Blockchain technology will play a significant role in combating climate change, says a report by Chainlink Labs and Tecnalia. The new-age technology will manage clean energy solutions and enable enhanced automation.
The report highlighted that the power businesses can better digitize and value clean energy investments through blockchain technology. It would lead to additional capital deployed to green investment opportunities, strong accountability, and transparency. The report sees “hybrid smart contracts” as the new backend framework necessary for building clean energy solutions. It utilizes blockchains to track and settle multi-party processes and smart contracts to define the rules for involved parties.
The smart contract uses oracles (interoperability solutions) to integrate data and non-blockchain infrastructure into the contracts. Organizations are showing interest in blockchain technology as they become aware of its usefulness. The report found that since 2019, more than 140 research projects and startups are studying, testing, and deploying blockchain-based solutions. They are focused on improving energy industry processes.
A spokesperson for Chainlink Labs said more and more companies are acknowledging that blockchains, smart contracts, and oracles can advance climate change initiatives. Chainlink Labs expects a trend that will grow with time until it becomes an industry norm. Some of the common use cases are tokenized carbon credits which companies buy to offset emissions. Experts outlined that by storing carbon credits as digital tokens, the tokens can be more easily tracked and traded. Oracles can then issue and audit them. Moreover, oracles can use satellite and remote sensing data to measure carbon sequestration in a certain region. It verifies a project’s stated carbon offset before issuing a credit.
A good example is Hyphen, a hybrid smart contract system that uses Chainlink oracles to bring verified greenhouse gas data on-chain and prove stated corporate climate commitments. Climate bonds and green bonds can also be tokenized on blockchains.
Chainlink Labs said clean energy industry leaders must assign researchers to focus on the benefits of blockchain technology and how they can leverage smart contract and oracle technologies before competitors.