Distributed Ledger Technology

Definition

DLT's, of which blockchain is a type, can help reconcile emissions across scopes because of their public and global nature.

DLT allows for data to be connected along supply chains, which helps associate emissions emanating from various sources, such as production (scope 1), electricity (scope 2), and upstream and downstream business parties (scope 3). Because of the complex nature of these relationships, DLTs can help prevent double counting and ensure that all emissions are accounted for.

DLTs can also help implement a global ledger for carbon accounting because they offer a transparent and secure way of recording and verifying emissions data. This can help overcome the challenges of siloed reporting, where different organizations may have conflicting or incomplete information.

Transparency, Scalability And Immutability

A public and decentralized ledger can create a system of checks and balances that allows for transparent governance and reduces the risk of collusion, conflicts of interest, and tampering. This is critical because only when emissions are accurately accounted for can we achieve a net-zero carbon economy. Additionally, looking at the emissions of the materials used to make products and how those materials are transported and disposed of can help companies better understand their environmental impact and take steps to reduce it.

Application In Climate Action

To effectively address the challenges of carbon accounting and emissions reconciliation, it is vital to have a public and transparent ledger that can be accessed and verified by anybody. This helps ensure that all emissions are accounted for and prevents double counting.

To attain this level of transparency, companies will need to make their businesses more open and transparent.

Furthermore, DLT can solve the intergovernmental trust and coordination issues that had been preventing the global carbon market from truly taking off.

No country would trust a private blockchain or database for fear that it could be tampered with. A public DLT such as Hedera can therefore foster trust because the jurisdiction that is hosting it does not have control over the day-to-day operations of the network and the transactions are immutable and transparent.