Automated systems and blockchain technology are increasingly being used to improve the efficiency and accuracy of the carbon market, which is an important component in the fight against climate change.
Cryptooshala spoke with Bill Kentrap about the role of blockchain technology in digitizing verifiable data in the carbon market. Kentrup is the head of Origination and co-founder of Allinfra Climate, an enterprise software platform designed to help institutions achieve their sustainability goals. Online monitoring, reporting, verification, issuance, distribution and cancellation of carbon credits and carbon claims can provide efficiency and predictability that has not been possible in the past, he said.
Kentrup said that by putting everything on a “digital track”, systems for detecting double counting, corporate carbon accounting, ratings and reporting to government regulators could go digital, stating:
“It is much less efficient for a digital accounting system to process data from reports, non-digital sales, sales contracts, and from traditional registries, which have limited information about who is the ultimate owner of the decommissioned asset.”
Kentrup mentioned that historically the problems and inefficiencies associated with the carbon market have led to understandable frustration and serious rejection. According to him, this resistance contributed to the fact that the Kyoto Protocol was not extended after 2012.
The Kyoto Protocol is an international treaty aimed at reducing greenhouse gas emissions and addressing climate change. He established an emissions trading system that allows countries that have exceeded their emission reduction targets to sell their excess allowances to countries that have not met their targets.
Speaking about how the current manual data collection and verification process in the carbon market is failing, and how blockchain technology can help eliminate these limitations, Kentrup said: “Most of the traditional approaches used to monitor, report and verify (MRV) emissions reductions use intermittent manual processes to determine the environmental impact of projects. Data collection is often laborious and time consuming as the number of emission reduction projects requiring environmental financing increases.”
“Historically, there have been significant challenges in having the validation and verification bodies needed to get the job done from start to finish – the process of getting a single issue of carbon credits issued by a project takes months (sometimes more than 6 months).”
He added:
“In order for organizations to truly reduce net emissions and accurately measure climate impact, it is critical that we have validated data that is linked to carbon offsets. A blockchain-based system can help us achieve this through the collection of real-time digital data that can be verified and verified.”
Explaining how the verifiability of data collected with blockchain technology improves the accuracy of reporting in the carbon market, Kentrup said: origin. . […] This results in greater predictability, reduced time and cost, and a significant improvement in auditability and auditability.”
Automating the collection and verification of data in the carbon market faces many challenges. Kentrup mentioned that these challenges include the availability of an appropriate market-based technology, as in some aspects there is not yet a suitable technology for full automation or digitization. In addition, over-enthusiastic “technology for climate” providers with little experience in climate finance will inadvertently fail and in some cases harm the market. This risks spoiling the broader market’s perception of “technology for the climate”. Finally, resistance to adoption by traditional market players is also a problem for the sector.
Despite the challenges, Kentrup expressed optimism that new ideas and technologies are being introduced and traditional players are moving to digital solutions for climate finance.
Takeaway from Davos: Blockchain is changing how we fight for sustainability
Noting the role of blockchain technology in the foreseeable future of the carbon market, Kentrup shared; “While potentially not the only solution available, the blockchain-based platform currently provides all stakeholders in the green financial products market with greater confidence in the underlying products, significantly reduces and makes more predictable time and costs, improves the efficiency of value distribution among the parties involved, and more optionality and accountability, ultimately helping to accelerate positive action on climate change.”
“Putting carbon data on a digital rail is a way to protect a party’s decarbonization activities in the future. In the near future, this will make carbon offsets faster and cheaper, and better structure financing, insurance and professional services – all of which are absolutely essential to strive for given the urgency with which we must fight climate change.”
Credit : cointelegraph.com
