Biden’s Executive Order on Blockchain for Climate Transparency: Here’s How It Could Work
A cryptographer, a climate scientist, and a policymaker walk into a bar…
The federal government stepped into two quickly evolving ecosystems on March 9, when President Biden issued an executive order on ensuring responsible development of digital assets. One important aspect involves the potential to apply blockchain technology to address the challenge of managing greenhouse gas emissions along complex supply chains. The executive order could help unlock the incredible potential of a data-powered green economy, and RMI’s Horizon Zero project is poised to provide a solution.
Horizon Zero, developed by RMI’s Climate Intelligence Program, already addresses the mandates and criteria of the executive order, by applying blockchain technology to provide transparency and traceability of the greenhouse gas (GHG) emissions linked to specific products throughout the supply chain.
Blockchain: Not Just Cryptocurrency
Blockchain has become a bit of a buzzword, but simply put, the evolving technology allows users to transmit information on a peer-to-peer basis, rather than setting up unwieldy central verification systems to be used every time information changes hands. For example, Amadeus, an international air travel ticketing system used by 474 airlines globally, adopted IBM’s Digital Health Pass, which uses a blockchain to authenticate a traveler’s vaccination credentials against each country’s requirements for travel. The traveler’s smartphone-based app shows a QR code that allows gate agents to see whether the traveler is cleared for travel, without the need to share any underlying, potentially sensitive information. At its core, the recently published executive order presents an opportunity to use similar blockchain infrastructure to revolutionize how we use open-source data to mitigate climate risk.
Horizon Zero: A Blockchain Engine for Climate Action
Through Horizon Zero, RMI is developing solutions that meet the requirements of the recent executive order, specifically “potential uses of blockchain that could support monitoring or mitigating technologies to climate impacts, such as exchanging of liabilities for greenhouse gas emissions, water, and other natural or environmental assets.” We’ve published principles on how to accurately measure emissions at every link in the supply chain and track them in a blockchain-based technological architecture. These tools are the foundations for creating a system to accurately measure and effectively monitor emissions throughout the value chain.
Radical Transparency for Supply Chain Emissions
The principles in the resources linked above inform how we can create “digital twins” of emissions and track them via a blockchain architecture that creates transparency around the emissions associated with a product at every stage of its life cycle. With each product transaction, the liability of emissions associated with those products is simultaneously tracked in the blockchain ledger. Blockchain architecture’s enhanced traceability features will allow insights that create accountability where it was previously impossible — improving climate disclosures and visualizing emissions at an unprecedented scale and level of accuracy.
The Right Engine to Drive Climate Action
Consumers and investors can make more informed decisions and create climate-aligned markets by understanding the emissions linked to purchases and investments. The impact of Horizon Zero’s ability to empower these market decisions will be far-reaching — from enhanced incentives and competition to create and sell greener products to increased compliance with climate regulation. Overall, economic actors will have better tools to decarbonize supply chains and take responsibility for their role in aligning with a 1.5°C climate future.
The potential for mitigating climate risk with blockchain technology is enormous and imminent. RMI’s Climate Intelligence team will be looking for opportunities to advise on how to develop digital assets responsibly, and we are prepared to offer Horizon Zero insights as potential solutions.