Consolidating a Climate Accounting System

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Martin Wainstein:

"Consolidating a climate accounting system that can combine state and NSA climate actions is essential to the success of the Paris Agreement and the prevention of dangerous global warming. In fact, NSAs and their progress should inform national target-setting, tracking and policy-making that in turn should encourage even more non-state action commitments. Quantitatively assessing and tracking climate pledges and certifying the efforts to achieve them, however, are still fraught with difficulties. Existing measurement, reporting and verification (MRV) systems to track climate action —both from state and NSAs— are labor-intensive and costly, frequently requiring third-party consultants, which discourages resource-constrained actors from participating and recording actions in transnational climate action networks or measuring their climate change impacts at all.

If we were to consolidate and maintain a single recordkeeping ledger with global consensus (i.e. where all parties agree) the task would be far from a simple under a trustless and competitive world. Decades of slow climate negotiations among countries attest to the intricacy of this challenge. The rise and maturity of blockchain and its cryptographic science, paired with emerging digital technologies such as internetconnected sensors, big data and artificial intelligence can provide robust opportunities for existing and new climate platforms to streamline and incentivize data collection, climate action certification (i.e. MRV), accounting and trade. These tools could fill a critical gap in the understanding of how bottom-up non-state climate actions are implemented, what they achieve, and how to build a sustainable system that lowers measurement and reporting burdens to be more inclusive globally.

Whilst the initial application of blockchain focused on digital currencies (e.g. Bitcoin), other non-financial applications quickly followed. In fact, its core promise of decentralized consensus eventually caught the attention of the climate world. Eventually, the UNFCCC declared its support for research on blockchain and distributed ledger technologies (UNFCCC, 2018). Following this announcement, initiatives like the Climate Chain Coalition have successfully created a growing network of entrepreneurial actors that are actively exploring the blockchain and climate intersection, each with their own set of technological value propositions.

To date, however, there hasn’t been a compelling direct application of the technology, at least not in terms of a global internationally recognized framework for carbon and climate accounting that propose to leverage the power of trustless decentralization and automation to integrate legacy accounting practices with emerging technological ones. There has also been little discussion about how to address questions around the governance of these tools, data sharing between existing climate platforms, development of globally accepted accounting protocols for NSAs, and the dichotomy of maintaining actor data privacy alongside climate transparency." ([1])

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