Sustainably Designed Blockchains and Incentivising Climate Action

On the 27th of June the INATB SISWG and the GAB on Climate Action & United Nations SDGs co-organized an event on “Sustainably Designed Blockchains and Incentivising Climate Action.”

The event aimed at showcasing the potential of blockchain in Digital Measurement Reporting and Verification (DMRV) and to see how it can be used to scale so that we meet short and long term sustainability goals. The end of the event has been rounded up by a panel discussion on the importance of smart standards for social impact.

The session speakers enriching the event with important insights into DMRV were:

  • Chandra Shekhar, Advisor to the Global Director, Climate Change at The World Bank
  • Tom De Block, Chairman of the Alliance for Internet of Things Innovation (AIOTI) WG DLT
  • Tom Baumann Co-Founder & CEO, ClimateCHECK
  • Mathew Yarger Head of Sustainability, IOTA Foundation
  • Hari Gadde, Senior Climate Change Specialist, World Bank

The event started with a keynote by Chandra Shekhar, Advisor to the Global Director, Climate Change at The World Bank.

Right at the start, Chandra pointed out in his keynote that DMRV is one of the best ways to reduce transaction costs and increase the transparency and credibility of carbon markets.  

Chandra recalled to the audience that most of the monitoring reporting verification in the past starting off with the Kyoto Protocol has been an expensive process that required a lot of capacity building. In his keynote he made clear that the gap between the time when the result is actually achieved and when it is actually certified and the payment received for the carbon credits generated has been extensive. He concluded that DMRV offers the ability for immediate review of results, as well as the potential to produce results quickly and in a more transparent manner, allowing for significant cost reductions and increased efficiency and accuracy. 

 

After the Impulse given by Chandra on what potential DMRV can bring, the event continued with a presentation by Tom De Block, Tom Baumann and Mattew Yarger demonstrating why we need DMRV and how Blockchain can benefit DMRV. 

 

Tom De Block demonstrated the potential Blockchain can have but that among society the idea still exists that blockchain technology is a burden for climate change, showing the reference to bitcoin mining operations. He emphasizes that organizations like INATBA and the Alliance for Internet of Things need to work together and show the advantage of improved next generation DLT protocols and consensus mechanisms to promote climate action, by providing  facts and numbers.

Suitably Tom Bauman emphasized that as we are observing more frequent occurrences of unusual environmental events, the urgency for solutions that can accelerate resource mobilization and action to help us achieve the Paris agreement under the UN gets clear.  In that sense Tom continued by highlighting why we need DMRV by presenting real-world challenges.

One of them being that compared to the goals we have set ourselves with the Kyoto Protocol, the Paris agreement and the SDGs and the regenerative economy, we have an insufficient number of specialists who can carry out monitoring, reporting and verification. Amplifying their skills using digital technologies is a must have if we want to be able to support the mobilization of finance and other resources into climate action and across the SDGs.

Another challenge that has been pointed out is the unacceptable level of errors, uncertainty and  inaccuracy of data that is being collected and reported and similarly the lack of uniformed standards. Tom outlines thereby amongst others that on average just accounting for emissions is about 30% to 40% uncertainty, which leaves limited use of this information due to the high level of uncertainty (corporate green house gas emissions inventory). Besides finance greenwashing can be observed frequently which need to be counteract.

 

The challenge is getting good data with the accuracy and transparency and auditability and also in how we transform the data. But we should not stop there because we do need to rationalize the system of sustainability standards. Many of them being contradictory and not harmonized. To date these standards have been developed primarily for manual or pre-digital mrv areas.

There is the need to modernize how the assurance and standardization systems actually can operate with all of these digital tools. We need to modernize how those standards are developed together and ensure that the dmrv applications are working together and aren’t amplifying differences

 

DLT can help with the simplification of digitizing the emissions and the data capture. There are a number of distributed ledgers that are helping advance the DMRV technology as a whole. 

In his presentation Mat Yarger explained three core capabilities that come into play where distributed ledgers can really assist in the digitization of MRV. 

So these three capabilities are summed up as follows

1. Oracles → which focuses on how to take the data from an entity  and how do we enable it to be shared and verified really easily so that auditors have access to a trusted process  where they can work at a more rapid scale and meet the demand that is really coming in from the supply side. 


2. Scalability, having the focus on efficient energy usage, the amount of data throughput, and access to verified near or real time data and having long term storage


3. Tokenization, tokenizing of carbon credits for an efficient carbon markets and sustainability markets as a whole


When implementing a DLT one important aspect to not offset any value created for the environment is the energy usage of a particular DLT, which highly depends on its consensus mechanism. By means of numbers Mat showed that through the next generation of DLT we are observing a shift away from the inefficient consensus mechanism and towards more energy efficient consensus mechanism like proof of stake. The new generation has the potential to create a more efficient trust-based system for us to transact over a distributed system or over the Internet essentially. In addition the Mat emphasizes that in general depending on how a DLT accomplishes Immutability, consensus and a distributed system plays an important role in  the advancement of the technology when it comes also to other aspects like scalability. scalability which we can see through newer generations of DLT providing more scalability as compared to older generations like bitcoin. To highlight this Mat demonstrated the case of IOTA. 

 

After introducing the opportunities DLT can provide for the DMRV, Mat Yarger and Tom Baumann presented two DMRV pilot projects. IOTA and ClimateCHECK have been working jointly with Arcadis, ENC Energy, ImplementaSur, Bio-E and the Canadian and Chilean government, to showcase how digitizing MRV activities by integrating the IOTA protocol on gateway devices can dramatically decrease the cost of MRV. The Government of Canada has contracted ClimateCHECK and IOTA Foundation to engage the project partners and develop a pilot the landfill gas site in Copiulemu Chile as well as for the Biodigester facility in Molina Chile in terms of using online tools for developing standards and then implementing those in digital mrv. During the session a deeper insight was given especially into the latest pilot which includes an extension of the previous one with the difference that it was built for the Biodigester facility in Molina Chile.

 

The speakers highlight three stages for the integration process.

The first as outlined beforehand is the development of the methodology and the adaptation of the existing mrv standards into this digital context. The second is the integration into the facility, where the data had to be measured and secured. In the second pilot Mat Yarger clarified that both manual data entry from the spreadsheet as well as autonomous data coming from sensors were present. All this data is processed at the edge having a Dell server, where the Iota nodes are located.The server takes all of the data from the manual data entry from the spreadsheets, pulls it from that spreadsheets API, takes the digital sensors, processes the data at the edge and forms it into transactions and publishes that data on to the iota ledger. Here the distributed ledger is being used as a transfer mechanism. Basically the data coming in is being validated through consensus over that ledger and then in stage three the outputs are processed at the cloud level with the digital mrv platform showing the necessary report for auditing.  

And then once we have that data, the stage 3 is the report and the audit on the evidence. IOTA has been able to innovate with Dell Technologies and Intell and others like the Linus foundation the concept of a confidence fabric. It takes a method of establishing confidence in data based on what the data attributes are (for e.g. where the data came from, whether it is manual or digital). This is done at every device along the data pipeline. The confidence fabric helps to see exactly where the areas for improvement are and promotes transparency and trust. Along with the other data the confidence score is also shown on the dmrv plattform.

 

After looking at the DMRV pilots, a panel session was held to discuss the importance of smart standards, what needs to be considered when designing a smart standard, and what we can do to overcome current implementation challenges.

During the panel discussion the efficiency and speed has been mentioned as a very strong reason to why we need smart standards and open data. The automation of implementing standards brings efficiencies in time and cost. Further smart standards paired up with AI and other additional digital capabilities can improve the standards itself in terms of environmental Integrity. As such Tom Baumann states that “Smart standards are more than simply reducing the time and cost and increasing efficiency of how to implement standards. It can also improve environmental Integrity.”

In addition to that Hari pointed out that when structuring those smart standards it is important to be concerned about governance to ensure that we do not multiply complexity so that we do not counteract the genuine value that smart standards are intended to have. Additionally he stressed that the structure needs to facilitate the participation of smaller market players as well which usually have less capacity but do have a significant meaning for the whole ecosystem. Suitably Tom Baumann from Climate Check pointed out that “sustainability means different things to different people in different places in the world.” So if these standards are to be widely accepted, we need to think of a standards system in layers. Tom explains that we can think of a standards system in layers, with generally applicable fundamentals for how a standard can be applied anywhere in the world to ensure some level of uniformity, yet then building on that each time in a modular fashion. In this way, standards can be built up that maintain a certain degree of uniformity, but can still be adapted to local conditions. 

Generally the discussion showed that the architecture of smart standards needs to have a level of integrity and needs to be efficiently built to not offset the originally intended goal of increasing (energy) efficiency as a whole. 

Nevertheless on our way to implementing those standards the speakers acknowledge that we encounter many challenges. 

The reality of the standard space states Tom De Block in the Panel is that “there are too many standards, with the result that there is no such thing as a standard anymore (…) There is an excess of actors that try to provide the core standard and that is the biggest problem we are facing in the standards space.” The discussion rounded out by highlighting what can actually be done to enable the successful implementation of smart standards.

One way to counteract for example the invisibility among the oceans of standards is by collecting existing methods and creating an overview, already being practiced by the Alliance for Internet of Things Innovation for. Ultimately, each sector will need a methodology for fair comparison or a fair taxonomy, but all speakers agree that we don’t have much time left and that we need to move everything up to speed. 

Another action possibility, which has been introduced by Mattew Yarger from IOTA during the discussion, is that of “an open collaboration, where we all come together, get an understanding of what the standards look like and generate a level of transparency.” However, to significantly make steps forward Matthew Yarer emphasizes that we need to aim for an efficient way of collaborating for example through incentive models, which are common to the blockchain and cryptocurrency space. They could help incentivize researchers and engineers to come together and establish and advance these standards through digital MRV improvement proposals. There the long term goal should be to advance or invest in technologies that have the greatest impact, not just those that are proprietary to one’ s solution or cloud-based solution.

Tom further emphasizes that we need to have a more inclusive approach. We need to look from the perspective of standards users and follow the incentive models. Giving users a more active role will encourage a more sustainable lifestyle and sustainable consumers and make us move toward a “prosumer like interaction with the economy.” 

Harri concludes that to bring us more forward in smart standards we also need to develop more pilots and use case studies together that simulate and show how the future of smart standards could look like. Another interesting aspect that was mentioned is how the metaverse can be an effective tool to engage individuals in the digital world with all its digital standards and data and get more actively involved in transforming our society. 

 

Another interesting aspect that was mentioned is how the metaverse can be an effective tool to engage individuals in the digital world with all its digital standards and data. Looking for tools that look how we can more actively involve individuals in transforming the society to be more sustainable would be a great beneficial contribution to speed us up.The concept of a metaverse could unite all stakeholders, data and different blockchains where individuals can interact with the data and also collaborate and build new incentive models. Suitaibly Mat Yarger acknowledges during the discussion that one exercise in the future could be to think of and discuss how do these components expand into a digital representation or digital twin of the planet and the impact that we are creating on it. But for achieving the development of a digital the need for collecting all that data that builds this metaverse is crucial. 

 

The speakers emphasize that time is running and to overcome the challenges of, among other things, an untransparent landscape of standards, and to create in time smart standards for our society that will help us create a more sustainable Plant and a more sustainable life, we need to come together and take action more quickly.

 

If you are interested to hear more about INATBA’s work, don’t hesitate to reach out to Morgane at morgane.stein@inatba.org or schedule an appointment with her directly through this link 

 

You can watch the recording of the event in the video below.