WEF Crypto report shows path to improve Web3 data standards for sustainability

A new insight report from the Crypto Impact and Sustainability Accelerator emphasized the role that blockchain technology can play in a sustainable power system, and how the crypto industry can continue to reduce its emissions. Written by the World Economic Forum’s Evin Cheikosman and Catherine Mulligan, the report draws on insights from leading consulting firms such as PwC and Deloitte, as well as academic experts at the Open University of the Netherlands and the Cambridge Center for Alternative Finance.

Much has been done by Web3 projects that can drive sustainability. “By purchasing renewable energy, blockchains can provide additional revenue streams for wind and solar projects,” Doug Miller, a contributing expert to the CISA report and co-founder of startup Zero Labs, said in a video call. “This could accelerate the use of renewable energy globally.”

For a more specific example of how this works, Zero Labs’ digital technology tool mentioned in the CISA report allows investors in bitcoin and other cryptocurrencies to zero offset the carbon emissions associated with their portfolios by purchasing renewable energy credits.

The core of the CISA report outlines efforts to determine the blockchain’s energy consumption, a difficult and controversial topic. Because most blockchain nodes do not report location or hardware, many assumptions go into evaluating their energy consumption. Despite the best and most powerful efforts of various researchers, today there is still a gap between the level of precision and confidence in emissions figures reported for permissionless blockchain networks and those produced according to standards in other industries.

As James Roy Poulter, CEO of Consequence, who was not involved in the CISA report, told me over email, “there are currently no blockchains that perform full, standards-compliant carbon calculations. Blockchain can be used to completely eliminate greenwashing , but this must include a full and accurate account of the industry’s own impacts.”

Along these lines, the report’s co-author Mulligan, a CISA Project Fellow at the WEF, told me in an interview that there is an “imminent need for industry experts to develop comprehensive guidelines for blockchain emissions.” And the clock is ticking.

– New regulatory requirements coming into force in Europe in 2024 will require companies to report both impact materiality together with existing financial materiality. The crypto industry can learn a lot from existing standards in the ICT industry and vice versa, says Mulligan.

Principles of transparency and verifiability central to the Web3 ethos are a natural fit for emissions reporting, and Web3 projects have the potential to make sustainability requirements more stringent, timely and accurate. In this case, the report outlines new solutions that raise the bar, such as Carbonara’s next-generation energy measurement system, virtual power plants powered by Srcful, and a series of demonstrations by the Energy Web Foundation.

While these and other projects offer something genuinely new and valuable, the industry needs to do a better job of balancing its vision of a demonstrably sustainable future with today’s sometimes more unsightly net zero requirements. Since it works to bypass traditional reporting, Web3 can also embrace the rigor that existing standards have to offer.

Disclosure: My employer, Protocol Labs, funded research on blockchain energy use via the Open University of the Netherlands, some of which was referenced in the CISA report, and has provided grants to Zero Labs and the Energy Web Foundation.

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