Dating back to our early days as hunter-gatherers, humans have had a long and complicated relationship with the environment. Nature has provided us with the resources needed to sustain human progress, however this has taken a toll on the environment.
We’ve exploited, traded and profited from natural resources that we’ve always assumed are ours for the taking. Moulding and reshaping the environment to create energy has been our biggest business venture yet, but this relationship is about to change.
From an economic perspective, the environment is generally regarded as a public good – and that’s part of the problem; some individuals, free riders, enjoy the benefits of the environment without taking responsibility for its protection.
Nobody is being held accountable for the damage that’s being done. However, this is changing.
The rise of the internet and massive communication tools have led to new digital economies and the current Silicon Age. Big data, artificial intelligence, machine learning, blockchain, and many other buzzword technologies are emerging and being operationalised to tackle our biggest challenges – among them, environmental degradation and climate change.
Human ingenuity and technology have saved us countless times before. Can we do it again? I’d like to explore this potential by honing in on one of these buzzwords: blockchain.
Blockchain, at its core, is an accounting tool. It is a ledger that records value exchanges between different users. Each user has a copy of that ledger on their computer, making the data hard to tamper with, and acting as a single source of truth for all transactions.
Much has been said about the potential of blockchain in different industries, but the breadth of possibilities it offers the renewable energy industry is particularly noteworthy.
One area of particular interest for blockchain and renewables is the potential to trade energy peer-to-peer through blockchain. In other words, you can send your solar energy to your neighbour.
In Southeast Asia, the energy industries have traditionally been regulated and highly centralised. However, the process of energy deregulation is underway in many countries in the region, such as Singapore, Malaysia and Thailand. As deregulation progresses, the market is opening up to new players.
One such example is a peer-to-peer energy trading pilot project in Bangkok where a school, hospital, apartments and a shopping centre trade energy between them, boosting the creation of locally-generated clean energy. With rapidly rising electricity demands and incredible renewable resources, Southeast Asia has the potential to set the global stage for the future of blockchain and renewable energy.
But what does this have to do with the environmental protection and accountability? As mentioned, blockchain produces a shared ledger of accountability. The environment, which has long suffered massive damages, is now able to reward those that protect it, while singling out those that are not doing their share – the free riders.
South Pole presented their blockchain application, developed in partnership with ixo Foundation and the Gold Standard, for renewables at Blockchain2Energy Asia last November. The application uses blockchain to automate the monitoring, reporting and verification of carbon credits for renewable energy plants. Through the use of algorithms and smart contracts (blockchain lingo for “automatic rules”), South Pole is helping to reposition the way the environment does business.
With this creative approach, users who produce clean energy and help mitigate anthropogenic carbon emissions can be rewarded for their efforts instantly. A process that used to take between 18 and 24 months can now be reduced to just a few, with dramatic cost reductions of around 80% as well.
Blockchain can help ensure accountability for the renewable energy industry, and put the environment back in the centre.
Does transparent accounting through blockchain hold the key to safeguarding our finite natural resources and improving our relationship with the environment? It’s too early to tell whether these digital tools will make significant changes, but one thing is certain: to safeguard our future, we need to realise that we only have one Earth and it is up to us to protect it.
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Want to read more about South Pole, Gold Standard and ixo Foundation's blockchain-powered pilot project? You can do that here – or for further information on South Pole's full offering of renewable energy solutions, click here.