Blockchain Against Climate Change: Perspectives from Indonesia – New Mandala

As the world faces staggering challenges in a post-pandemic and climate change era, the use and development of advanced technologies like blockchain are increasing the transparency and accountability of environmental systems needed to meet these challenges. As chair of the G20, Indonesia should seize the opportunity to lead cutting-edge technology in solving climate change issues.

The Crash of All Major Cryptocurrencies this year has left many crypto-related businesses facing serious financial difficulties, including bankruptcy. This “crypto-winter,” in which valuable crypto-based assets have fallen across the board, is expected to last another 250 days.

But while crumbling cryptocurrencies such as TerraUSD and LUNA are blockchain-based assets, blockchain itself is an innovative technology that stands on its own. It is widely known in the financial world and widely used as the basis of financial assets, but the technology goes beyond that.

blockchain is a shared, immutable set of growing records (called blocks) that are securely bound with encryption (so called chain). This immutable ledger facilitates the process of recording transactions, tracking assets, and building trust. As an internet-based technology, blockchain offers more security than the banking model because it is an instant online transmission. All things considered, blockchain offers added values replacing slow manual processes that open up to direct manipulation or modification.

The use of blockchain and advanced technologies such as Internet of Things (IoT), robotics and artificial intelligence is inevitable as the world enters the 4.0/5.0 era, without exception in Indonesia. Dubbed “the Internet of the future,” Indonesia is set to embrace blockchain adoption without delay or hesitation.

Home to one of the world’s mega-biodiversity sites, Indonesia could harness its potential to lead efforts to combat climate change in regional and global arenas. With its wealth of ecological diversity, Indonesia is a resource for genetic diversity research, vast commodity industries and a massive supply chain. Blockchain and advanced technology are accelerating the documentation, tracing, archiving and innovation of these great natural resources.

In sustainability practices, blockchain offers strong tools for raw material traceability for products such as coffee, Tunaand Palm oil. This can be useful in cross-border and international trade to comply with rules of origin (ROO) and mitigate the high cost of quality assurance issues – from reputational damage to product recalls and tracing transnational diseases carried by commercial goods.

In the case of Indonesia, blockchain can be strategically used and developed in environmental fields.

As one of the world’s biodiverse ecoregions, Indonesia is susceptible to biopiracy. Moreover, with its undocumented biodiversity and low identification and registration technology, there is a double job to be done to ensure fair and equitable sharing of commercial benefits. The use of advanced technologies such as blockchain can support the protection of genetic resources, traditional knowledge and folklore (GRTKF) which the Indonesian government is currently pursuing under international regimes such as the World Intellectual Property Organization ( WIPO) in a more transparent and reliable way.

As the fourth most populous country in the world and 14^e largest country by land area, land assets represent a major investment and provide basic livelihoods. Land titles are complex and usually lengthy. The bureaucratic process involved in dealing with different documents from various agencies has many unwritten rules along the way. The result is an unstructured model and no good governance. Blockchain can provide data harmony and openness, lightning access to data, reliable management of permanent records, and faster processing. A recent study shows that blockchain-based solutions can increase efforts to digitize land rights in Indonesia, reduce information processing costs, and facilitate access to important information. This is very useful for facilitating land use/land cover (LULC) monitoring for agricultural ecosystems, forest conversions and water bodies for climate change impact and actions.

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Traceability is important in supply chains, and Indonesia has vast ranges of world market products in its land and seas. As the world’s largest producer of palm oil, Indonesia supplies 45% of international demand. Currently palm oil is traceable through third-party mechanisms such as Indonesia Sustainable Palm Oil (ISPO) and Roundtable Sustainable Palm Oil (RSPO). A new initiative called Palm Oil Block (POB) aims to use blockchain and Internet of Things (IoT)-based technology to integrate a database system that holds digital palm oil identities for stakeholders along the value chain. Blockchain-based smart contracts can also benefit smallholders by creating price transparency based on the quality and quantity of their fresh fruit sales. As a leading producer and exporter of coffee, blockchain has been widely used in Indonesia for traceability and sustainability. users such as Alko Cafe Sumatra, Korintji blue and Coffee Noka used blockchain to inform customers of the journey from farm to cup by scanning a QR code. The journey of albacore and skipjack tuna take-to-customer was also piloted in Ambon, tackling failing systems such as slavery-supported practices.

The researchers discussed blockchain applications in carbon tradingand tokenized carbon credits via Betacarbon and Climatrade market. Certain obstacles ensue, with roadblocks reported encountered in the crypto industry regarding carbon trading. There are two options available for blockchain-based carbon trading: using the blockchain with its cryptocurrencies for monetary exchanges; or use the blockchain as a platform for a secure, transparent and immutable carbon exchange.

The Indonesian energy system is highly centralized and monopolized mainly by the government to maintain price stability. But the cost of energy distribution is higher in areas far from energy producers, whether fuel refineries or electricity generators. Deloitte predicted that blockchain will transform the renewable energy industry providing transactional infrastructure (such as smart contracts) and certifying the green energy source. Blockchain has ultra-comparative traceability advantages from the source of energy, to final consumption, including retail.

The development of technologies is crucial to combat climate change. The United Nations Framework Convention on Climate Change (UNFCCC) sets provisions in the original text from 1992, providing for the promotion, facilitation and financing of environmentally friendly technologies and know-how that reduce or prevent anthropogenic emissions of greenhouse gases. Moreover, the UNFCCC Technology Mechanism supports countries’ efforts to accelerate and scale up action on climate change, as outlined in the Nationally Determined Contribution (NDC).

In the battle two main strategies to combat climate change, mitigation strategies address the causes of climate change, while adaptation targets its impacts. Blockchain-based solutions can be used in both strategies. Initiatives such as collecting genetic diversity can be categorized as coping strategies; while green supply chains and carbon trading are obviously mitigation strategies; and land certification and green energy can contribute to both adaptation and mitigation strategies.

Despite its enormous disruptive potential, blockchain-based technology has some challenges in scaling. First, there is already a transparency and traceability system available alongside the blockchain that has been in use for a long time. The cost of developing and operating blockchain is also unclear, with only a few standards in place. On top of that, the legal and regulatory frameworks at local and international levels are largely obscure. Lack of awareness of enabling technologies that support blockchain has also delayed its adoption.

Oregui and Kumar (2017) established four-step approach to address the challenges of blockchain-based solutions for further implementation. The first is to establish a Blockchain strategy and roadmap ensure the commitment and participation of a critical mass of stakeholders, which paves the way for regulatory and legal cooperation. The second is launch of the preparation of the blockchain for collaboration, innovation, and experimentation to familiarize users with enabling technologies and get support. The third facilitates blockchain in action to establish proof of concept (PoC), scale, produce, implement and manage change management. Last but not least is integrate the blockchain to create sustainable practices.

In order to harness its full potential and minimize limitations, all stakeholders need to understand the urgency of adopting a blockchain-based system at all levels, including public and private sectors, civil society, academia and individuals.

Implementing new life-changing technologies like blockchain, robotics, and artificial intelligence requires at least five enabling factors beyond the usual approach, namely leadership, mindset, qualified human resources, infrastructure and supporting policies.

As G20 Chair this year, Indonesia is at the forefront of leading the recovery of global economies by maximizing efforts in its three pillars of global health architecture, sustainable energy and digital transformation. The use of blockchain-based solutions for climate change issues is an essential deliverable in sustainable energy and digital transformation goals.

Climate change is a clear and current problem. UN Secretary General Antonio Guterres, referring to the report released by the Intergovernmental Panel on Climate Change (IPCC) last year, says it is a “Code Red for Humanity”. Addressing climate change with advanced technology is an idea whose time has come.