Why Allinfra Climate Uses Blockchain Technology

Allinfra Climate is our sustainability data management software. But why choose blockchain to build a climate tech product?

The issues plaguing the market

Prior to founding Allinfra, we identified a number of areas of improvement in the creation and use of environmental financial products (e.g. renewable energy certificates, emission reductions):

1. Challenging processes for data collection. These processes often involve one or more site visits to conduct manual data collection, third party verification, periodic inspections, report generation, and other processes that typically result in lengthy and highly unpredictable timelines, significant cost and the potential for human error.
2. The inability to permanently link data to products. Conducting data collection, verification and reporting in the traditional manner above, it is difficult to permanently and transparently tie non-digitized data to a product, making it more complex to verify environmental claims and use that data in future carbon accounting, green ratings and other value-added processes.
3. Potential for double counting. The lack of highly referenceable data sets or other universal systems linking underlying project data to claims over emission reductions (i.e. environmental financial products, carbon accounting, etc.) – and ultimately to regional and national targets – means it is more difficult to ensure that an emission reduction or mitigation outcome has not been claimed by multiple actors.

What is blockchain technology?

A blockchain is essentially a digital ledger – each block of transaction data on this decentralised growing list of records contains information about the block previous to it, thus forming a chain that is resistant to modification. It is secure by design.

This technology is most well-known for cryptocurrencies like Ether or Bitcoin, but this same distributed ledger technology can be used for a host of other applications, particularly where transparent and traceable information is important.

How a blockchain-based platform boosts climate action

Provenance

We saw a blockchain-based system as a way of ensuring that data captured from devices and other carbon-relevant sources retained a high degree of provenance. A verifiable and direct methodology for extracting and recording data directly can materially accelerate processes that are often entirely manual and open to human error, only requiring manual inspection where and when necessary. This results in greater predictability, reduced time and cost, and vastly improved verifiability and auditability.

Permanently linking digital financial products to data

Blockchain technology allows us to construct a cost-efficient scheme able to easily, reliably and permanently link underlying data to a digital environmental financial product, a carbon accounting exercise, a green rating or other products and services. By permanently tying underlying data to environmental claims, you move closer to a more versatile system that doesn’t require trust of third parties, providing far greater optionality to project owners but still allowing for third party collection, reporting and verification where it is necessary or value-added.

The avoidance of double-counting

A blockchain-based solution encompassing source data and digital products tied to that data makes it easier to track the provenance of a product – where and how it originated, where it was traded and who retired it, thus reducing the chance of multiple claims over the same underlying source data and allowing for easy and efficient audit.

A secure system to finance real positive environmental impact

From a product perspective we saw the technology as enabling:

1. parties to custody and transfer environmental financial products themselves, while allowing for easy reference by carbon registries, government and other relevant stakeholders.
2. the cheap and reliable fractionalisation of products that would otherwise be difficult for a broad spectrum of buyers to access.
3. access to environmental finance opportunities with minimal friction costs, vastly reduced third party fees.

While potentially not the only solution available, we believe that a blockchain-based platform currently provides all stakeholders in the environmental financial product market with greater trust in underlying products, vastly reduced and more predictable time and costs, increased efficiency in allocating value to participating parties, and greater optionality and reporting – ultimately contributing to the acceleration of positive climate action.

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Allinfra is building technology solutions to help your organisation achieve ESG goals. Learn more about our sustainability data management software, Allinfra Climate.