Using Blockchain to Avoid Double Counting While Empowering Everyone to be Part of the Solution

Today’s side event at COP24 for Blockchain Technology for Enhanced Climate Action emphasized the importance of distributed ledger technology (DLT) to accelerate mitigation solutions for climate change and empower non-country parties to work together. The event featured the Climate Chain Coalition Screen Shot 2018-12-11 at 1.12.56 AMfounded just one year ago but already bringing together 140 organizations with a mission to mobilize climate finance and enhance monitoring, reporting and verification of climate goals.

Blockchain technology is a form of Distributed Ledger Technology (DLT). (For a good explanation of this technology see this World Bank Group 2017 report.)Screen Shot 2018-12-11 at 1.22.55 AM It functions as a decentralized database that can securely store data and digital assets, like environmental credits or certificates. Transparency is increased because the data recorded on the blockchain is a permanent ledger that cannot be modified. Trust between parties is increased because the data is not stored in a centralized location but rather through peer-to-peer transactions. Transaction costs are reduced enabling much smaller transactions that are accessible to more individuals.

A new report issued this week by the Climate Ledger Initiative (a collaboration of several think tanks aiming to accelerate climate action) Navigating Blockchain and Climate Action identified three main areas where blockchain has the most potential to accelerate climate action: 1) next generation registries and tracking systems; 2) digitizing measuring, reporting and verification; and 3) creating decentralized access to clean energy and finance.

The UNFCC has identified blockchain technology as a disruptive technology that has the potential to solve the solution to the main challenge of “how do you attribute the climate contribution while avoiding double counting.” Under the Paris Agreement (PA), a country steps up by submitting their commitment to mitigation measures as their Nationally Determined Contributions (NDCs). Theoretically, the development and continued revision of these NDCs will govern the Parties and their climate commitments under the Paris Agreement. But the Paris Agreement also encourages developed countries to finance projects in developing countries. Screen Shot 2018-12-10 at 5.41.57 PMWho gets the credit toward the NDC – the country financing the project or the country implementing the project? How do we ensure that one country (or entity) doesn’t take credit at one stage of a project and another take credit at a different stage? The security and transparency of blockchain may be the solution. (However, keep a healthy dose of skepticism, said CEO of Goldstandard, Marion Verles, because many times technology solutions are being proposed that don’t actually solve the real world problem.)

Climate change is the seminal issue of our generation and requires all hands on deck. As Massamba Thioye of the UNFCCC said today, “We need to mobilize ALL stakeholders, suppliers, financiers, consumers, citizens, policy makers so that they make the right investment.” The challenge being faced is how do we all work on the solution and create market incentives. Ms. Verles identified the importance of DLT technology in the supply chain to help corporations get the critical data they need to make decisions on the impact that a good has on the planet (carbon impact, water impact, etc).

See GLOCHA - the Global Citizen Empowerment System

See GLOCHA – the Global Citizen Empowerment System for Full Poster

This information can move to the end consumer. If you knew, and could compare, the carbon impact of items you were purchasing, would you pay a little more to make a cleaner purchase? The bottom line is that blockchain has the potential to add a value stream to products that represents the intentional choices of individuals, companies, and countries to work toward a cleaner, safer planet.

(Note bitcoin uses blockchain technology in a very energy intensive manner that is not healthy for our planet – see fellow VLS student Ben Canellys blog here.)

 


Canadian Carbon Pricing System Moving Forward

As the world gears up for COP24, the Canadian government reaffirmed its intention, on October 23, 2018, to implement a federal carbon pricing system across Canada in 2019.

DcDre-xU0AAUhvwAs set out in its Nationally Determined Contribution (“NDC”) submitted to the UNFCCC under the Paris Agreement, Canada committed to reduce GHG emissions by 30% below 2005 levels by 2030. To that end, Canada proposed adopting various measures to transition to a low-carbon economy, including a federal carbon pricing system. In 2016, the government published the Pan-Canadian Framework on Clean Growth and Climate Change ,(“Pan-Canadian Framework“) which outlined a benchmark for pricing carbon pollution requiring all ten (10) Canadian provinces and three (3) Canadian territories to have a carbon pricing system in place by 2018, in their respecting jurisdiction (the “Benchmark“). Provinces and territories had the option to either implement i) an explicit price-based system (i.e. a carbon tax like in British Columbia or a carbon levy and performance-based emissions system like in Alberta) or ii) a cap-and-trade system like in Quebec.

Pursuant to the Pan-Canadian Framework, the federal government was to introduce an explicit price-based carbon pricing system in order to cover jurisdictions that will not have met the Benchmark requirements within that two year period.

In that regard, earlier this year, the Greenhouse Gas Pollution Pricing Act (the “Act”) (the Federal Backstop), received Royal Assent on June 21, 2018. The Act outlines two compulsory mechanisms which will be applicable to jurisdictions that did not meet the Benchmark:

  1. a charge on fossil fuels that are consumed within a province (generally to be paid by fuel producers and distributors) which will start applying in April 2019; and
  2. an output-based pricing system, to be applicable to emission-intensive industrial facilities (i.e. facilities emitting 50,000 tonnes of carbon dioxide equivalent/year or more, etc.), to be applicable as of January 2019.

The majority of Canadian jurisdictions have either developed their own carbon pricing systems or elected to adopt the federal system:

The holdouts—Manitoba, Ontario, Saskatchewan and New Brunswick—having either failed to adopt measures that meet the federal Benchmark stringency requirements or declined to propose their own carbon-pollution pricing systems. They will be obligatorily subject to the federal carbon pricing system.

The main requirement of the federal system is to attribute a $20/tonne cost on emissions as of April 2019, which will rise by $10 each year, reaching $50/tonne in 2022. The federal government has committed to return direct proceeds collected under the federal carbon pricing backstop system to provinces.  This may happen via one of three methods: 1) providing individuals and families “Climate Action Incentive payments;” 2) providing support to schools, hospitals, small and medium-sized businesses, colleges and universities, municipalities, not-for-profit organizations, and Indigenous communities; and 3) supporting reductions in GHG emissions in such provinces.

Chart_Pricing carbon in CanadaIt remains to be seen whether or not the Canadian carbon pricing plan will help Canada meet its NDC commitments and contribute to the overall long-term goal of the Paris Agreement of holding the increase in the global average temperature to well below 2 degree Celsius above pre-industrial levels and of pursuing efforts to limit that increase to below 1.5 degrees.

 


Climate Change News from Across the Pond

Newsflash #1

france frackFrance has announced that it might stop importing shale natural gas from the United States because it’s extracted using hydraulic fracturing.  Fracking was banned in France in 2011. Two French utilities currently contract with Houston-based Cheniere Energy, which sells them liquified natural gas (LNG) comprised of 40% shale gas. Notably, this policy debate in France is taking place as the US seeks to step up its LNG exports to Europe.

Newsflash #2

UK national gridThe United Kingdom used no coal in the electricity that flowed from Britain’s National Grid between midnight and 4am on May 10. This is a first since the 19th century. A number of reasons contributed to this moment. A carbon tax has made coal unprofitable in the UK and led to increased use of renewables and gas. The UK has also signaled its intent to phase out coal by 2025. In addition to all the sound policy making, serendipity also played a role in the UK’s May 10 first:  a series of power plant breakdowns occurred!  For more details on this – and the bumps in transitioning to a clean grid, read here.