Responding Call from the Sixth Plenary Session of 19th Central Committee of CCP, Blockchain Facilitates in Achieving Carbon Dioxide Peaking & Carbon Neutrality

From 8th to 11th November, the Sixth Plenary Session of the 19th Central Committee of the Communist Party of China was held in Beijing. The plenary session mentioned that:

During the construction of ecological civilization, the CCP Central Committee had made a significant step in constructing ecological civilization and beautifying China construction via unprecedented strength, hence our country’s ecological environment protection had experienced a historical, transitional and global change.

Besides that, currently the CCP Central Committee and State Council had issued “Working Guidance for Carbon Dioxide Peaking and Carbon Neutrality in Full and Faithful Implementation of the New Development Philosophy”, so that full deployment was carried out to ensure that carbon dioxide peaking and carbon neutrality can be achieved as scheduled. This had fully shown our country’s great courage in facilitating green and low-carbon transformation and high-quality development, while expressing our responsibility in actively participating global climate governance as a big country.

Recently, as extreme climate such as global warming continuously happens, resource environment restriction problem has grown more and more important, thus carbon dioxide peaking and carbon neutrality will become an inevitable choice in achieving sustainable development of Chinese people. In the next 40 years, carbon dioxide peaking and carbon neutrality will become the latest trend and redefine a new economic territory.

Green economy becomes the latest trend

In early 2021, 27 members unit which consist of National Development and Reform Commission, Ministry of Science and Technology, Ministry of Industry and Information Technology (MIIT) and etc. had initiated and established Chang’An Chain Ecological Alliance in Beijing which aimed to apply blockchain on important application scenario like carbon trading ecological network. We can say that, application and innovation of digital technology such as blockchain will speed up in reshaping production economy under “dual carbon” target and bring inestimable technical value for driving green development method and transformation in future.

No. 1: Blockchain Facilitates Carbon Tracking

Differed from zero emission, carbon neutrality needs to achieve balance between carbon emission and carbon absorption.

On the road of achieving carbon neutrality target, except for adjusting energy structure and reducing carbon emission, on the other hand is to increase carbon absorption, therefore carbon tracking, capturing, utilizing and storing technology can be used to increase carbon absorption.

Image source: Internet

According to the evaluation report of Intergovernmental Panel on Climate Change, without carbon tracking, capturing, utilizing and storing technology, cost of emission reduction will experience exponential growth, and it is estimated that average rate of growth will reach up to 138%. On 21st October, while General Secretary Xi Jinping was conducting research in Shandong, he arrived at Block Lai 113 of Shengli Oil Field located at Laizhou Bay, Dongying City to have thorough understanding about the condition of carbon dioxide capturing, utilizing and storing technological research and development application. This had shown how much Mr. Xi was paying attention to the specific operational phase under dual carbon target.

Recently, carbon footprint tracking and capturing which involve blockchain have reached certain progress. Some cases have shown that, via implementing distributed ledger triggered by smart contract, blockchain technology is able to track carbon footprint well in the whole supply chain. Through blockchain and smart contract empowerment, a tamper-proof trust system can be established to track data, share record with authorized agencies and endow the ability of tracking carbon footprint in whole supply chain.

In May 2021, according to news, Polestar, an electric vehicle company which is the subsidiary of Volvo announced strategic cooperation partnership with Circulor, a blockchain traceability start-up company. The company attempted to use Circulor’s blockchain technology to construct traceability solutions for carbon dioxide emission tracking in each phase during production process, and also to follow-up emission data in supply chain. This innovative practice had raised excitation of sector and gained great attention from the capital market for a time. Hence, we can say that, blockchain possesses an enormous market prospect and business value when adopting carbon footprint tracking, capturing and utilizing.

No. 2: Blockchain Builds Trusted Carbon Data

Currently, information island frequently happens due to non-transparent information and lack of trust during the management process of carbon emission, emission reduction and carbon target, so this has created obstacles for dual carbon target achievement.

Data circulation creates difficulties

Consistency and transparency of blockchain’s data structure and certification mechanism help to open up information island during carbon emission, emission reduction and carbon target management process and construct trusted database participated by various parties. At the same time, high data privacy characteristic possessed by blockchain can solve dilemma in terms of business information secret and disclosure of environmental information, actively adapt to information disclosure strategy of carbon issue and avoid risk under carbon emission regulatory system constructed by government department, third-party review and financial institutions.

After possessing trusted data, main enterprise can formulate carbon accounting which fulfils standard specification based on own actual situation in order to promote scientific emission reduction target and implement more effective energy saving and emission reduction actions.

No. 3: Blockchain Participates in High-Effective Carbon Management

After blockchain technology empowers data such as carbon emission, emission reduction and carbon target management, these data will then match with tamper-proof, accurate operation node and trusted timestamp characteristics. The above characteristics help enterprise to increase resources utilization and overall operational efficiency, construct green supply system, control production cost and promote craft and technical transformation upgrade in order to form low-carbon competitiveness under “dual carbon” target.

Blockchain makes carbon data trackable

Through combining technologies such as AI, big data analysis, IoT and adding smart contract management of blockchain, summary analysis regarding carbon data of enterprise will automatically be conducted, while best carbon emission management method will be summarized and early warning system will be triggered once non-compliance phenomenon being discovered in order to prevent connection and systematic error from happening. Meanwhile, blockchain technology’s clear monitoring node also helps to clarify internal responsibilities, facilitate carbon data monitoring and training related to carbon trading, and improve carbon management level of each main enterprise fundamentally.

No. 4: Blockchain Empowers Carbon Trading

On last December, Ministry of Ecology and Environment issued “Measures for the Administration of Carbon Emissions Trading (for Trial Implementation)”, carbon trading was entrusted with important tasks while promoting the implementation process of “carbon dioxide peaking, carbon neutrality” target.

Image source: network

Blockchain records chain structure consisted of connected and combined transaction data block according to time sequence. Its actual form is a decentralized distributed database that uses technologies such as asymmetrical encryption, Merkel tree and so on to ensure information cannot be tampered by external attack and assure data security.

After blockchain technology empowers carbon trading platform, data will be stored dividedly in “chain” form via distributed ledger technology and transaction data. Data is maintained by community without restricted by certain centralized node, while user is able to check enterprise’s carbon emission data and transaction information history at anytime within authorized permission scope, hence this has increased data transparency effectively during transaction process, ensured source of carbon emission rights in every unit and effective tracing on transaction route, and also solved asymmetrical information difficulties among participating parties.

At the same time, blockchain will help achieving model revolution, connect various accounts of transaction party directly, leave out participation of agencies such as bank and financial institution and undergo disruptive reformation on current transaction model in order to save huge cost, greatly increase overall efficiency of carbon trading link and achieve fast settlement speed.

Experts predict that, market value of annual carbon emission rights in our country will reach 60 Billion to 400 Billion Yuan in year 2022. Furthermore, via adoption of blockchain technology, global carbon trading market scale may exceed trillion US Dollars in near future, thus we can say that blockchain technology still has a very wide development prospect.

No. 5: Conclusion

In 18th of October, for the purpose of promoting healthy development of country’s digital economy, Political Bureau of the CPC Central Committee carried out the 34th collective study session. During the meeting, General Secretary Xi Jinping emphasized that:

As technologies such as Internet, big data, cloud computing, AI, blockchain have sped up in innovation and gradually assimilated into whole process of economic and social development in various industries, rapid growth of digital economic development, wide radiation range and unprecedented profound impact are becoming the key power in reorganizing global element resources, reshaping global economic structure and changing global competition pattern.

China has to achieve the target by reducing more than 65% of carbon dioxide emissions per unit of GDP in year 2030 compared to year 2005, non-fossil energy occupying approximately 25% of primary energy consumption and accomplishing carbon neutrality in 2060, thus this is a tough mission for us.

Being a new generation of disruptive core technology emerged after steam engine, electricity and Internet, blockchain’s unique characteristic will portray an important role in achieving dual carbon target, producing richer business scenarios, establishing more new industries, format and models similar to carbon management, carbon data and carbon trading.