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Writer's pictureTan Lim Soon Fu

How Blockchain Will Play a Significant Role in the Mitigation of Greenhouse Gases

Updated: Jan 15, 2019

Basém Alasi

Energy Systems Engineer & Blockchain Developer


Tan Lim Soon Fu

Chief Technology Officer



In November 2017, 13 US federal agencies concluded in a special report that human activity is directly linked to the increase of Earth’s temperature and extreme weather events. This sets a huge challenge for governments and businesses to reduce their energy consumption and minimize their release of greenhouse gases, while maintaining growth. One method economists have come up with to limit unavoidable carbon emissions is called Carbon Offsetting; and blockchain technology is the perfect way to accelerate this procedure, making it much more practical, transparent and cost-effective.


Carbon offsetting

Carbon Offsetting is the process of converting emission reductions into tradable permits, allowing emissions to become commodities. These permits can then be sold to other organizations, businesses or even individuals, that are compelled by legislation or just simply wish to ‘offset’ their carbon dioxide emissions. In theory, one activity offsets the other, but in practice it’s very hard to guarantee that emissions are actually being cut down. Therefore, better systems are needed to avoid manipulation and fraud in recording energy reduction and carbon footprints. And that’s where blockchains come in handy.

Energy savings or generation of energy through renewable means abates climate change through the reduction in CO2 emissions. The use of blockchain to track, monitor and record such initiatives in a decentralized and encrypted/secure manner provides an avenue for a well-documented and traceable CO2 emissions certificate generation in line with the methodologies prescribed by the United Nations Framework for Climate Change Convention (UNFCCC). Such climate change mitigation actions are critical to the sustainable development of the world and are in line with the United Nations Sustainable Development Goals.


The Malaysian-based blockchain start-up, EPC Blockchain Sdn Bhd is developing a decentralized platform to track energy savings and tokenize carbon credits. The platform is called BESC, short for Blockchain Energy Savings Consortium,. They are planning to deploy two blockchains, one public and the other private, using NEM. It’s one of the few enterprise solutions that can be applied to utilize the decentralization capabilities that blockchains offer, while providing the necessary privacy and data security.


Private blockchains are usually used in Business-to-Business (B2B) interactions. In the case of BESC, they are used to record the energy savings of a project. These savings are the product of an Energy Performance Contract (EPC) between the project developers and an energy service company (ESCO). EPCs had previously been nearly impossible to use in a virtual environment. But now, with the use of digital tokens and smart contracts, respective parties can now easily automate, track and validate payments. Data can then undergo an auditing procedure by carbon consultants to certify the corresponding amount of carbon credits awarded to project developers, all in compliance with the United Nations Framework for Climate Change Convention (UNFCCC).


BESC Tokens Model

Once carbon credits are generated, they will be tied to a cryptocurrency called ‘EPC Token’, which is stored on a public blockchain and traded on various cryptocurrency exchange systems. This assures purchasers that these tokens cannot be duplicated or falsified. Such a business model allows investors and the general public to invest in energy efficiency and renewable energy projects, like wind and solar.


Based on BESC’s blockchain project, the approximate energy saving per capital dollar spent is about $0.032 for every 1 kWh a year saved through an EPC in Malaysia. If a government-backed financial institution funds the project, as planned with $49.3 million, it could save approximately 1.5 billion kWh per year, or 1.1 million tons of carbon credit. According to the Gold Standard organization, energy efficiency projects could fetch approximately $9.6 per ton of carbon credits. This could make the value of the carbon credit worth approximately $11 million a year. The start-up is still in its early days and seeking funding to undertake additional system development.


Should you buy carbon credits?


When you’re pottering around the house you’re probably not thinking of melting ice caps or changes in rainfall patterns, and this is a huge challenge for climate scientists. Climate change is such a massive, world-changing issue, it’s difficult for any one of us to feel responsible.


“No raindrop blames itself for the flood.”


The answer is yes, but before you buy yourself some EPC tokens, make sure that you’re not giving yourself a license to pollute. You should always try to reduce your own carbon footprint before paying someone else to reduce theirs.

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