• Nkechi Victoria Osuji
4. Semester, Digital Communication Leadership (Master Programme)
The main objective of the research is to look at how blockchain can be used for monitoring and tracking CO2 emission trading in the energy industry with a focus on the European Union Emission Trading System (EU ETS) framework. Guided by the network, stakeholder and network theory, the researcher was able to gather the relevant data necessary to address the research questions, interpret findings and analyse. Applying both empirical data from semi-structured expert interviews and literature reviews, three outcomes are presented. The first is on the current conditions and challenges of monitoring and reporting CO2 emissions. Second is putting into consideration if blockchain is the right fit to solve these challenges and how. The third stage looks at the factors that might affect the implementation of such a system and provide recommendations.

The use of blockchain to address the issue of climate change is increasingly a discourse among countries, industries, and stakeholders. Already, industries and climates initiatives view the technology as a potential solution for combating climate change (UNFCCC, 2017; Willers, 2018). The EU Regulation (EU) 2015/757 is also positive that implementing innovative technologies can accelerate climate actions and reduce CO2 (European Commission, 2015). For a long time, the EU has been combating the issue of climate action in industries through sustainability programs. One of such program is the EU monitoring reporting and verification (MRV) program under the EU ETS. However, systems have some key challenges and areas for improvement which makes it ineffective.

The first stage of the study findings reveals that the monitoring and reporting of CO2 emissions is a mandatory requirement by law for all energy operators under the EU ETS program. However, most energy operators are non-compliant to the program in reality. This creates gaps and issues of non-compliance in the current system. Other challenges the study found out are the lack of transparency, lack of standardization in CO2 accounting, and the issue of double counting.

The second stage of the research was guided by the cases studied and requirement engineering (RE) to explore these identified challenges and if blockchain is the right fit to address them. Most importantly how can blockchain fix the said challenges? This stage of the research addressed the main research question: how can blockchain be used for monitoring and reporting of CO2 emission trading in the energy industry. Through elucidation of the study analysis, the research developed a private-permissioned Hyperledger blockchain otherwise referred to as a Process Flow Networked (PFN) to address the identified challenges. Particularly, the smart contract of the blockchain was highlighted as a key feature. This is because of its ability to automate, be immutable, and digitally enforce negotiations without a middleman. These characteristics are unique in solving the issue of compliance, transparency, standardization, and double counting identified.

Furthermore, through the result validation in a post-expert interview, the research found out that the verification step in the process of monitoring and reporting CO2 may not be ‘fully’ replaced by blockchain because the technology is still evolving and not yet mature. Human effort will be required in the verification stage of the process. As such, the study encourages further work on this. The implementation of the proposed blockchain comes with challenges which the third stage of the research addressed.

The third stage presents technological constraints and a high level of stakeholder collaboration as major factors that might affect the implementation of the proposed system. Also, the system requires a high-level integration with other technologies such as the Internet of Things (IoT) and machine learning.

Therefore the study also encourages future research in these areas. This is because blockchain is continually evolving its technology capabilities. As such, it remains a topic of interest in research and development for addressing climate change. This research explores how blockchain, with its smart contract and distributed ledger technology (DLT) can be used to address a critical global issue: climate change. Such a study is a good contribution to creating sustainable practices to solve the global climate issue. Not just the energy industry but other sectors: maritime, aviation, logistics e.t.c can learn from the research findings.
Publication date31 Jul 2020
Number of pages180
ID: 337939956