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Governance Innovations for Climate Action: Opportunities and Challenges of Blockchain-based Platforms

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posted on 2024-06-27, 02:51 authored by Carlos Andres Diaz Valdivia
As scientific evidence on the causes and effects of climate change become progressively evident, significant efforts around the globe -- to adapt and mitigate -- have greatly focused on increasing renewable energy capacity in energy systems and accounting for industry carbon emissions into trading systems. Although these efforts reached important milestones -- such as the economic competitiveness of renewable generation or the enactment of voluntary carbon markets in several jurisdictions across the globe -- there are still considerable technical and institutional challenges preventing the accomplishment of the targets settled in the Paris Agreement (PA) and the Sustainable Development Goals (SDG). In this regard, a growing body of literature from the social sciences focuses on researching the institutional barriers preventing the achievement of successful transitions towards renewable-intensive energy systems and low-carbon economies. Beyond the private and public vested interests maintaining the status quo, this literature also points towards the key opportunities stemming from novel community-based energy solutions. In this way, individuals (e.g. prosumers and consumers) organized into energy communities, can enhance operative and governance dynamics that contribute to improving the resilience (adaptability) of energy systems towards net-zero goals. However, energy communities still lack cost-effective coordination tools that enable them to achieve collective action. For this, the enactment and enforcement of rules, jointly agreed to invest in common generation and storage resources, as well as the capabilities to settle financial and energy/carbon emission exchanges in a transparent way, has been identified as critically important. Considering this context, this research project focuses on the governance innovations stemming from the development and implementation of blockchain-based solutions for climate action (e.g. distributed energy configurations and voluntary carbon markets). These solutions enable novel operative configurations and governance dynamics through the use of native blockchain affordances, such as bi-directional peer-to-peer exchange, tokenization of assets (e.g. generation and storage units, along their outputs) and smart contracting (enabling automation). Specifically, this research project addresses the development of open-source infrastructures and tools for decentralized forms of organization (i.e. business-led and commons-led) stemming from the availability of unique and transparent databases. It employs a qualitative research design that gathers insights from content analyses using publicly available text-data published in the form of business whitepapers. These whitepapers constitute key sources of information about the decentralized governance arrangements proposed for the climate action using blockchain technology. Firstly, the findings show the disruptive potential of blockchain-based solutions for enabling novel governance dynamics in energy communities. Using this technology, energy communities’ operations can be organized into microgrids or local energy markets where bi-directional exchange between prosumers, consumers and storage facilities constitute the backbone of distributed energy systems. This thesis shows that data from aggregated community operations also enhances the visibility of renewable and storage operations for energy system’s operators, while providing them with capabilities for enhancing their flexibility and avoiding curtailment. Secondly, the findings also show the potential of blockchain technology to enhance the integrity and legitimacy of voluntary carbon markets through the introduction of robust information systems. In this way, the governance dynamics within voluntary carbon markets benefit from transparent and verifiable databases that reduce information asymmetries between supply-side and demand-side participants. Overall, the results reveal complex and multi-level socio-technical interrelations sustained in different layers at the blockchain-based systems. The adaptability and customizable properties of this technology enables opportunities for private and community-based solutions, end-user empowerment, democratic participation and polycentric governance.

History

Degree Type

Doctorate by Research

Copyright

© Carlos Andres Diaz Valdivia 2023

School name

Grad School of Bus and Law, RMIT University

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