An operating system like Linux is a set of resources for building applications. There's a low level tier that connects to hardware and devices, a middle tier of services for building applications, and a user interface tier at the top. Similarly, blockchain services could be combined to empower climate action:
Emissions Data Channels
This is the first layer of trusted data which is the foundation of all climate action.
These are data channels used by auditors to record audited emissions data. Like the hardware and devices tier of an operating system, these channels store data gathered from the real world and recognized emissions factors. The data could be audited emissions from emissions auditors, or they could be digital Measurement, Reporting, Verification (MRV) data for verifying Greenhouse Gas (GHG) emissions, reduction, or sequestration. In both cases, the data could then be used to create tokens.
The data channel could be implemented with Hyperledger Fabric or stored on IPFS. For example, the Supply Chain Decarbonization takes transportation and shipping data, including flights and tracking numbers and calculates their emissions based on standard emissions factors.
By following the Multi Channel Data Architecture, data from different sources could be stored immutably to improve trust in the integrity of climate and emissions data.
Click here for a video of the audited emissions chanel.
Token Networks
This is the middle layer that gives financial value to climate activities and allow smart contracts to execute transactions and coordinate different parties' actions.
Once data for emissions and offsets are tokenized, they allow transactions to take place: paying for emissions reductions and offsets with tokens and smart contracts. These transactions are like the middle tier of services in an operating system.
For example, the Net Emissions Tokens Network could be deployed on a permissioned Hyperledger Besu or any Ethereum-compatible public network where carbon offsets and renewable energy certificates (REC’s) are traded and retired against audited emissions. As a “gated” network, only audited emissions, offsets, and REC’s from accepted sources are allowed to transact in this network.
This network could form the basis of organized climate action at a variety fo scales, from supra-national and national carbon emissions cap and trade to community energy projects to nature-based offset projects.
Click here for a video of the emissions token network.
Distributed Autonomous Organization (DAO)
This is the user engagement layer that connects the users – consumers, members of the public, monitoring agencies -- with climate action.
A DAO allows members of a network to vote on governance issues, such as whether to accept certain emissions offsets or auditors, accept the data from an audited emissions channel, and upgrade the models for emissions accounting.
For example, they can decide if a particular certifying entity's offset tokens would be accepted as a valid offsets. They can decide the relative value of different offsets by voting on exchange rates or bonding curves. They could validate the MRV results on an audited emissions channel before issuing offset tokens. They could vote on whether emissions factors or emissions calculation methodologies should be updated on the emissions channels.
Because many of the topics are technical, we need to balance experts vs. community members. At the same time, though, it's important to create an inclusive model of collaboration, just like in open source software, to avoid the dangers of being locked into obsolete models and ineffective climate action.
Click here for a video of the DAO.
Products Being Developed
Get Involved
Here are some good first issues to get started with:
Coding Standards
Even though, or perhaps because we're building open source software, code quality is very important. We're writing code that others would see long after we're finished, so we'd better leave them something they could actually understand and work with. We'd also like to avoid being featured in an "Anti Pattern" book or blog post.
The most important coding standard is to keep things very modular, so separate each function as much as possible. The UI and application logic must be completely separated, to the point of being separate projects, and talk to each other only through clearly defined (REST) API's. This means that we could have several different UI's, like Linux. It also means we don't start putting our business logic in the UI, like some PHP or JSP code did. Similarly, different application domains such as user management, application logic, and standards data management must be kept apart as well.
Cryptocurrency Policy and Disclaimer
This project does not endorse nor recommend any cryptocurrency for investment. No integrations with any cryptocurrency are planned for this project. Cryptocurrencies are very volatile and risky, so do your own research and stay within your risk tolerance.
Get Involved
This is an open source project and anyone is welcome to get involved and we will be happy to see you contribute.
1) Start by subscribing to the Climate SIG mailing list for updates and meeting notifications.
2) Join our bi-monthly Peer Programming Zoom call for developers on Mondays at 9 AM US Pacific time (UTC-07:00 America/Los Angeles.) Please check the calendar for the next call.
3) Check out the good first issues from our blockchain-carbon-accounting in Hyperledger-labs and feel free to contribute a fix for one that looks interesting to you.
4) See our How to Contribute page for other ways how you could get involved.
23 Comments
Robin Klemens
Hi folks, I created a first draft of an architecture reference about how we could use Hyperledger Fabric in a simple but also powerful setup. The prototype would exist of 4 peers, each belonging to a different organization. All peers are within the same channel "carbonNeutralChannel". Every peer stores in addition to the public channel ledger one or more private data collections in order to ensure privacy and protect sensitive data. The REGorg (Regulator) would have access to all three private data collections and maintain copies of them. I suggest running the prototype in one docker environment using docker-compose as this is sufficient enough to demonstrate the proposed workflow of Si Chen.
In terms of translating the business logic, I suggest five smart contracts (chaincodes), which will be deployed to the carbonNeutralChannel:
On the chaincode level, chaincode access control ensures privacy and the compliance of business processes. An example of chaincode access control would be to check the X.509 certificate of the client and verify if the client belongs to Company C1 before querying a simple getCompanyCO2Balance(companyId=C1) function.
Please share your thoughts
Cheers from Berlin
Robin
Si Chen
Thank you Robin Klemensfor coming up with this. It sounds very good. Do you think we can make it simpler by having the smart contracts for "REC" and "Carbon Offsets" only record the amount of REC's and Carbon Offsets the company obtained during this period?
Then some other process could verify that REC's and carbon offsets were purchased, and if so call our smart contracts to record them our ledger. This other process could be a different ledger, such as a public ledger, where someone could purchase REC's and carbon offsets.
Robin Klemens
Hi Si Chen, thank you very much for your feedback! Of course, we can adjust my proposal in many ways. Simplifying the smart contracts of the oneWorldChannel to only record the number of certificates the company obtained during a period instead of handling more steps of the certification process (issue, buy, trade, redeem, ...) could be one approach.
However, I suggest to iterate the definition of the scope of this PoC one more time - maybe in the next SIG call - to refine what exactly we want to prove with the PoC and therefore focus on in the development. As a starting point for the discussion I suggest some questions and statements:
Looking forward to hearing from the community.
Si Chen
Yes, that makes a lot of sense:
Let's talk about this more during our next SIG call next Tuesday (July 14).
Peter Clarke
Robin Klemens
Hi Peter Clarke, thanks for sharing.
Is the enhanced version of `Fabcoin` developed (maybe internally) by IBM publicly available?
Fabric at all is not Byzantine Fault Tolerant. However, we can use Raft ordering service which is Crash Fault Tolerant. I suggest to always use more than on orderer (Solo). Raft ordering service is recommended to run with 5 nodes, but three works as well (https://raft.github.io/raft.pdf Chapter 5.1).
Running the blockchain network at IBM but makes life a lot easier. However, I wouldn’t run all nodes of the nodes and orderers at one cloud provider. In terms of availability, we should always strive for distribution across many cloud providers and on-premise servers.
Peter Clarke
In terms of translating the business logic, I suggest five smart contracts (chaincodes), which will be deployed to the carbonNeutralChannel: Definitely, because it forces standardization of contracts
On the chaincode level, chaincode access control ensures privacy and the compliance of business processes. An example of chaincode access control would be to check the X.509 certificate of the client and verify if the client belongs to Company C1 before querying a simple getCompanyCO2Balance(companyId=C1) function.
Please share your thoughts
I am biased toward the Genossenschaft whether it is a village benefitting from off grid solar and 3G in Benin or an energy co-operative. I would add biomass as a discrete category of asset because it is 7% of Germany's energy mix.
In the UK the Renewable Obligations Order produces a RO Certificate and double counting is what blockchain prevents.
Varun Adibhatla
Hello there. Thank you for creating this space and call for ideas.
ARGO Bio
I represent ARGO Labs, a 501(c)3 project that builds, operates, and maintains digital infrastructure towards better delivery of public services.
In 2016, we helped stand up the data infrastructure for the California Data Collaborative, (CaDC) a coalition of municipal water utilities in Southern California around a shared data and analytics framework.
Token concept to incentivize water & energy conservation
Recent research in behavioral economics supported by a very large randomized controlled trial across over 400,000 free standing households in Cape Town, South Africa indicates evidence of water usage and its subsequent conservation is motivated by specific socio-economic interventions across the income spectrum. This research finds that “lower income households respond only to financial incentives, whereas higher income households respond only to social incentives and appeals to their intrinsic motivation” when engaging in conservation behavior. Furthermore, the research also finds that “public recognition can be used as an adjunct to more traditional demand side management tools, such as water restrictions and tariff increases to achieve additional conservation in the higher income households.”
Based on this evidence, we propose offering financial and social incentives through the development of a digital utility token that is linked to individual households' water or energy usage.
We envisioned the token to work as follows:
Tokens are anticipated to be redeemable for the following three types of incentives:
Questions / References for this audience:
Thanks and Stay Safe!
Varun Adibhatla / varun@argolabs.org
Si Chen
Hello Varun Adibhatlathanks for sharing. In fact what you're describing is exactly what we've been building – the utility data can be stored on the Emissions Data Channel or similar data channel. M&V models (such as OpenEEMeter, which we've integrated with) can prove the savings. Then those savings can be issued as tokens on Emissions Tokens Network which are ERC-1155 tokens (more features than the ERC20), and from there you can issue your incentives, etc.
So thinking about this:
Yes, I believe utility bills are good proof of climate action. There is some personal data on them, but I'm not sure they qualify as "identifying information." We had a discussion about it on 2020-12-21 Peer Programming Call at the end of the call.
The problem with these incentives is that they have very low conversion rates. Could this be because utilities run these programs in isolation, without connecting to the overall needs of their customers. For most customers the savings are too small–energy is very inexpensive here in the US. To take them up, you'd have to either be already renovating or motivated by a goal (ie net zero energy or LEED certification) So might it be better for them to join a broader program with the tokens they issue?
Varun Adibhatla
Thanks for responding Si Chen I have to earnestly read the Utility Emissions Channel but glad to know we've arrived at the same intention!
Yeah I hear you re: Conversion rates. Unless it's direct cash or some other form of social incentive, they pretty much operate like credit cards points ($20 Billion worth of Credit Card points are unused)
However if you start pricing carbon ( $50 per ton ), things get interesting.
Also, not all climate action is valued the same.
Emission reduction behaviors for a median sized single family household in California is qualitatively different from the same type in Texas, so conversion rates should be benchmarked to household type and location. (Ref: per capita emission rates)
The most valuable behavior re:utilities is exchanging your fossil fuel home heating/cooling for decarbonized alternatives. Companies liked sealed.com do this for homes.
In other words, not only should it be super simple for a FF household to exchanged for DECARB alternatives, there should be a clear financial incentive.
For energy reduction (not exchange behaviors) I think social incentives are understudied and key to scaling pro-deccarbonization behaviors.
Climate Action Tokens could be treated like Loyalty points that accumulate over time and unlock certain "privileges" like getting entry to some premium experience.
Coned's cool points is interesting. It incentivizes people to not use their AC's during peak load times (which is when many power utilities have to rely on dirtier peaker plants to satisfy the demands)
So it's less about reducing my AC usage across the year and more about turning off the AC at a specific time (more valuable climate action)
There is good research that shows the effectiveness of lottery-linked programs to get people to engage in "virtuous behaviors" like saving money.
What if Climate Action Token Holders were automatically entered into a lottery of sorts and a lucky few get a huge payout?
Another option is to work with local chambers of commerce to convert Climate Action Tokens for discounts in local businesses. A company called www.colu.com does this.
The challenges are less technical and more about sustaining powerful network effects.
Hope this helps
Si Chen
Yes these are pretty interesting. What the blockchain offers is a way to run these kinds of programs either without a central authority (such as a utility) or a lot more efficiently with a utility. So hopefully we could experiment with a lot more to find something that will have better uptake.
Anshu Jain
Hi Si Chen ,
A thought: if a lot companies take on climate reporting in earnest, then I think it might be that the REC's would be taken by the company buying the renewable electricity and the renewable energy producer might not have many certificates left to trade to 3rd parties.
Further, I think a corporation wide Carbon balance sheet might be a useful concept for companies to implement (at least at a Scope 2 level) in order to demonstrate their environmental credentials over time.
Views welcome.
Si Chen
Yes, that is certainly true. To claim that you're powered by renewable energy with REC's, you would have to retire them, so they would no longer be tradeable. If a lot of companies did this, then it would remove the supply of REC's and require more investments by renewable energy producers.
How do you think a carbon balance sheet might look? I haven't thought of that yet.
Anshu Jain
Hi Si Chen
I think you have answered the question to a degree in the simple mechanism of "inventorisation" mentioned on the Data Center Carbon Calculator (bottom half of the page). Extending this idea over time, the inventory could accumulate on a C account (in tonnes) where as an example :
This would lead to the question : How would this asset / liability would be priced to reflect on the balance sheet ? I is something that would need some futher investigation and discussion with a finanical accoutant. I wonder if there are published standards already help answer this ?
For reference, there are some further ideas here :
Carbon on the balance sheet: it’s a “stock” in the atmosphere, not an annual flow
Bring climate change on to companies’ balance sheets
Papers
A reference Accounting forCarbon: the Role of Accounting Professional Organisations in Governing Climate Change
As a thought, we could extend this idea across organisations, in transaction of C laden goods / services. A financial invoice could also include a transfer of a C liability (based on the quantity of goods) to the buying organisation and downstream (similar to value added tax). This would give an objective picture of C addition along the value chain, of a product and ultimately landing with the end consumer.
Si Chen
This is a very interesting and deep point that you make. Indeed atmospheric CO2 levels persiste for a long time, so from an accounting point of view they are more a "stock measure" like assets/liabilities/equity rather than "flow measure" like income or losses. So while a company may indeed have achieved CO2 neutrality, it still may have a whole history of CO2 emissions that's still lingering in the atmosphere.
Once we have the CO2 emissions for one period of time, we can accumulate them over time to get the total CO2 impact of the organization. We could also try to go back historically by reviewing a company's data. This, as you can imagine, would be a bigger project on top of just calculating the emissions from a recent period.
Very few companies are going this far, though Microsoft has stated they plan to offset all their emissions over the history of their company. In fact, when you think about it, the Paris Climate Agreement's most aggressive goal is to limit climate change to 1.5 C, which means that total emissions will continue to rise for a while before finally stopping. The climate action that we're taking is designed to reduce the emissions (flow) rather than the total carbon (stock) in the atmosphere so that this could happen. Whether the policy goals should change is probably up to our wise elders.
Anshu Jain
Hi Si Chen Robin Klemens
Good points. Both Inventory management and financial accounting methods, I think, could provide a good basis in both flow (trading accounts) and stock (balance sheet).
As companies aggregate costs on a product bill of material, similarly they could also add C, if the data is offered by a supplier.
i.e. C debits by
C credits by
This method would be very similar to Value added Tax and would increment along the supply chain.
The question then appears, if double accounting systems, based on transaction between two parties can operate today based on self hosted systems regulated by an audit regime, what is the rationale of a public ledger ?
Perhaps a public / distributed ledger could be a re-think of existing accounting practice and take away/reduce the cost of audit. This needs some further thought.
Anshu Jain
As a reference, I came across this UK standard on C Neturality :
PAS 2060 Carbon Neutrality - BIS Standard
Examples C Neutrality services being offered in the market
Carbon neutral certification by Carbon Trust
Anshu Jain
Hi Si Chen
I came across this article : Asset owner-steered project delivers blueprint for net-zero investing mainly focussed towards the investment community.
I read here some work is being done by an organisation Partnership for Carbon Accounting Financials (PCAF) in developing a C accounting standard .
Event though, I think this has a specific focus on investment community, it might offer help as a framework for a POC.
Si Chen
Hi Anshu Jainhope you're doing well. I finally got through to reading these, and they're very helpful. The PCAF Global GHG Standard extends the GHG Protocol for banks and investors to calculate their "financed emissions" while the IIGC has started a Net Zero Investment Framework, currently in consultation phase, for aligning their portfolios with the Paris Agreement.
These all point to some interesting applications for the blockchain as well:
Anshu Jain
Hi Si Chen ,
I am keeping well thanks and I hope you as well as climate colleagues are well too.
Thanks for your note and further thoughts on this discussion. I think so too that blockchains could offer a solution by way of a crowd sourced "audit regime", perhaps a lower cost alternative to assure compliance to those offered by traditional audit institutions.
Apologies for taking time to write back, I have been occupied on a project. Pleased to see great progress in the various workstreams. I will like to take some time to get upto speed on the latest thinking here.
Vipin Bharathan
Great collection of information.
I refer to this wiki page in my article on the dominant themes driving dlts on Forbes. Under Climate action.
Since the publication is business focused, I stay at a very high level, also it is about multiple themes - so it touches on these issues only very lightly.
(although I plan to write a stand alone article on Climate Action & DLTs sometime next month and would use this site for my research)
I had another article on ESG sometime last year which made similar points - Since ESG certification was shown to be riddled with inaccuracies and rife with greenwashing.
Robin Klemens
Vipin Bharathan, let us know if we can help with providing any information.
Si Chen
The use case for cross chain integration: Here we have a permissioned network like Hyperledger Fabric which is gathering business or activity data, for example the amount of energy used, travel or freight mileage, or widgets produced, and converting it to emissions. Then it is tokenized as emissions tokens on the public ethereum network, so that you could trade emissions against allowances or offsets or pay for emissions reduction.
I think this is a fairly common use case where activity data needs to be on a permissioned ledger for performance and privacy reasons, but transactions need to take place on more public ledgers. The issue with the cross chain integration is that public ledgers are slow, so we need a way to track the tokenizing of permissioned ledger data and lock the data while the transactions are in process. We have been working on that on our github repository and will be making a big update for it shortly.