The World Economic Forum (WEF) published a milestone document titled "Blockchain for Scaling Climate Action" last week, in which it highlights the use cases of the technology for a multitude of verticals within the climate tech space, together with the challenges and opportunities. Alongside many others, Reneum is happy to be included in the ecosystem of Regenerative Finance (ReFi) projects, and thanks the team of Climate Collective for pushing the publication over the line.
While the paper does not focus extensively on energy markets, but rather on carbon, we highlight key points of the paper and how it pertains to Reneum's product and wider field of Environmental Attributes Certificates (EACs) or more specifically in our case, digital Renewable Energy Certificates (RECs).
The Big Picture
Overall, the report highlights how Blockchain can provide an enabling infrastructure to combat climate change at speed and scale by improving the transparency and integrity of existing decarbonization mechanisms such as carbon or renewable energy markets. Especially when paired with digital tools for measurement, reporting and verification (MRV) – such as remote sensors, drone imagery and artificial intelligence – digital environmental assets and carbon accounting systems can provide real-time visibility into the effectiveness of emissions reduction and sequestration efforts. Subsequently on the commercial and impact sides for businesses, this allows for a more credibility when making climate claims and proving these to stakeholders.
We can broadly categorize the benefits into four fields: strengthening trust and ambition in climate negotiations, enabling more efficient and accessible carbon markets, democratizing access to climate action, and providing the ability to pull revenue from secondary market transactions back to project owners.
Use Case for EAC and REC Lifecycles
This infographic from the white paper, illustrates the life of a carbon credit and the pain points it encounters with current legacy mechanisms. From origination to registration, issuance and retirement, there are multiple points that we can draw parallels with in the life of a REC, mostly from registration phase onwards. The origination phase of a REC differs and is simpler, insofar as one REC is pegged 1:1 with a megawatt-hour (MWh) produced by a renewable energy project. For quantification purposes, the emissions avoided by the production of 1 MWh can be calculated through standard grid emission factors depending on geography.
How blockchain features in the Reneum ecosystem
From the origination stage to the measuring, reporting and verification stages, through to issuance and transactions, blockchain solves the pain points both in the carbon credit and REC lifecycles. In addition, pertinent to steps 9 and 10 in the infographic, the technology allows for unprecedented transparency and verification of impact through the digital RECs and their attached metadata viewable instantly online.
10 Key Takeaways
To summarize, below are ten key takeways from the Blockchain for Scaling Climate Action white paper:
Blockchain can provide an enabling infrastructure to combat climate change at speed and scale.
Digital technologies, including blockchain, can provide an enabling infrastructure layer needed to manage (and account for) rapid increases in the speed and scale of global climate action, with integrity and efficiency programmed in from the beginning.
Blockchain can improve the transparency and integrity of existing decarbonization mechanisms like carbon markets.
Digital environmental assets and carbon accounting systems can provide real-time visibility into the effectiveness of emissions reduction and sequestration efforts.
Blockchain can democratize ownership and reallocate resources to shift power dynamics to the people most knowledgeable of, and most vulnerable to, the effects of climate change.
Blockchain could also improve the transparency and integrity of existing decarbonization mechanisms like carbon markets.
Digital carbon markets can funnel more money to project developers.
Fractional ownership of credits, made possible by tokenization (i.e. digitization) of credits, allows individuals and smaller organizations to participate in the carbon market.
Blockchain's participatory culture is inspiring a new wave of climate action by younger generations who see the technology as a tool for empowerment.
Blockchain adoption and implementation across decarbonization sectors will require thoughtful coordination, meaningful action across layers of society and industry, education and balanced regulation.
5 Blockchain for Renewable Energy Use Cases
- Facilitate peer-to-peer energy trading, which could help increase the adoption of renewable energy.
- Allowing individuals to directly buy and sell energy from one another, without the need for intermediaries, creating a more decentralized and democratic clean energy system.
- Track the provenance of Renewable Energy Certificates (RECs), which certify that a certain amount of energy was generated from renewable sources, and enable more efficient and transparent trading of these certificates.
- Help increase the demand for renewable energy and incentivize the development of new renewable energy projects.
- Provide access for traditionally underfinanced markets in the energy transition.
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