According to a paper by Chainlink Labs and Tecnalia, blockchain technology will play a crucial role in fighting climate change by controlling clean energy solutions and enabling increased automation.
The energy industry can make clean energy investments more efficient by embracing blockchain technologies, according to a paper released Tuesday by Chainlink Labs, which provides open-source blockchain interoperability solutions, and Tecnalia, a European research institute.
According to the paper, the power industry can better digitise and value clean energy assets by utilising blockchains. According to the two companies, this would likely result in more capital being invested in green investment possibilities, as well as more openness and responsibility when it comes to meeting climate-friendly promises.
“Hybrid smart contracts,” according to the research, are the new backend infrastructure required for developing renewable energy solutions. Blockchains are used to track and settle multi-party operations, while smart contracts are used to define the rules for all parties involved. It also incorporates data and non-blockchain infrastructure into the contracts using oracles, which are interoperability solutions for blockchains built on smart contracts.
According to the report, more than 140 research projects and businesses have started analysing, testing, and applying blockchain-based solutions to improve energy industry operations as of 2019. In a statement, Hyphen CEO Miles Austin said, “We can now give proven real-world metrics to dynamic carbon assets.” “This gives investors, capital markets, banks, and regulators confidence.” Climate bonds and green bonds – fixed income instruments that raise money for environmental projects — can also be tokenized on blockchains, similar to carbon credits.
Arbol, an Ethereum-based climate risk solutions platform, employs smart contracts to enable energy companies hedge power demand and revenue changes as temperatures change. According to the report, individuals might be rewarded for reducing emissions through reward programmes. In exchange for completing the terms of a smart contract designed to reduce their carbon footprint, consumers may be reimbursed with bitcoin or NFTs.