In November of 2017, US federal agencies have concluded in their report that human activity is directly linked to the increase of earth’s temperature and extreme weather events. This sets a huge challenge for governments and businesses to reduce their energy consumption and minimize the release of greenhouse gases into the atmosphere while maintaining growth. One method economists have come up with for limiting unavoidable carbon emissions is called Carbon Offsetting; and Blockchain technology just might be the perfect candidate for accelerating this procedure and making it much more practical, transparent and cost-effective.
Carbon offset is the process of converting emission reductions into tradable permits allowing emissions to become commodities. These permits can then be sold to other organizations, businesses or even individuals that are compelled by legislation or just simply wish to ‘offset’ their carbon dioxide emissions. In theory one activity offsets the other, but in practice it’s very hard to guarantee that emissions are actually being cut down in a project. Therefore, better systems are needed for avoiding manipulation and fraud in recording energy reduction and carbon footprints. And that’s where blockchains come in handy.
The Malaysian-based blockchain start-up, BESC, short for Blockchain Energy Savings Consortium, is developing a decentralized platform for tracking energy savings and tokenizing carbon credits. They are planning on deploying two blockchains, one is public and the other is private using NEM. It’s one of the few enterprise solutions that can be applied to utilize the decentralization capabilities that blockchains offer while providing necessary privacy and security in data storage.
Private blockchains are usually used in Business-to-Business (B2B) interactions. In the case of BESC, it is used to record energy savings of a given project. These savings are the product of an Energy Performance Contract (EPC) between the project developers and an energy service company (ESCO). EPC’s were nearly impossible to operate in a virtual environment, however, with the use of digital tokens and smart contracts, respective parties can now easily automate, track and validate payments. Data can then undergo an auditing procedure by carbon consultants to certify the corresponding amount of carbon credits rewarded to project developers in compliance and adherence to the United Nations Framework for Climate Change Convention (UNFCCC).
Once carbon credits are generated they will be tied to a cryptocurrency called ‘EPC Token’ stored on a public blockchain which can be traded on various cryptocurrency exchanges assuring purchasers that these tokens cannot be duplicated or falsified. This business model allows investors as well as the general public to invest into energy efficiency and renewable energy projects like wind and solar. The start-up is still in its early days and seeking funding to undertake additional system development.
Should you buy carbon credits?
When you’re puttering around the house you’re probably not thinking of melting ice caps or changes in rainfall patterns and this is a huge challenge for climate scientist. Climate change is such a massive, world-changing issue, that it’s difficult for any one of us to feel responsible. “No raindrop blames itself for the flood”. The answer is yes of course, but before you buy yourself some EPC tokens make sure that you’re not giving yourself a license to pollute. So you should always try to reduce your own carbon footprint first before paying someone to reduce theirs.
Useful links and videos:
Video: Cap And Trade — Carbon Offset — Carbon Footprint — Climate Change — Carbon Scam — Pollution Scam
Video: The Financing Toolbox for Energy Saving Projects: Energy Performance Contracting
BESC Website
BESC: Empowering The Masses To Mitigate Climate Change (Community Fund Proposal)
Should You Buy Carbon Credits?
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