I don’t want to know what happens if global temperature increases surpass 2 ºC.
Neither do the signatories of the 2016 Paris Agreement, which is why they agreed to “keep a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels”.
At the same time, fossil fuels are powering my life. And I feel powerless to stop it.
Riding my bike to work and taking my afternoon dose of caffeine in a renewable mug doesn’t offset the fact that my laptop runs on emission-spewing, coal-fired power.
As one little person, I feel completely helpless to drive momentum away from fossil fuels and invest in clean energy—or, at least, not without trudging through layers of bureaucracy.
For example, let’s say I want to invest $1,000 into a large-scale solar power plant. As an individual, the only way I can do so is through a solar financing company.
This company will then pool my investment with a bunch of other investors’ money to help finance a solar project.
As soon as the solar plant starts generating electricity, I, along with all the other investors, will earn a certain percentage of the profits—as will the solar financing company.
This makes sense, of course, because the solar financing company did all the heavy lifting. They negotiated the contract, found the investors, kept track of who invested how much, kept track of the electricity generated at the site, and paid out dividends accordingly.
That’s a lot of work.
But, it’s exactly the kind of work that blockchain is really good at.
But first, what is blockchain?
Blockchain technology is basically a gigantic, shared digital ledger that keeps track of transactions between people.
To understand the important role an accurate ledger plays, think about your checking account. It keeps track of all your earnings and expenses. When you buy a cup of coffee, your checking account will make note of the dollar amount and the vendor. If someone steals your card and buys a plane ticket to Timbuktu, your checking account will also make note.
While much of this process is now automated, it still requires a team of humans to make sure the ledger is accurate, and to stay on the look-out for fraudulent charges.
Instead of using error-prone humans to manage ledgers, a blockchain platform can be immediately updated by multiple sources simultaneously. And before any new transaction can be added to a chain, it undergoes a thorough vetting process, ensuring that each new transaction is legitimate.
Furthermore, the blockchain automatically verifies every block on the chain every ten minutes, thwarting any spurious attempts to manipulate transactions.
And that’s the gist of it. Blockchain is nothing more than a glorified ledger that simplifies accounting and eliminates the risk of fraudulent transactions.
Great, but all I want to do is save the planet. How is blockchain going to help me do that?
Just like solar financing companies, blockchain technology keeps track of all the nitty gritty details of renewable energy investments. Unlike solar financing companies, it does so automatically without expending much effort. Furthermore, blockchain directly connects investors with renewable energy developers, instead of going through a third party.
Blockchain is widening renewable energy investment possibilities for environmentally-conscious professionals, eager to offset carbon emissions from their collective laptops. ImpactPPA and WePower are two renewable energy developers of note that are already financing future solar projects via blockchain platforms.
ImpactPPA lets people directly invest in solar energy projects in developing countries using a blockchain platform. That means I can invest $1000 directly into a solar energy project—both offsetting carbon emissions and also delivering clean electricity to people who need it. Furthermore, as an investor, I receive a share of the revenue after these projects start generating and selling electricity. Check out their white paper for more details about how this process works.
WePower operates under a similar system, allowing investors to directly invest in solar projects in Europe and Australia by purchasing tokens via a public blockchain. If I purchase $1000 in tokens, I am essentially buying $1000 worth of future electricity. This initial investment helps WePower cover the up-front costs, and lets me directly invest in expanding the global clean energy supply. After the solar facility begins supplying the grid with clean energy, locals can use their tokens to purchase electricity, while non-locals can either sell the tokens directly to the local wholesale energy market or back onto the blockchain platform. If you’re interested to learn more, they go into much more detail about this process in their white paper.
But this is really just the beginning. Blockchain technology may help improve person-to-person energy transfers, or even improve supply chain transparency. I, for one, am excited to see what else blockchain has in store.
For more about residential solar financing, see Sustainability Defined Episode 7.