By 2030, the Asia-Pacific (APAC) region will emit 21.3 billion metric tons of carbon dioxide, which is a significant blow in the battle against the negative impacts of climate change. A Statista survey in Southeast Asia between November and December 2021 showed that respondents from the region believed that climate change was an immediate threat that people should do something about. Using blockchain in climate tech may hold the key to developing environment-protecting solutions.
According to IBM, blockchain technology is a shared, trusted, and immutable ledger made up of cryptographic blocks for recording transactions and tracking tangible and intangible assets on a business network. It comes with permissions for those who can access the ledger, tamper-proof records, and digital contracts that can work automatically when specific parameters are met. Climate tech startups can leverage this technology to address the challenges brought by carbon emissions.
APAC is considered the biggest polluter in the world—primarily due to China’s growth activities—with North America and Europe placing second and third, respectively. Most economic activities create greenhouse gases, which affect food production and supply disruptions, extreme weather, wildfires, and changes in weather patterns. These gases also affect human health and destroy various species in the environment.
How startups are combatting climate crisis issues in Southeast Asia
The suggested solutions involve planting trees, using renewable sources, reducing emissions in multiple sectors, and boosting energy efficiency. However, it can be challenging if no verifiable data is available on the number of carbon emissions generated and the outcomes of these solutions to mitigate those negative impacts.
Scope 3 emissions and carbon credits
Carbon emissions are listed as Scope 1, 2, and 3. According to the GreenHouse Gas Protocol (GHG).
- Scope 1 emissions are caused directly by an organisation through something it owns, for example, a company vehicle.
- Scope 2 emissions are indirect and come from energy purchased elsewhere, such as electricity or gas.
- Scope 3 encompasses all the emissions caused by other businesses or individuals in a company’s value chain, such as the pollution generated when their supplier buys something from another firm.
Due to a large amount of data necessary to track all these Scope activities, it becomes difficult to collect and store reliable and verifiable data on emissions. A report from the World Economic Forum (WEF) and PricewaterhouseCoopers (PWC) found that establishing an international carbon credit price to offset carbon emissions would cost 1% of the global GDP and reduce greenhouse gases by 12%. That means finding a way to track global emissions accurately is vital.
Even though the International Energy Agency(IEA) highlighted the COVID-19 pandemic’s role in reducing global emissions, the outbreak also shattered economies, leading to a surge as countries try to make up for the lost time in developing many sectors, which requires a lot of energy use. Therefore, the IEA predicted that Southeast Asia’s rising demand for energy would increase by 3% annually until 2030.
An estimated 65 million Southeast Asians lack adequate access to electricity, relying on pollutant biomass solutions such as firewood and manure for cooking. Policy conflicts are exacerbating the issue since subsidies for fossil fuels and electricity to benefit the poor increase pollution, whereas they should be focusing on policies for renewable energy use and making it more affordable and accessible.
The International Monetary Fund (IMF) reports that rising sea levels, frequent and intense typhoons, and recurrent floods are signs of climate change and global warming in Vietnam and other ASEAN countries. The region struggles to shift from coal and oil as its primary energy sources and adopt renewable options.
Countries like Malaysia and Indonesia earn billions of dollars in carbon credits. Still, it would be better and cheaper to preserve forests rather than allow deforestation in exchange for carbon credits.
The role of blockchain in fighting climate change
Climate tech startups are innovating blockchain solutions to combat climate change by tracking carbon emissions on a scale that encompasses Scope 1, 2, and 3 emissions. That ensures that companies and every individual or organisation they interact with during their business operations can be held accountable for reducing their carbon footprint and choosing sustainable options.
Businesses can access a blockchain database to verify what impact they are having when they choose one supplier over another. The technology ensures all the data is accurate, easy to counter-check, accessible to all, standardised, and available as a reporting tool. Startups can review which companies use environmentally-friendly solutions in their operations to keep Scope 3 emissions low.
It would not make any sense for a company to have the right approach to curbing its carbon footprint while working with businesses that are doing the opposite and causing damage with greenhouse-producing products and services.
Blockchain in climate tech could be the missing link in helping the world achieve carbon neutrality and protect the environment. The focus should be on meeting energy security while achieving net zero emissions.