to enable digital payments, store property title deeds, and to manage healthcare licensing, supply chain procedures, and visas.

Shaping behaviours

The scale of the activities required to achieve net zero targets can often feel staggering. While often led by government- and industry-scale activities, there is a role for everyone, and blockchain can help in shaping behaviours and attitudes at all levels.

Much like tracing inventory through the logistics supply chain, blockchain can, and has been demonstrated to, track energy around an ever more distributed grid. Tying smart contracts to blockchains, where peers are able to buy and sell energy between themselves at varying rates depending on conditions, can significantly reduce the overhead cost in managing such a complex environment, both financially and in terms of carbon emissions. These savings can be passed on to the consumer, promoting further take up.

Many large companies have reward schemes that allow managers or peers to nominate colleagues for small rewards. Extending blockchain tracking to measure the rough carbon usage of business units and teams could be tied into these schemes, encouraging friendly competition within the business to reduce group carbon impacts. Taking this a step further, individual tracking apps, and gamification have proven immensely popular in supporting behavioural change.^5,6 Blockchain could be used to allow individuals to track their utility or fuel usage from creation to use, challenging them to meet their own net zero goals.

Gaining consensus

As with the adoption of any technology though, the sustainability and ethical impact of blockchain itself must be considered and addressed. Any implementation of blockchain has a carbon footprint but, while it is often difficult to directly compare values, it is clear that certain implementations have a lower impact than others. One obvious example of this is the consensus method: proof of work (PoW), in which one party to the blockchain proves to others on the chain that certain verification activities have been undertaken, has been shown to have a significantly larger carbon overhead than proof of stake (PoS) – which selects validators in proportion to the blocks they ‘own’ on the chain – or proof of authority (PoA), an identity-based consensus mechanism.