UNEP DTU Partnership is part of an ongoing research collaboration looking into how blockchain solutions can be applied within the new carbon market mechanism as outlined in Article 6 of the Paris Agreement.
As part of that research a policy brief, addressing constraints and key challenges, has been produced and published.
Blockchain and distributed ledger technologies are still in an early stage of development, but it is a fast evolving environment.
The policy brief was presented during the OECD Global Blockchain Policy Forum 2019, that explores the policy implications of blockchain technology, including an appropriate regulatory environment, at a global level.
The second edition of the Forum convened senior decision-makers from the public and private sectors, experts, academics and other stakeholders to among other things investigate uses of blockchain in specific policy areas, highlighting the work of the OECD and other stakeholders.
UNEP DTU Partnership research confirms that the application of a blockchain solution can address some of the previous carbon market constraints, and thus enhance the transparency of the system, resulting in increased unit quality and environmental integrity. The research further presents possible blockchain architectures for such a system and formulates policy recommendations.
Blockchain can address challenges
Key features of blockchain technology, such as an immutable audit trail of transactions, cheap and borderless transfer of values, and automated execution of contracts, can help address challenges to climate action implementation.
More specifically, this technology can act as a transparency mechanism that incentivizes emission reductions in carbon markets, and can provide a decentralized infrastructure enabling new applications in carbon transparency and markets, climate finance, and clean energy generation.
Below is a table showing how blockchain technology can help address some of the challenges in the market mechanisms in the Paris Agreement:
As an internationally leading provider of research-based advisory on climate and energy action, UNEP DTU Partnership is uniquely positioned to analyse blockchain use cases that strengthen climate action, particularly in developing countries.
Building on the partnerships’ current competence areas and country engagements, the partnership will focus on the assessment of specific climate and development projects to evaluate if the application of a blockchain solution is beneficial