From waste treatment to reducing pollutant sources, from green investments to the promotion of the Circular Economy, blockchain can play a primary role in planning and managing current environmental issues. Thanks to its characteristics, in fact, it can adapt to widely diverse situations and reach both individuals and companies, facilitating the implementation of active engagement strategies.
Using incentive-based engagement strategies, both companies and individuals can be encouraged to act sustainably, by providing information, rewards, credits, tokens, and reputation systems based on blockchain.
This type of approach can be of fundamental importance in changing the modus operandi of our economy and benefiting not only us but especially future generations. Through blockchain and the incentive system, it is indeed possible to build alternatives that economically translate the value of individual actions, creating opportunities for growth, development, and consequently new economic flows.
All this is facilitated by the public distributed ledger of the blockchain, aimed at storing transaction records or any other information, eliminating the need for intermediaries and allowing users to interact peer-to-peer at reduced transaction costs, simultaneously increasing the efficiency and value of the data itself.
Currently, there are several types of blockchain (public and private), each with peculiar characteristics that allow users to create programs (dApps) for every kind of problem and that offer an immense variety of solutions, uses, and applications.
Currently, we have ample knowledge of blockchain applied to areas of economic and financial interest, but it is worth emphasizing how such technology can also have a positive impact on our conception of the environmental system, offering innovative management tools and ideas.
Let’s try to describe five different uses of blockchain in relation to environmental sustainability:
- Supply chain management.
- Circular Economy and waste management;
- Control over community treaties and agreements and “carbon footprint tax”;
- Direct funding for Non-Profits (NGOs);
Supply chain management.
One of the current and main uses of blockchain certainly concerns the certification of the production chain and the product. Most people today increasingly want to buy products made with an ethical and sustainable approach, searching for this type of information in the company’s history or on the label itself. However, it often happens that this information is not available or difficult to find. A product passes through many hands before reaching the store, and it can be easy for companies not to maintain the necessary transparency regarding, for example, the production process: from materials to chemicals used, from waste treatment methods to employee treatment policies, etc.
In these contexts, by tracing the path from the manufacturer to the shelf, helping to prevent waste and inefficiency, fraud and unethical practices, blockchain can serve to bring clarity, making everything more transparent and traceable. Consumers can thus be better informed about every product they buy and be put in a position to make more conscious and environmentally friendly choices.
Monitoring the food chain, for example, allows buyers to purchase local typical products with the certainty that they have been locally grown, processed or managed. This, in addition to providing quality certification (as in small high-value and commercial brands), can help to determine, for example, if a product is actually 0 km and if its production therefore contributes to reducing CO2 emissions resulting from road transport or if a fish sold in a local fish market actually comes from a “local” fisherman or company that actually adopts sustainable fishing methods and fair trade practices.
There are already some solutions of this kind, each built on a specific blockchain, with a focus on individual projects or purposes, such as “Foodtrax” or the “Giant Organic Blueberry” project by Affidaty (for the organic Tuscan blueberry production chain “Borgo San Giuliano”). Both in fact represent a tracking application of the product value from its origin to the shelf, providing quality and transparency to the process, the product itself and the company that produces it.
Circular Economy and Waste Management
With the current recycling programs, waste management and disposal systems, people play a fundamental role in the proper functioning of the waste recovery process. Most of the time, however, they do not have enough motivation, education or attention for active and conscious participation. Responsibility for carrying out recycling programs therefore falls on local public administration in a often confused or fragmented manner. This results in communities without pickup programs or optimized waste management, making it difficult to monitor and compare the impact these programs have on the environment and people themselves.
Through blockchain, individuals can be encouraged to participate by offering financial rewards (also in the form of cryptographic tokens) in exchange for the deposit of used and recyclable materials at ecological islands or pickup points (such as plastic containers, cans or bottles, etc.).
Such an approach would facilitate the monitoring of volumes, costs and profits, offering a clearer evaluation of the impact that each company or individual can have on the success of the project.
“Social Plastic” (aka “Plastic Bank”) for example is a project that works to transform plastic into value by creating collection centers (in underdeveloped communities) where people can deposit used plastic in exchange for currency, services or specific items (such as fuel). The company is already working to expand the project onto blockchain, allowing people to exchange materials with cryptographic tokens in a peer-to-peer manner. This approach aims to clean up the world from plastic waste while at the same time alleviating poverty in these areas, creating an industry with a real sub-scale economy.
Like “Social Plastic,” “Re-Universe” is another example of a dApp, currently under development, that allows people living in different parts of Europe to return their used plastic containers in exchange for tokens (through the use of automatic pickup points as well).
In summary, an approach of this kind could prove successful in the long run because in a consumer-based society, where it is easy to produce waste and waste that needs to be managed and disposed of, it is necessary to avoid the dispersion of certain types of materials in the environment while at the same time offering a model that can promote compliance with the rules and help to keep interest on the subject alive.
The management of the energy market is another sector characterized by high centralization. For energy supplies, it is necessary to go through trust companies that purchase energy from larger utilities and then resell it to individual users. This exchange and storage model creates high inefficiency in its distribution, often producing unused surpluses and causing interruptions in energy supply for long periods, especially in areas affected by natural disasters or where people live with a higher poverty rate.
Since power plants are usually expensive and often financed by governments or large private companies, a decentralized energy system with peer-to-peer exchange would help reduce the need to transmit electricity over long distances, consequently reducing the losses suffered along the way. A blockchain-based platform could thus allow institutions, companies, and individuals to make profits by investing directly in small and medium installations of panels or instruments for the accumulation of clean and renewable energy, helping to reduce the need for centralized energy storage and simultaneously promoting local exchange (from where it is in excess to where it is needed), thus positively impacting production, storage, and transportation costs.
Innovative startups such as “Transactive Grid” or “SunContract” (both peer-to-peer renewable solar energy exchange platforms based on blockchain) offer virtuous examples of energy management. “Transactive Grid,” for example, is an Ethereum-based grid energy service that allows customers to transact on decentralized energy generation systems (such as individual condominiums) more effectively, enabling individual residents to generate, buy and sell the electricity created by their installations in complete autonomy, exchanging it with neighbors.
This model supports the growth of retail micro-investment in renewable energies, channeling the individual citizen’s economic commitment to their own territory. “EcoChain” is an example of a dApp developed precisely for this purpose: to create a platform where people invest in renewable energies or on-site solar installations, obtaining a return on their investment from the accumulated energy exchange, directly in their wallet.
Such a project can have a significant impact, especially in developing countries where energy is a privilege for few. The “Blockchain for Sustainable Energy and Climate in the Global South: Use Cases and Opportunities,” for example, has explored precisely how this approach can accelerate the transition to cleaner energy while also helping to combat climate change in developing countries. Following a recent study, it analyzed how the changes that current global temperatures are undergoing could reach an average increase of about 2.7°C by the end of the century. The analysis has raised concern both among political leaders and the UN: UN Secretary-General António Guterres has defined such a temperature increase as “catastrophic.”
Similarly, Mark Radka, head of the “UNEP Energy and Climate Branch,” referring to the data in the UNEP’s Emissions Gap Report 2021, has stated that “the world needs to halve emissions in the next eight years to stay on track, while also expanding access to energy to bring hundreds of millions of people onto the grid… blockchain technology can play a fundamental role by making it possible to monitor, generate and distribute the load through more efficient use of data.”
Unfortunately, we must specify that there are still obstacles to the widespread implementation of blockchain in various environmental applications. We cannot ignore the current debate on the level of energy use of some PoW (Proof-of-Work) blockchains. Some types of blockchain still require a significant amount of computing power (and therefore electricity) to function, which is a cause for concern.
Unfortunately, we must specify that currently there are still obstacles to the widespread implementation of blockchain in various environmental applications. We cannot ignore the ongoing debate about the level of energy usage of some PoW (Proof-of-Work) blockchains.
Some types of blockchain still require a high amount of computing power (and therefore electricity) in order to function, and since the cost of energy can be prohibitive in many countries, this makes it difficult to develop and implement certain types of infrastructure. However, it is important to know that “new” blockchains are already being created with a focus on energy consumption, increasingly embracing sustainability criteria such as ESG (Environmental Social Governance). ESG criteria are ranking parameters required to measure companies’ ability to adhere to standard principles considered essential for sustainable business development. Currently, for example, at the center of the debate, we find accusations made against the Proof-of-Work consensus mechanism for being highly energy-intensive, with constant sponsorship of the more current Proof-of-Stake consensus mechanism (in its various forms).
In this regard, various community regulatory frameworks will also be of fundamental importance. Electricity tariffs, in fact, in many places, will need to be modified so that consumers have greater opportunities to participate in the exchange of excess energy. However, these regulatory frameworks or guidelines are still far from being exhaustive or even clear. We must therefore hope that the political side facilitates current technological development, removing bureaucratic and managerial barriers to innovation as much as possible.
Control over community treaties and agreements and carbon footprint tax.
Monitoring the impact of environmental agreements and treaties can be complex. In this context, the immutability and transparency of blockchain can help to control the behavior of the parties involved and discourage illicit behaviors. An example is “carbon credits.” “Carbon credits” represent a sustainable strategy aimed at promoting national and international environmental and climate protection projects with the goal of reducing greenhouse gases. “Carbon credits” attest that a company’s actions comply with sustainability and environmental protection requirements. Investing in this sector can represent an opportunity for differentiation, improving the competitiveness of one’s business and positioning in the market, in full coherence with one’s Corporate Social Responsibility. Transparently tracking the “carbon credits” of individual companies or projects can show whether the commitments made have been truly respected or not.
In the current economic system, the environmental impact of each product is often difficult to determine, and its carbon footprint (level of carbon emissions) is not often taken into consideration in the production process and, consequently, in the final price. This means that there are few incentives for consumers to purchase low-impact products and few incentives for companies to produce or sell such products.
Similarly to “carbon credits,” monitoring the carbon footprint of each product through blockchain can protect this data from tampering and be used to determine the amount of carbon tax to be charged to the producing company. If a product with a high carbon footprint (therefore with a greater environmental impact) were more expensive to purchase, it would encourage consumers towards more conscious behavior, and companies would be encouraged to restructure their supply chains to meet this demand and impact characteristics.
Such a reputation system based on blockchain could then assign each company and product a score based on the “carbon footprint” parameter, making production more transparent and simultaneously discouraging wasteful or environmentally unfriendly practices.
Direct funding for non-profits (NGOs).
Finally, through the use of blockchain, we cannot ignore the issue of donations to non-governmental organizations (NGOs), a well-known problem that directly concerns the individual citizen. This context highlights one of the inherent problems in human nature: trust in others. The issue of trust between two parties is indeed a priority when it comes to good practices for using blockchain: bureaucracy, corruption, and inefficiency are among the main issues that can potentially cause distrust in this field.
Here too, blockchain can ensure that donated money is traced along its path. It is possible, in fact, to implement a whole series of control and traceability mechanisms on the single transaction that more traditional payment circuits unfortunately do not have. For example, donations could be automatically released to the unique address of the specific organization only after specific goals in the program are achieved. In this way, the trust of the individual retailer towards the foundation would increase significantly because, on the one hand, they would have the opportunity to verify the progress of the operation and, on the other hand, they would manage their donations directly, without going through external intermediaries.
The tokenization of currency, furthermore, would allow for further optimization since a transfer of funds through the blockchain without the need for bank accounts can help people living in countries lacking such infrastructure to still receive money without having to go through a complex network of intermediaries or centralized authorities.
There are already several examples of application in this field. “Bitgive” and “Bithope” are just two of the charitable organizations that work using blockchain and cryptocurrencies to carry out their work, and many others are considering this solution.
In all of this, we must remember that blockchain technology is still in its infancy and that some of the chains currently in existence may still have a negative impact on the environment, such as high energy consumption or a lack of adherence to ESG criteria. Therefore, there is a need for the technology itself to continue evolving until it can fully promote its sustainability on a large scale. Additionally, driving the expansion of blockchain will require an improvement in digital infrastructure, including the expansion of affordable access to the internet and broadband, which will enable the construction of digital infrastructures based on highly efficient IoT systems.
Of course, as already mentioned, rapid technological advancement requires political parties to adapt through the modification or creation of new EU regulations to encourage rather than hinder the development of future energy systems. Currently, partnerships such as that led by UNEP (the “Coalition for Digital Environmental Sustainability”) can support these efforts by connecting digital technology applications through blockchain to environmental sustainability in its various forms, but this must be a continuous path in the years to come.
In summary, the valorization of that part of the common good understood as the environment in which we live must therefore start from the bottom, from the direct involvement and education of the individual, as well as the careful sensitization of communities. The areas described above are only some of the implementations that are currently emerging on the world stage, but there are many others that deserve particular attention and in-depth analysis. In recent years, thanks in large part to the world of finance (and cryptocurrencies), blockchain has experienced and is experiencing an important period of expansion that will allow for increasing interest from individuals but especially from institutions, companies, and multinationals that have already had their eyes on this technology for some time. The hope is that this evolution can continue for years and reach a maturity that allows for greater mass adoption and advanced use that can improve the quality of life for everyone.
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