- Satellite and blockchain technology could be combined to address the lack of transparency and accountability in the carbon market, according to a recently published report.
- The report suggests that while satellite imagery can provide data in real time, blockchain technology could be used to ensure that the data are accessible, transparent and not tampered with.
- The combination of the two technologies, according to the report, could also be used to improve traceability and ensure compliance with deforestation regulations.
- The complicated nature of blockchain technology, the lack of regulatory infrastructure and high energy consumption are likely causing skepticism and relatively slower uptake for its application in environmental monitoring.
Can satellites and blockchain technology solve the woes of the beleaguered carbon market?
Although challenges abound, there’s potential ahead, according to a new report. Published as a collaboration between Earth imaging company Planet, carbon credit company Carbify, and the think tank European Carbon Offset Tokenization Association (ECOTA), the report delves into how the two technologies could potentially help address the issues of transparency and accountability that pervade the carbon market.
“The sustainability and carbon market has a very deep-rooted integrity problem,” Maximilian Rösgen, communications officer at ECOTA and one of the authors of the report, told Mongabay in a video interview. “We wanted to explore how we can use technologies to make it more transparent and to scale it as per institutional demand.”
Satellites have long been used to monitor and estimate environmental degradation in real time. High-resolution satellite imagery has helped scientists, conservationists and authorities identify deforestation, detect illegal roads, and keep track of wildlife in various ecosystems. Blockchain technology, on the other hand, has found applications in fields like finance and retail. Owing to its immutable nature, data stored on blockchain can’t be altered or tampered with. To date, however, it has found limited use in environmental monitoring.
Together, though, the two technologies could be put to good use, according to the report. While satellites could continuously monitor changes in forest cover at regular frequencies, people can access alerts and other information on smart contracts — agreements signed and stored on the blockchain and executed automatically when the terms of the agreement are met. The report also proposes that blockchain technology could be used to store satellite imagery in a decentralized manner, keeping people from altering or hiding the images as part of environmental crimes.
Outside of the carbon market, satellites and blockchain technology could also be used to maintain traceability and ensure compliance with a growing slew of regulations, like the European Union’s new regulation on deforestation-free products, or EUDR, that target deforestation in global supply chains.
“I need to know if the coffee I’m drinking is deforestation-free,” Flávia De Souza Mendes, program manager at Planet, told Mongabay in a video interview. “Similarly, I need to know that I’m buying a good carbon credit without needing to pay three companies to validate or verify if it’s really good.”
Blockchain technology, however, has seen slower uptake, likely due to how complicated it is. It’s also notorious for its high energy consumption, a criticism that the report suggests people in the industry should look into and potentially overcome by adopting energy-efficient systems.
Mongabay’s Abhishyant Kidangoor spoke with Flávia De Souza Mendes, Maximilian Rösgen and William ten Zijthoff, co-founder of Carbify, about the potential that the technology holds, how it can be applied on the ground, and why adoption has been slow. The following interview has been lightly edited for length and clarity.
Mongabay: Your report looks into combining satellites and blockchain technology for better environmental monitoring, especially in the context of carbon markets. What was the motivation behind this?
Flávia De Souza Mendes: The need to put satellites together with blockchain technology, it’s increasing, especially in big financial institutions. They are requesting to have more what they call “real-world assets.” That means, bringing real problems like real estate or environmental crimes into the blockchain.
People have an idea about satellites, but not so much about blockchains. This report is meant to be very introductory. The first time I heard about blockchain a few years ago, I was thinking, “OK, what is that? What does it exactly mean?” This report is an introduction because in the field of blockchain, it’s very much focused on the experts. And we want to make it more actionable and more visible for people who have no idea about blockchain, like myself.
Maximilian Rösgen: The sustainability and carbon market have a very deep-rooted integrity problem. Carbon credits, for example, have to be valid. When I talk to financial institutions, they only have this bitcoin framework in their head. But blockchain is more than bitcoin. What we tried with this report is to explore how we can use new technologies that, in and of itself, may not be native to the sustainability market to solve deep-rooted problems that we have in the market to make it more transparent and to scale it as per institutional demand.
Mongabay: What gaps are you seeing in the market that could potentially be resolved by the combination of these two technologies?
Maximilian Rösgen: When I talk to financial institutions, they ask me, “If I buy a carbon credit, for example, for part of a forest in South Africa, how do I know that the forest is still existing and developing as set by the methodology of a carbon project?” I could say, “Hey, you can buy a flight ticket there or hire scientists and put them on a plane to do the research on the site.” But there are cheaper, faster and more reliable ways to actually do it. We could try to connect the technologies with blockchain as the final ledger where all of this data is then settled on.
Flávia De Souza Mendes: There’s a lot of criticism on the methodology of carbon markets that’s principally related to verifiers. Being able to use satellite images in a smart contract, for example, will allow you to see the changes and keep track.
A very big problem that we have with carbon projects is how frequently certifiers go to the field and check if the carbon is still there. If you look at some of the famous certifiers, it’s sometimes between three or four years. Anything can happen within three years. If you have satellite images, daily, weekly or even monthly, you could look at it in a smart contract. So the person who has bought the credits can check if the forest is still there and do something about it instead of waiting for something to happen. Satellite imagery is a very important piece of the puzzle when we think about transparency and being actionable. Blockchain offers an immutable ledger. Everyone can see it and that’s what makes it more transparent.
William ten Zijthoff: When we started Carbify, I found it very weird that nobody was asking where the carbon was coming from. We have companies in Europe that sell carbon credits and when you buy them and ask where they are from, they will say somewhere in Brazil or South Africa. We wanted to create transparent carbon offsets linking each kilo of absorbed carbon dioxide back to the original source. That can only be done by blockchain. Even blockchain was not ready for this. We had to develop a whole new smart contract that did not exist to link the carbon dioxide from the tree back to the geolocation.
Satellite data is super helpful. We don’t want to fly there every month. We want to have a reliable source of data that can flag everything. So these two technologies are very complementary to each other. It gives the transparency we need in the carbon market.
Mongabay: What is the status of blockchain technology at the moment when it comes to environmental applications?
William ten Zijthoff: It’s still in very early stages. It is still not progressing fast enough because it forces you to be transparent, and that’s not in everybody’s benefit.
Mongabay: How do you see these technologies being applied on the ground?
Flávia De Souza Mendes: So far, we have been talking mainly about the carbon market. But there are other things coming up too, like a lot of regulations that require big commodities traders like traders of coffee, soybean, palm oil from everywhere in the world to really have the geolocation of the exact plot where they planted these commodities. This makes you think about how complex all of this is going to be. In the whole supply chain, you have a lot of indirect suppliers. So it’s a mess and it’s almost impossible to track the origin of the products. I think blockchain might come into use in that sense as well.
With really good technology to tag each one of these plots, you can track them right from the farmer registry on the blockchain. For example, it can help with providing location data, deforestation monitoring and verifying compliance. It can, for example, track coffee batches and have the whole supply chain traceability from the farm to retailer recorded on blockchain. With a QR code, for example, you could know more about the coffee that you are drinking or the meat you are eating and know that you’re not contributing to deforestation and support regulations such as the EUDR.
Mongabay: What challenges do you anticipate in the years ahead in the adoption of this technology?
Maximilian Rösgen: When I talk to people, most of them feel it’s way too complex. This could be why adoption is slow.
Flávia De Souza Mendes: Blockchain is very complex. But with the carbon markets, for example, there is a lack of transparency. It is so complex that it’s sometimes even more complicated than if you have everything implemented in a blockchain.
William ten Zijthoff: With regard to the carbon market, what we see is a lack of education. We tell them that we utilize the blockchain technology for transparency, but they don’t really know about it or care about it. We see that the big carbon traders are not ready for it because they will need to integrate into the blockchain.
Also, there are too many certifications. If you can prove where it’s coming from or that the trees are still there or what tree species are there, why do you need somebody else to say they also agree with it? With blockchain, you could potentially verify everything and you don’t need to trust anybody anymore because you can see it. You can have access to everything. You can then verify it with satellite data and geolocations.
Mongabay: How do you think we can overcome those challenges? What does the future look like to you?
William ten Zijthoff: I think this is where we start: with writing papers, doing webinars and educating people. It’s about talking and getting those big guys to understand and adopt it.
Flávia De Souza Mendes: I think bringing more real-life issues and daily problems into blockchain will make people realize how helpful it can be. When you say blockchain, people only think about big banks, financing, gaming and bitcoin. But bringing this technology to real problems will help people. I need to know if the coffee I’m drinking is deforestation-free. I need to know that I’m buying a good carbon credit without needing to pay three companies to validate or certify if it’s really good. Bringing it into real-life cases will help a lot because then people see the advantage of using the technology.
Maximilian Rösgen: Blockchain guys should also develop it in a way that the consumers get it. My analogy is this: You might not get the internet, but you understand the value that you get from the internet. Similarly, what I would like is for everything to be settled on blockchain. But it doesn’t necessarily have to be communicated to the consumer because it’s not important. The only thing important for the consumer to know is what the technology enables and that it is immutable.
Banner image: A tree in the Serengeti grasslands in Tanzania. Image by Hu Chen via Unsplash (Public domain).
Abhishyant Kidangoor is a staff writer at Mongabay. Find him on 𝕏 @AbhishyantPK.
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