Blockchain Technology as a Medium for Creative Climate Financing :
Blockchain presents itself as a secured, and immutable digital ledger. It is a distributed database that allows the transfer of assets and the recording and storing of transactional records (block) from various users in several databases (chain) in a network connected by peer-to-peer nodes.
Climate finance refers to the use of funds from public, private, and national sources, including sovereign wealth funds, and investment firms, to finance initiatives necessary to halt climate change and aid economies and populations in adapting to its inevitable effects. Statistics show that the United Arab Emirates region is highly susceptible to climate change which affects their homes, crops, and way of life. With SDG 13 focusing on climate action, the 2030 SDG framework agreed upon by the UN in 2015 embraced an integrated approach to support and boost and sustainable societal development through the 17 SDGs.
There have been numerous mediums to support the environment. Digital technologies like blockchain and ledger-based systems have the potential to alter climate finance mediums by making use of digital currency instead of monetary funds that are transparent and easy to legislate to fund climate technology projects efficiently. Due to the financial difficulties associated with mitigating climate change, implementing innovative strategies like these transparent ledgers can significantly enhance this industry. This article examines the effect of blockchain technology on climate financing.
The effect of blockchain technology on climate financing
1. Fostering clarity and traceability:
The nature of blockchain enables safe, open, and permanent recording of transactions, ensuring that the information contained therein is unaltered in any way. As a result, funds allocated for climate action will be kept in digital currency and are accessible for tracking.
2. Improve climate finance flow:
Blockchain has strong support for peer-to-peer financial transactions and crowdfunding which is used to raise money for projects. These frameworks not only help to raise more money, but also increase outside interest in the process, making it possible to boost funding for climate action and guaranteeing that money is acquired for programs addressing climate change.
3. Effective accountability for necessary officials:
The issue of government inefficiency, particularly in societal projects, is not new. However, by adopting blockchain in climate finance, this digital ledger acts as a check on the government by guaranteeing efficient monitoring of climate fund activities and assuring transparent uniform transactions.
4. Reduction of carbon emissions to save funds:
blockchain has improved modes of transactions. It can use less energy to enable various operations, which is crucial for cutting carbon emissions. Since carbon emissions contribute to climate change, reducing them helps avoid crises and loans. In exchange, funds initially allocated to combat climate catastrophes caused by carbon emissions can be distributed for other climate-related needs.
Although blockchain may act as a creative medium for climate financing, its nature requires a robust regulatory framework to guarantee constant operation. The nature of blockchain technology over time may provide more difficulties and in return affect sectors that will adopt it.