The world has failed to halt global warming. Four years after the signing of the Paris Agreement, most experts predict global warming will exceed the agreed thresholds, with disastrous consequences. As much as the world faces a climate crisis, it also faces a climate governance crisis: we know what must be done to halt climate change but we do not know yet how to get there.
New mechanisms are evidently needed. Blockchain is one technology that has the potential to boost global cooperation for climate action. Blockchain is a data structure that stores information as a series of cryptographically linked blocks, which are distributed simultaneously to all participants in a network. The information stored on a blockchain is tamper-resistant. This is useful for generating a single source of truth for any kind of information.
Blockchain technology provides the building blocks for what are known as decentralized autonomous organizations, which have been discussed (and criticized) as potential alternative governance mechanisms at the national level. But the benefits of such a decentralized organization at the international level would be much higher.
Imagine a decentralized climate organization, based on blockchain, in which states, companies, and individuals participate and whose interactions are facilitated by smart contracts. These contracts are pieces of computer code running on top of the blockchain, which makes them virtually unstoppable. A common token— let us call it climate coin— allows climate commitments by states to be linked with the flourishing ecosystem of transnational climate initiatives and individual climate action.
Such an organization would help get the world together to act against climate change in three ways.
Transparency boosting
Coordinated action against climate change requires better information. One important task is to ensure that different stakeholders do not claim carbon credits for the same carbon-offsetting activity, such as two companies paying for the same forest to be planted.
To avoid such double-counting, a publicly shared digital LEDGER of carbon credits, as currently piloted by the Pacific-Alliance nations, would offer a more cost-effective solution than a central agency settling transaction of carbon credits.
Another task would be to verify that carbon-offsetting activities have actually occurred. Blockchain technology, combined with informal feeds such as internet-of-things devices, could tap new information sources.
Meanwhile, smart contracts offer an efficient way to reward critical tasks like verifying emission reductions and adaptation measures at the local level.
Enforcing commitments
Climate change is an area ripe with broken promises. Consider the decision by US President Donald Trump to withdraw from the Paris Agreement. In other countries, worries have grown that the COVID-19 pandemic will thwart government efforts to honor their climate-related commitments.
Through smart contracts, blockchain technology could mitigate the risk of backsliding, provided that states underpinned their commitments with a monetary deposit. If states fail to comply with their emission reduction targets, their deposit could be taken and redistributed as climate coins to those that have abated carbon emissions, for example by planting trees, or another climate action.
More effective enforcement of commitments through smart contracts is only possible where resources have been staked upon commitments. An added benefit of eliminating uncertainty around enforcement is to entice more ambitious climate commitments from those who are concerned about being cheated upon by more powerful bodies.
Blockchain-based climate governance has undeniable theoretical benefits, but there would be significant obstacles to its realization.
While the blockchain ensures that once-recorded data is tamper-resistant, it can do little to ensure that the data that is brought onto the blockchain can be trusted. Start-ups like Chainlink have proposed decentralized networks of information feeds as a promising solution to this problem, but for some applications, suitable solutions are hard to find.
A blockchain-based climate organization might not come to fruition if key players decided not to join. Powerful states or companies might be especially unwilling to participate in a system that makes broken promises immediately transparent and that automates the punishment process. But as long as there was enough momentum, they might slowly be incentivized to get involved.
A virtual entity for climate governance would also require people to accept to be governed by algorithms. And at the moment, this might be the hardest challenge of all.
