Blockchain is critical to China’s energy plans
Beijing has set itself a political goal of becoming the world leader in blockchain technology by 2025. To that end, recent years have seen policy changes by the National Development and Reform Commission (NDRC), which has broad administrative and planning control over the economy of the People’s Republic of China (PRC). . Of particular interest, in 2021 the NDRC published a plan for the development of the national digital economy by 2025. In this plan, blockchain was once again labeled as a “key digital technology” – along with artificial intelligence, big data and cloud computing.
Not surprisingly, in 2022 we see new infrastructure development plans from the Chinese government in this area. Last month, the China Energy Administration (CEA) – the state agency responsible for formulating energy policy under the National Development and Reform Commission (NDRC) – announced that it would explore blockchain-based power trading platforms to facilitate the trading of electricity between independent power generation units and state and national networks, according to a policy document released at the end of August. The policy will examine the feasibility of small and medium-sized power generation and storage facilities serving local neighborhoods to trade energy with state and national grids. This plan aims to avoid or mitigate power outages in the event of natural disasters or droughts – such as the recent drought and heat wave, which has taken a toll on Sichuan province’s power supply, causing massive industrial and residential blackouts.
Blockchain is ideal for this project. The technology’s immutable properties can provide transparent and reliable flow measurement and proof of transactions. Blockchain is a decentralized, immutable database that makes it easier to track assets and record transactions in a specific network. It stores transaction records through a network of connected node-to-node nodes, or blocks, linked together via cryptography. In more detail, as new data comes in, it is put into a new block. When the block is filled with data, it is linked to the previous block, causing the data to be linked together in chronological order. Therefore, this technology allows digital information to be recorded and distributed, but not edited, improving data traceability, security and reliability.
In a government infrastructure project, reliable power metering and proof of transactions will lead to accountability and reduced corruption risk. In general, blockchain has been used to prevent fraud, waste and abuse in public services worldwide. It is interesting to see China introduce such a measure in its own country. It is a fairly comprehensive project regarding new uses for blockchain supply chain and accountability features. And this should push Western democracies to think about similar initiatives, especially the United States.
However, that has not yet been the case under the current or previous administrations. Just this March, US President Joe Biden issued an executive order regarding a “whole of government” approach to the cryptocurrency industry. It signaled that Washington’s targeting of the blockchain sphere remains focused only on the financial aspect of blockchain technology, particularly cryptocurrency and its use as a financial asset. Like many people, the US government still neglects to think about the strategic application of blockchain technology throughout society (infrastructure, supply chains, accountability and healthcare). In the West, blockchain success will depend on a regulatory policy environment that provides clarity, allows for growth and holds the industry accountable. This would be the only way to see new developments flourish.
MIchael Locketz is a former financial analyst at Wells Fargo and a resident of San Diego with a strong interest in international affairs. After the coronavirus pandemic, Michael left the financial industry to pursue a career in journalism, particularly in the intersections of business, innovation and politics.
Image: Reuters.
