Blockchain in Climate Change

https://courses.shortlisted-productions.
com
Blockchain applications in
Climate Change
Julia Mariasova, Shortlisted Productions
Alastair Marke, Blockchain and Climate Institute
https://courses.shortlisted-productions.com
Agenda
´ Common misconceptions about blockchain technology

´ Blockchain history and key features
´ Blockchain definition
´ Blockchain benefits
´ Examples of blockchain applications in Climate Change
´ DAO as a blockchain organisational structure: Climate DAOs
´ Challenges in adoption of blockchain technologies
´ Additional resources
These are the notes for the training course “Blockchain technology applications in Climate Change” Produced by Julia Mariasova © www.Shortlisted-Productions.com 2023
Why there is lack of trust for the concept of

blockchain
´ Blockchain is usually associated

with cryptocurrencies, where it
found its first application
´ Climate unfriendly reputation
comes from the energy intensive
bitcoin mining process
´ Cryptocurrency markets
volatility, failed cryptocurrencies
and exchanges (most recent
example FTX) and scandals
around celebrity endorsements-
all add to the bad perception of
Image source: Analytics Insight
the blockchain technologies
Blockchain history
In 2008, Satoshi Nakamoto published a paper on

blockchain. Nakamoto solves a fundamental problem
that prevented its adoption: unlike paper currency, digital
currency or a token could be duplicated and spent
several times. This was known as "double-spending," and
Nakamoto solved it by creating the blockchain system of
verification.
Blockchain definition and key features

A blockchain is a distributed database that maintains a continuously
growing list of ordered records, called blocks. These blocks are linked
using cryptography. Each block contains a cryptographic hash of the
previous block, a timestamp, and transaction data.
Key features:
´ Trustless and permissionless: transactions can take place between
two parties without the need for a trusted third party, and neither
party in a transaction or interaction has to seek permission from a
third party before it can take place
´ Decentraliasation: the transfer of control and decision-making from
a centralized entity (individual, organization, or group thereof) to a
distributed network.
´ Distributed Ledger is a database that is consensually shared and
synchronised across the network spread across multiple sites,
institutions or geographies. It allows transactions to have public
“witnesses”, thereby making a cyberattack more difficult.
´ Consensus Mechanism: rules by which the network participants
agree to record data on the ledger and decide which transactions
are legitimate. Transactions are coded into the protocol so cannot
(easily) be changed or updated. It is the majority copies on the
network who override any amended record automatically.
´ Smart contracts: agreements that get self-executed upon meeting
certain predetermined and put into code criteria. These traceable,
transparent and irreversible.
´ Tokenisation: the process of converting something of value into a
digital token that's usable on a blockchain.
Blockchain system is based on four main components:

´ The distributed ledger that stores blocks of transactions
´ Peer-to-Peer Networks consisting of nodes
´ Consensus mechanism that validates the transactions
´ Incentive Mechanism that rewards validators
Consensus mechanisms
(2 main types) Proof-of-work (PoW)
´ The nodes that validate transactions and propose

new blocks are called miners.
´ Miners compete to generate a random number to
unlock the next block on the chain, consuming a
significant amount of energy, hardware and
computing power
´ Example: Bitcoin
Proof-of-stake (PoS)
´ The nodes that verify transactions and propose
new blocks are called validators.
´ Validators are defined based on the percentage
of tokens or, so called stake, locked by each
validator for the right to validate transactions,
hence less energy consumed compared to PoW.
´ Validators are discouraged from misbehaving by
the process of slashing, when their stake is “burnt”
or removed from the network if they break the
rules.
´ Example: Ethereum
Blockchain benefits
´ Decentralisation
´ Security
´ Transparency
´ Efficiency
´ Robust information monitoring, reporting and verification (MRV)
´ Inclusion
Examples of applications in Climate

Change (1 of 2)
´ Renewable energy trading on blockchain (renewable micro-generation -
small household can participate in energy markets by supplying renewable
electricity to the grid)
´ Forest and ecosystem conservation programmes (blockchain combined with
AI to automate data collection and analysis can ascertain the economic
value of restored forests and other nature-based solutions)
´ Tracking supply chains of goods and commodities (eg timber, rubber, palm
oil)
´ Smart-contracts for parametric insurance including micro-insurance against
natural disasters (eg crop insurance for low-income farmers, where smart
contract automate cash payouts through smartphones based on
meteoritical parameters confirming catastrophe).
´ Blockchain-based climate and ESG disclosures. If ESG reporting datasets are
maintained on blockchain technologies – this information will be more
trusted and there will be less opportunities for greenwashing or double
counting.
Examples of applications in Climate

Change (2 of 2)
´ Facilitation of disbursement of green and climate finance (blockchain combined
with IoT and sensing technologies to validate that a green project reached
certain conditions necessary to execute smart contract that releases finance,
and simultaneously providing evidence to investors that the funds were allocated
to the right initiative, and paid out after certain criteria has been met)
´ Green bonds:
´ blockchain-based verification of how “green” the bond is
´ tokenisation of green bonds making them more accessible to retail investors and thus
helping to increase green financing
´ Carbon markets:
´ facilitation of carbon markets infrastructure (MRV + carbon registry)
´ tracking/accounting of carbon assets and emission reduction units (carbon
credits/offsets) on blockchain to avoid double-counting and monitor their validity
´ tokenisation of carbon offsets
´ standardisation of carbon emissions recording, providing groundwork for more standard
carbon pricing
What is Web3?
Web3, as a term was

introduced by Gavin
Wood, the president of
Web3 Foundation, and it
represents the next phase
of the internet.
´ Web1 was the era of open, decentralized protocols, where most online activity
involved browsing individual static pages.
´ Web2 is the era of centralization, in which a large part of communication and
commerce occurs on closed platforms and is owned by a handful of
technology corporations, subject to centralized control by regulators and
government agencies.
´ Web3 gives data ownership and power over digital identity to individual users.
Web3 refers to a decentralized online ecosystem based on blockchain.
What is DAO?
A decentralized autonomous organization (DAO) is
an emerging form of legal structure that has no
central governing body and whose members share a
common goal to act in the best interest of the entity.
Popularized through cryptocurrency enthusiasts and
blockchain technology, DAOs are used to make
decisions in a bottom-up management approach
(Source: Investopedia)
Features of DAO organisation:

´ Members of DAO are joint owners. Key decisions are
made through voting
´ The agreements and rules are coded into smart
contracts and cannot be changed without voting
´ Collective ownership of crypto wallet, with access
through multi-signature
´ All transactions are transparent to all members

´ DAO can be independent from investments and get
revenue from selling tokens and NFTs
´ Members can work as much as they want/can, and the
work can be rewarded with tokens
Types of DAOs
Source: https://www.alchemy.com/blog/types-of-daos Source: https://consensys.net/blog/blockchain-explained/what-is-a-dao-and-how-do-they-work/
Other definitions Impact DAO: the goal is to

achieve tangible positive
externalities by redesigning core
mechanisms of society causing
problems in the first place. Most
Climate DAOs can be considered
Impact DAO.
Regenerative Finance (ReFi) is defined as
a movement focusing on the power of
blockchain and web3 to address climate
change, support conservation and
biodiversity, and creating a more
equitable and sustainable financial
system. Under this system, a positive
impact is no longer a by-product of return
on capital. Instead, the goal becomes
positive change with financial return
circulating amongst the community. It
supports a shift from an economy that is
extractive to one that is regenerative.
Examples of Climate DAOs

´ dClimate - decentralised climate information ecosystem of data-driven
technology solutions for helping communities achieve climate resilience
´ ReFi DAO – fund projects that help accelerate the transition to a regenerative
economy
´ DAO Diatom - ocean protection and cleanup projects
´ DAO Earth Fund - Carbon removal and Green Technologies, Ecosystems and
conservation
´ KlimaDAO – tokenisation of carbon credits. They aim to accelerate the price
appreciation of carbon assets, and thus making low-carbon technologies and
carbon-removal projects more profitable
´ RedemptionDAO – Congo basin conservation projects
´ Toucan DAO – carbon infrastructure for Web3 projects, credit suppliers and
corporate offsetting, helping grow the voluntary carbon market
´ SparkEco DAO - invest in solar energy projects, fund non-profits working on solar
projects in developing communities, and support land preservation efforts
Key challenges in adoption of

blockchain technologies
´ Datasets quality and standardisation
´ Policy and legal issues:
´ Legal definitions of digital assets on a blockchain and how they are/will be
regulated in the current financial and banking laws
´ Lack of authentication of offline identity and assets
´ Compliance with data protection laws (transaction data privacy)
´ Oversight and regulation
´ Legality of smart contracts
´ Technical delivery and cost of implementation
Blockchain in Climate Change

Conclusion
Well-design blockchain solutions can bring:
´ transparency, traceability and trust
´ efficiency, automation and cost reduction
´ inclusion, accessibility and democracy
THANK YOU
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Additional resources on the subject of

Blockchain in Climate Change
´ UN Climate Technology Centre and Network (CTCN) presentations and
recordings of webinars https://www.ctc-n.org/news/ctcn-webinar-series-
blockchain-technologies-climate-policy-implementation-recordings-
available
´ Book by Alastair Marke: Governing Carbon Markets with Distributed Ledger
Technology https://www.amazon.co.uk/Governing-Carbon-Markets-
Distributed-Technology/dp/1108843565
´ Blockchain and Climate Institute https://blockchainclimate.org
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https://courses.shortlisted-productions.

´ Common misconceptions about blockchain technology

Why there is lack of trust for the concept of

´ Blockchain is usually associated

In 2008, Satoshi Nakamoto published a paper on

Blockchain definition and key features

Blockchain system is based on four main components:

(2 main types) Proof-of-work (PoW)

´ The nodes that validate transactions and propose

Examples of applications in Climate

Examples of applications in Climate

Web3, as a term was

Features of DAO organisation:

´ All transactions are transparent to all members

Source: https://www.alchemy.com/blog/types-of-daos Source: https://consensys.net/blog/blockchain-explained/what-is-a-dao-and-how-do-they-work/

Other definitions Impact DAO: the goal is to

Examples of Climate DAOs

Key challenges in adoption of

Blockchain in Climate Change

Additional resources on the subject of

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