A Technology at he service of Social Development: Compatibility between Sustainability and Blockchain Technology

Carbon markets as case study.

The planet is a unique and deeply interconnected living ecosystem that requires balance. This balance is played out on many levels. On the eve of COP26, the 26th annual UN conference that focuses on climate change, issues related to sustainable development are crucial. Carbon management is one of the issues that will be discussed. Symbolically, this conference is intended to be carbon neutral. Indeed, carbon management and more precisely the decarbonisation of societies, companies or countries, would mark a major step towards a more sustainable world. The change and transition of societies towards a responsible production and consumption are unavoidable actions. It starts with the ability to measure our current impact in order to reduce it.

The Blockchain technology

The blockchain technology was created more than 10 years ago with the launch of Bitcoin and it has generated a lot of interest. No single definition exists, however we can define it as “an open, decentralised, digitised ledger that records all transactions between peers without the need for a centralised authority” (Woodside et al. 2017, 65).” Blockchain technology was initially deployed in the financial sphere and then gradually migrated to multiple other domains including energy, transport, luxury goods or even health. This can be explained by its intrinsic characteristics, as highlighted in several studies. Among its qualities, we note: transparency, traceability, authentication, security, reliability, intelligent execution (intelligent contract).

We now ask ourselves how can we use this technology and its advantages in the context of sustainable development actions? What are the possibilities regarding carbon management?

Blockchain technology and sustainable development: a paradoxal alliance?

Several studies have proven the link between sustainable development and blockchain technology. Indeed, at first sight this alliance seems to be a paradox. Blockchain technology has developed a poor reputation in terms of sustainability. Often described as energy-intensive. One might ask how to achieve sustainable development with a polluting technology? The first point to clarify is that there is not just one type of blockchain but several. Some are energy intensive while others are much less so. On the other hand, its intrinsic qualities mentioned above can play a key role in what businesses and societies can do to achieve a sustainable economy. Blockchain technology can be useful in all three aspects of sustainable development, namely

• The social aspect (e.g. reducing inequalities)
• The economic aspect (e.g. cost reduction and time saving)
• The environmental aspect (e.g. managing and reducing the carbon footprint)

It is also interesting to note that coupled with other technologies such as the Internet of Things or Artificial Intelligence, Blockchain technology can be an excellent tool for measuring impact. We would no longer just accumulate data, but we could exploit and reuse it.

Blockchain technology for carbon management

Among all the opportunities mentioned above, one of the interesting avenues to explore is carbon management. According to a recent study by Xing Chen and Ashley D. Lloyd in 2021, blockchain could be a solution for developing carbon markets. How does it work? The carbon market works on the principle of trading emission quotas as certificates: these are the carbon credits. These certificates could be issued, encrypted and exchanged at a lower cost, in a faster and more secure way via a smart contract system, for example. This would create a decentralised carbon market that would allow companies to decarbonise more quickly. And this is just one example of how blockchain technology could be used in carbon markets. On the other hand, it is certain that it can be useful to move towards an inevitable transition.

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