Increasingly Blockchain has become a buzzword in the sustainable development community. Yet usability and potentials of the technology behind Bitcoin are still unclear for many potential use cases. Within the context of a regional collaboration (GADeR-ALC), GIZ Brazil, GIZ Costa Rica, and GIZ Mexico made the first start to explore and evaluate the possibilities of using Blockchain technology in climate policies in the three countries and presented the conclusions in a joint Webinar.
Brazil and Costa Rica are exploring opportunities to use Blockchain for enhancing transparency of national livestock and coffee value chains, while Mexico is analyzing several climate policy instruments to integrate Blockchain, such as the Emission Trading System (ETS), the Measurement, Reporting and Verification (MRV) system of Greenhouse gas emissions (GHG) and of Climate Finance.
Brazil´s land use change, deforestation, and farming are accountable for 52% of the national GHG emissions. Although new legislation to protect Brazilian forests have been passed in the past years, they are only enforced partially because of lacking transparency. During the webinar, Vasco Varanda Picchi presented the possibilities of Blockchain to unify the different existing tracing systems along the livestock value chain and avoid the tampering of data.
Costa Rica faces similar challenges within their coffee-sector which are responsible for 9% of the national GHG emissions. During the webinar, David Cortés Poza, Consultant of Oruka.lat explained that the usage of Blockchain could enhance value chain traceability from farm production to export sales, which could potentially reduce 250,000 t CO2 and might result in a higher coffee price on the market.
Mexico´s is among the top 15 emitters of GHG worldwide. During the webinar, Sven Braden, Co-founder of the Climate Ledger Initiative, provided insights into different design-options of Blockchain technology and applied these to the different aspects of the Emission Trading System. He also presented criteria to help define whether Blockchain could be a useful technology to climate issue in question: Is a database involved?, Does the climate issue at hand require several entities to provide information?, Is there a lack of trust among stakeholders? Is there a need for disintermediation and interaction of transactions?
These criteria were also used in a final analysis that compared the three cases from Brazil, Costa Rica, and Mexico. Based on the analysis of the criteria, David Cortés Poza provided specific recommendations for the three use cases. As a result, Blockchain has a clear potential for the traceability of value chains and climate finance as well as for the exchange of assets in the Mexican ETS. However, in comparison with a traditional systematized database, blockchain does not offer an added value for the MRV of GHG emissions.
An important decision regarding Blockchain technology is the design options: A completely public Blockchain is seldomly needed if participants on the blockchain are known, especially as it comes with inefficiency and high energy consumption. In conclusion, David Cortes suggested that in the value chain examples a private (permissioned) Blockchain should be used, while in the ETS case a hybrid (private but centralized) version would be recommendable. For climate finance, a public blockchain would significantly enhance transparency.
During the Webinar, more than 40 interested participants logged into the Webinar, held on November 30th and had the chance to ask questions to the presenters via chat.
Below you can download the final presentation of the three case-studies the comparative analysis as well as re-watch the webinar.