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13 February, 2017

Blockchain-revolution in environment protection

Blockchain technology enables environmentally responsible business to monetize the outcomes of green projects. Photo: b-neutral.com

For the first time in the world Russian startup "Blockchain Ecosystem" has applied blockchain to rescue the planet from climate change. DAO IPCI digital ecosystem allows to raise investments to green projects and technologies.

Until recently, services rendered to us by nature were perceived as free. We took fresh air, clean water and fertile soils for granted. Rapid growth of the population, climate change and exhaustion of resources make people, countries and corporations appreciate ecosystem services.

The purpose to preserve nature has led to creation of specific economic instruments and mechanisms: for example, emissions trading, green bonds etc. Carbon units (GHG credits) represent the outcomes of climate change mitigation activities certified under specific climate programs, standards and methodologies and assured by the independent entities. Green bonds represent obligations to finance result-based environmental projects. National, subnational and international cap-and-trade or tax-based schemes are implemented to control pollution. Thus, environmental markets and financial instruments aimed at mitigation of environmental impact are developing.

Because of endless smog, residents of Beijing buy tens of million cans with air a year. Photo: pixanews.com

At the same time, development of technologies influences economic processes. Traditional markets and banks will change soon and the reason is blockchain.

Some people call it a revolution comparable to the advent of the Internet. Blockchain is a way of decentralized data storage or digital ledger of operations, transactions, contracts. The copies of the data are stored on hundreds and even thousands of computers linked in one network. Such system is almost impossible to crack, as it requires access to one thousand computers but not one. Therefore, safety of data is ensured. Besides, blockchain ensures 100% transparency of transactions: each action made by any of participants of network remains in memory of the system forever, until the last pair of computers in the network exist.

The difference between centralized and decentrilised network. Infographics: InformatiqueNews.fr

One more advantage of blockchain is getting rid of most of intermediaries represented by banks, notaries and supervisory authorities, and as a result, minimizing transaction costs. Unlike banks, the blockchain transfers are made not in 3-5 working days but within minutes. They can be accomplished by anyone connected to the Internet at any time. The issue of distrust of the parties is resolved by their trust for the open-source smart contracts performance. One can find out more about advantages of the technology.

DAO IPCI blockchain ecosystem developed with the Airalab IT support, the initiative implemented with the participation of the environmental Russian Carbon Fund, is the first-ever blockchain-platform aimed at market-based financing for innovative environmental projects.

Principle of how blockchain DAO IPCI ecosystem works. Infographics: Russian Carbon Fund

Reforestation, introduction of best available technologies in the sphere of energy efficiency and renewables, waste management, rehabilitation of landfills, construction of wind farms are just few examples of such projects, explains Alexey Shadrin, Executive Director of the Fund.

Infographics by Russian Carbon Fund

Baker McKenzie law firm and IT giant Microsoft have supported the innovation.

"The blockchain technology is ideal to increase transparency in the carbon markets , therefore Blockchain Ecosystem project has global significance and high development potential",

states Max Gutbrod, Partner at Baker McKenzie.

CHG offset credits are the first asset to be traded in DAO IPCI blockchain ecosystem. By buying them companies can offset carbon footprint, environmental damage, as well as enhance the image of a socially responsible supplier of goods and services.

   

Actual trial issuance of carbon units on the blockchain platform was performed on December 1, 2016. Pilot commercial transaction is planned for February 2017. The first carbon units to be traded derive from 15.2 MW solar power station in Mauritius. In this project the reduction of greenhouse gas emissions were achieved by substituting the coal-based generation by renewable energy in the electricity grid of the Island. This project was chosen due to high environmental value assured by independent auditor.

La Ferme – Bambous Solar Photovoltaic Power Plant in the island of Mauritius. Photo: ecosurafrique.com

The designers of the DAO IPCI platform note the paradox in Russia. According to preliminary estimates, today demand for buying the carbon units is higher than the supply. DAO IPCI developers explain that this is due to lack of emission reduction credits or removals by sinks compliant with the international standards and requirements in Russia.

One of the purposes of the “Blockchain Ecosystem” is also to store the data on the environmental results of modernization and implementation of the best available technologies projects. This data can be used to support issuance of green bonds and to monitor supply chains to ensure its conformity with the national rules and international standards.

Investors in bitcoin and blockchain ecosystem. Source: CBInsights

DAO IPCI blockchain ecosystem has drown interest among Russian business leaders. Now the developers are negotiating with the international airline, which is planning to use the innovation to afford passengers the opportunity to offset their carbon footprint.

"DAO IPCI is an example of the correct and logical use of the blockchain technology. Global scale project cannot have centralized hierarchy, which is why here the decentralization technology is ideally applicable",

says the Leader of Airalab Sergey Lonshakov.

“Blockchain ecosystem” is actively communicating with other companies, which are kept in confidence for now. “We invite the environmental projects and their potential investors for cooperation. By using blockchain technology we are creating digital ecosystem in order to develop the green economy in the country and worldwide and to preserve our nature heritage”, — concludes Shadrin.

Discover Russia in the best articles of Climate Russia:

The Outcomes of the Historic Paris Agreement in One Picture

Carbon Market as a Presentiment

Paulownia: an Allien With the Green Mission

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