New dynamics in the energy sector are compelling providers to shift to sustainable and clean energy to combat climate change. While many challenges accompany the clean energy transition, a report claims that blockchain has the potential to help the industry achieve its climate action goals.
The report, titled “Managing Climate Change in the Energy Industry With Blockchains and Oracles,” was conducted by Tecnalia Research and Chainlink Labs. It outlines how blockchain features like tokenization, hybrid smart contracts and blockchain oracles can be applied to the energy sector to manage climate change.
Jose Luis Elejalde, an energy executive at Tecnalia, said that within the infrastructure transformation period, the energy industry can use blockchain to “digitize and assign value to clean energy investments and design fully automated incentive systems for participating in sustainable practices.”
According to the research, blockchains can be applied as a database in the settlement layer, smart contracts can be used to develop the application layer, and oracles can create connectivity in a specialized computation layer. Through these, the report highlighted various blockchain use cases like tokenizing carbon credits and smart grid management and explained that these can contribute to the clean energy transition.
The research highlighted use cases like verifiable eco-data reporting through a hybrid smart contract system. The study cited projects like Hyphen that use oracles to provide greenhouse gas data within the blockchain and create proof that corporations are meeting their climate commitments.
Apart from this, the report also mentioned the climate-focused blockchain insurance solution by Lemonade that deals with the effects of climate change like weather-related disasters by insuring farmers in Africa.
William Herkelrath, an executive at Chainlink Labs said that “a data-driven backend infrastructure is critical to propelling the cross-sector collaboration needed to address the climate crisis.” Herkelrath also mentioned that oracles can give the energy sector the right tools to combat climate change.
In an article written by Dr. Jane Thomason, she mentioned that blockchain can assist in the management of smart grids in decentralized energy markets and allow peer-to-peer energy trades. It can enable people to “buy, sell, or exchange excess renewable electricity” directly with each other.