Feature: How blockchain can help governments achieve the COP26 targets

Anna Roberts, head of business development at iov42  explains how blockchain can help governments achieve their COP26 targets. 

Leading up to COP26 in Glasgow, the event was being framed as an important make or break moment for global climate action. The Conference has now wrapped up and some of the biggest outcomes have been new pledges to halt deforestation and phase down coal usage.

While some leaders have expressed subdued optimism that COP26 indeed marks a step in the right direction, a louder, more concerned contingent has pointed out that the progress at COP26 is not ambitious enough. Indeed, current pledges, if fulfilled, will only limit global warming to about 2.4 degrees celsius, which is a far cry from the Paris Agreement’s goal of 1.5 degrees.

For us on the ground who are dedicated to climate action, there is little time to dwell on whether or not the outcomes of COP26 are ambitious enough. The public, private, academic, and civic sectors must all come together and get to work immediately, adopting the right innovative tools, emerging technologies, and collaborative mechanisms to ensure that effective climate action is deployed quickly and scaled appropriately.  

Historically, some of the barriers to global climate action have included: a lack of transparency around how mitigation efforts are being monitored, reported, and verified; disjointed and opaque value chains that complicate global cooperation; an extremely variable regulatory landscape; and insufficient accountability for those who have made commitments. 

Addressing these challenges will require a multi-faceted approach that facilitates trusted, cross-sector collaboration at all levels of climate action, from local communities to international multilateral organisations. 

This is where blockchain technology can assist. Blockchain and other decentralised ledger technologies (DLTs) can provide new levels of trust, security, and efficiency across multi-stakeholder ecosystems and various use cases. 

Blockchain technology — first made popular by the rise of Bitcoin and subsequent cryptocurrencies — is the most widely known example of distributed ledger technology. Put very simply, a DLT is a digital system made up of independent computers that record, share, and synchronise transactions. DLTs aim to offer an efficient, secure, and reliable alternative to traditional, centralised ledgers, which are vulnerable to fraud and cyber-attacks.

If we look at the COP26 deforestation pledge, DLTs can provide new levels of traceability and transparency for environmentally-impactful supply chains, such as cotton, timber and agriculture.

By being able to track and permanently record what is happening at a given point in the value chain, illegally sourced timber can be reduced and accountable decision-making can be promoted through a visible, secure audit trail of actions.

Curtailing deforestation by 2030 can be achieved using tools such as Timber Chain, which enhances the digital data recording processes for companies, optimises the auditing and certification processes for certifiers, and ensures data integrity by protecting everything on a cryptographically-secure platform. This is game-changing for industries that can get bogged down by manual processes, and especially those most impactful to our environment. 

Despite its potential beyond cryptocurrency, blockchain is too often associated with the environmental impact of digital currencies such as Bitcoin, causing some consternation around the sustainability of DLTs.

But the reality is that many enterprise-grade blockchain networks do not use the energy-intensive ‘Proof of Work’ algorithm that blockchains like Bitcoin employ. In use, these energy-efficient systems can allow us to design globally accessible and fully automated systems, encouraging individuals, companies and governments to take part in sustainable practices – such as regenerative agriculture, carbon offsets and crop insurance.

And with the urgency to meet targets, there is an abundance of opportunity for technology companies, entrepreneurs and innovators to create new and innovative solutions to accelerate towards a greener future. For example, international carbon markets, considered to be one of the most important levers for driving climate change action, can be realised at a global scale through the use of blockchain. 

Carbon markets have long been impacted by market fragmentation, carbon certificate fraud, opaque audit chains, and an overall lack of transparency. Blockchain can tackle these challenges by enabling the reliable monitoring, reporting, and verification of CO2 sequestration data, preventing double-counting, and transparently tracking the creation, trading, and retirement of carbon credits. 

And though well-designed carbon markets alone won’t be the solution to reducing greenhouse gas (GHG) emissions, they provide a proven mechanism to incentivise the type of innovation that will facilitate governments’ paths to decarbonisation. 

It’s not just carbon markets that blockchain can enhance, either. From waste to transport, blockchain is ideally suited to manage records that can be difficult to track, such as the real impact of environmental protection plans, agreements, or even international treaties. Too often, corporate interests, misaligned incentives or corruption can prevent the successful implementation of ESG pledges. But blockchain’s consistent transparency, and the traceability it enables, ensure that for those failing to step up to the challenge, there’s nowhere to run or hide.

The COP26 summit could be remembered as the moment the wider world woke up to the challenges we face. But what happens next will be pivotal to how much progress we actually make in the years to come. Now is the moment for leaders to seriously consider the technology available to ensure positive change is delivered — they can take inspiration from the efforts of the European Blockchain Services Infrastructure (EBSI) to “deploy cross-border blockchain services across Europe as soon [and sustainably] as possible,” an excellent example of what is possible when the public and private sectors work together to drive meaningful innovation for a more resilient future. 

In the end, without rigorous monitoring and assessment or a trusted infrastructure for collaborative exchange, the post-summit ESG goals will remain precarious.