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How can blockchain decarbonize the planet?

Blockchain can be a strong tool to transform green finance, knowing that transparency and traceable information are key to measuring and monitoring climate impact…

The benefits of blockchain for green finance

Financing the transition to a low-carbon future could find new impetus thanks to blockchain. Indeed, the technology uses a database capable of keeping a complete record of any transaction taking place within a network. It can be useful in a range of areas, including maintaining a land title registry, health records, but also green finance. To this end, it can help improve the market for carbon emissions, clean energy distribution, climate finance flows, monitoring and reporting of greenhouse gas emissions… In addition, the revenues generated by various blockchain projects can be used for various charitable causes. The Philcoin platform is one illustration of this, by making it possible to generate passive income flows, but also to donate the accumulated funds to various NGOs, while respecting the 17 United Nations Sustainable Development Goals. Other initiatives exist such as SolarCoin which offers tokens to people installing solar energy.

The “NFT” plantation model

Tokenizing trees, as part of a regenerative finance program, can help decarbonize the atmosphere. Smart Forest, a Polish startup, is an example of investing in forests using the power of blockchain. The company offers entry tickets from €40 to subscribe to a plantation via the acquisition of an NFT. In its plantations in Romania, where land is more accessible, Smart Forest grows paulownia. According to the company, one hectare of planting of this variety can save “up to 30 hectares of natural forest” due to its high productivity. Veritree, a Canadian company that operates on the same model of reforestation via the Blockchain aims to plant 1 billion trees by 2030. It uses technology capable of monitoring, verifying and tracking plantations. This company has set up a partnership with many companies, including the Korean multinational Samsung.

Improving the traceability of wood

Illegal logging and the ‘under the radar’ timber trade are a problem for the authorities, who cannot monitor everything. Governments suffer in terms of loss of revenue and damage to the environment. With its improved data security and traceability, blockchain can help certify timber and other natural resource supply chains. Not to mention the fact that it can facilitate real-time timber tracking and tracing audits.

Tokenized “carbon credits”

Large companies find in the purchase of carbon credits, the way to achieve carbon neutrality by offsetting their CO2 emissions, a real devastation of modern times. In fact, this practice can encounter several pitfalls, including duplication with several organizations that often claim credit for the same project. By moving these credits to the blockchain, regenerative finance projects hope to make transactions more transparent with irrefutable proof issued to investors, suppliers and regulators. This is the case of Moss.earth, climate tech based in Brazil, which aims to convince landowners to grow trees rather than crops or livestock, with the lure of carbon credits. These credits being a way to make its forest land expensive. Single.Earth follows the same logic by offering tokens to encourage landowners to keep trees on their land rather than razing them for the benefit of agriculture. Concretely, landowners put their property on the Single.Earth platform and the company sends biologists to assess the ecological value of the plantation. Once certified, investors buy them, getting carbon credits in return in the form of tokens. In France, as Les Échos recently indicated, the Château de Chambord is looking for a partner to enhance its huge forest by selling CO2 credits…

Still limits…

Issuing carbon credits on the blockchain can raise other environmental issues, as mining cryptocurrencies can consume significant amounts of energy. Furthermore, blockchain is not necessarily the silver bullet for green planning given the volatility and instability of crypto-assets. If prices continue to fluctuate as widely as some crypto assets, it makes planning and sustainability difficult… To be continued!

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