DR JANE THOMASON, CEO ABT AUSTRALIA, gives her perspectives on helping prepare the world for global warming with blockchain solutions -for a greener, inclusive, more resilient world.
Earlier this year, my colleagues Mira Ahmad, Julien Bouteloup, Pascale Bronder, Katrina Donaghy, Edward Hoyt, David Huysman, Ben Joakim, Loretta Joseph, David Martin, Steven Pocock, David Shrier , Tony Willenberg and I spent several months thinking about how Blockchain can transform climate finance and improve access to renewable energy for the poor. The full project will be published in the forthcoming book “Transforming Climate Finance and Green Investment with Blockchains ” by Alastair Marke.
Climate change has a disproportionate impact on the world’s poor. Developing countries will require tens of billions of dollars in new funding annually to adapt to climate changes. Blockchain innovations can help build trust and transparency in international climate finance and could potentially have major implications in scaling and speeding up north-south, south-south, and peer-to-peer climate finance transfers. Here are the 5 key potential applications of Blockchain for climate finance, green prosperity and the poor.
- Digital Identity is a fundamental human right and is a prerequisite for financial inclusion, access to services, formal employment and movement of people. Blockchain provides a game changing opportunity to confer a permanent, immutable record of identity where no state identity exists. This will improve accuracy and transparency for carbon trading, beneficiary ID, and cash transfers for climate finance and financial inclusion more generally.
- Tracking Financial Flows to the Poor Each year, over one trillion dollars flows from individuals, governments, and businesses to address the challenges of poverty and crisis across the world. The distribution and tracking of global development and humanitarian aid funds remains complex, opaque, and hugely inefficient. Transfers can take weeks to arrive and 5-10% losses are not uncommon. Lack of transparency is also a key issue as there is an inability to trace the flow of funds from end to end. Blockchain applications to track financial flows and report results, and smart contracts that target beneficiaries have potential to speed up financial flows and vastly improve accuracy and transparency of reporting.
- Tracking Results: Blockchain smart contracts offer a tamper-proof and zero-cost administrative mechanism for connecting positive (or negative) environmental changes or outcomes to financial incentives/disincentives.
- Renewable Energy: The provision of access to affordable electricity through the introduction of off-grid renewable energy technologies, has the potential to dramatically improve the lives of the more than 1.1 billion people who lack access worldwide. Blockchain can play a useful role in the process of introducing renewable technologies suited to the needs and capacity to pay of the rural poor by reducing transaction costs, increasing the transparency and traceability of customer payment data, and increasing trust between parties. Furthermore, the growing traction in Blockchain and cryptocurrencies open the doors to autonomous market players and services to disrupt the entire energy market using a peer-to-peer (P2P) business model. Developing countries represent one of the most interesting use cases for decentralised energy through a peer-to-peer infrastructure and using new, low-cost renewable energies.
- Faster Cheaper Remittances: With Blockchain enabled digital currencies and identity – financial inclusion can be provided to the two billion unbanked in the world. Blockchain would reduce the transaction costs for remittances and climate transfers, giving the unbanked access to financial systems, and ensuring that climate funds intended for the poor actually reach them.
Bill Gates speculated that if the world can find a source of cheap, clean energy, it will do more than halt climate change, it will transform the lives of millions of the poorest families. The focus of the global community now needs to move to real world use cases and solutions that can scale. This can form the focus of a global collaboration to deploy Blockchain as a strategic ally towards a greener, inclusive, and resilient world.