I hope you are all well and having excellent day, welcome to CryptoGod-1’s blog on all things crypto. Today I will be looking at the recent announcement that the European Commission is to award an €800,000 study on the environmental impact of cryptocurrencies.
European Commission Study
It was announced on Tuesday the 26th of September 2023 that the European Commission is to award an €800,000 euro ($842,000) contract as part of plans to tackle the environmental impact of cryptocurrencies. The tender document, titled "Developing a Methodology and Sustainability Standards for Mitigating the Environmental Impact of Crypto-assets," highlights the concerns over the environmental and climate impact of cryptocurrencies. Within the document the European Commission noted:
"There is evidence that crypto-assets can cause significant harm on the climate and environment and generate negative economic and social externalities, depending on the consensus mechanism used to validate transactions."
According to the EU it depends on the consensus mechanism used for transaction validation to determine the adverse effects on the environment, economics, and society. This comes in response to the increased demand for crypto-assets and crypto-mining within the EU and further afield, and the Commission has expressed their concerns over its potential impact on the region's climate and sustainability objectives outlined in the Paris Agreement.
Back in 2015 the world leaders established the Paris Agreement in response to climate change, with its primary aim to limit global warming to well below 2°C above pre-industrial levels, with an overall aim of 1.5°C.
All nations involved have submitted national climate action plans (NDCs) which aim to reduce emissions. These plans are regularly adapted and changed to ensure overall targets are obtainable. As part of the plans the transparency and financial support for developing nations is key.
The Paris Agreement became effective on the 4th of November 2016, and afterwards it was ratified by at least 55 countries responsible for over 55% of global emissions. All EU nations are onboard with the agreement, although the United States of America had withdrawn from the agreement under the Presidency of Donald Trump, only for President Joe Biden to re-join on his first day in office in 2021.
With recent pressure mounting from cryptocurrencies, the Commission has decided to react with this tender document. Bids will be accepted until the 10th of November 2023, which will seek to establish standards which will contribute to potential future EU policies around the environmental impact of crypto on climate change.
The initiative also envisions introducing new energy efficiency labels designed explicitly for blockchains. The contract is due to last 13 months and it intends to bolster the Commission's ability to valuate and address the environmental ramifications of crypto-mining. Specific sustainability benchmarks for crypto-assets is also part of the overall objective, and will help to enact future legislative measures pertaining to the financial regulation of cryptocurrencies.
The contract is just one of many investments and initiatives the EU has undertaken as part of their efforts to tackle the environmental impact of crypto along with promoting sustainability. The commitment is part of the EU's willingness to address environmental issues while enhancing its competitiveness as part of the European Green Deal and the REPowerEU Plan. Both of these plans emphasize the importance of energy efficiency and the transition to clean energy sources, and were launched in October 2022.
Digital assets such as cryptocurrencies are included in the multiple sectors encompassed in the plans, as the EU aims to mitigate the environmental impact of various industries.
The REPowerEU Plan was launched in response to the Russian-Ukrainian conflict and will look to address the impact of the crisis on European energy supplies. Its considered an opportunity to move the bloc towards clean energy. As part of this it will require the energy usage of the information and communications technology (ICT) sector to be regulated to a higher standard, including blockchains as a subset of data centers.
This new study, set a year apart from the REPowerEU Plan, will examine environmental concerns related to crypto, including its consumption of water, generation of waste products, utilization of natural resources, and energy usage.
Have a great day.
CryptoGod-1.
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