“Chainlink Labs is the leading provider of secure and reliable open-source blockchain oracle solutions”
Chainlink Labs and TECNALIA Show How Smart Contracts Address Key Interoperability and Economic Complexities in the Transition to Renewable Energy
As the race to Net Zero continues, discussions around a unified approach to measurement and standardization remain front and center. Chainlink Labs, the organization developing the global decentralized oracle standard powering mainstream blockchain adoption, and TECNALIA, a leading European research institute, have released a new report providing a primer on how to accelerate the transition from fossil fuels to clean energy sources using blockchain technology.
“A data-driven backend infrastructure is critical to propelling the cross-sector collaboration needed to address the climate crisis,” said William Herkelrath, managing director at Chainlink Labs. “By using Chainlink to bridge some of the highest-quality climate data in the world onto blockchains for energy and climate initiatives, we can give the clean energy sector the tools it needs to expand its impact.”
Hybrid “on-chain/off-chain” solutions
One catalyst for the success of early adopters in the emerging blockchain industry has been the use of smart contracts. Smart contracts rely on oracle middleware to access secure external data, which then enables developers to create advanced blockchain applications. With high-quality climate and energy data accessible on-chain, smart contract developers have the tools they need to build the next generation of clean energy solutions.
The $1.9 trillion dollar energy industry is facing new challenges, such as keeping an increasingly distributed energy grid in balance and steadily increasing the share of intermittent renewable energy generation while demonstrating investment returns on clean energy projects.
“During this period of major infrastructure and market transformation, utilities, service providers, and governments can use blockchain technology to digitize and assign value to clean energy investments and design fully automated incentive systems for participating in sustainable practices,” said Jose Luis Elejalde / Energy, Climate and Urban Transition Manager at TECNALIA.
The report, Managing Climate Change in the Energy Industry With Blockchains and Oracles, outlines eight hybrid smart contract use cases supporting the transition to clean energy, including:
- Issuing carbon credits or consumer rewards when predefined energy objectives are met.
- Tokenizing energy commodities and energy project cash flows, which can then be used as collateral in various decentralized finance (DeFi) applications.
- Using parametric energy conversion contracts to guarantee performance or uptime requirements of renewable energy installations with automatic settlements.
One example of a climate solution using blockchain technology explored in the report is Hyphen, which seeks to enhance the accuracy of corporate emissions reporting by leveraging data from leading atmospheric agencies such as the Integrated Carbon Observation System (ICOS).
"Companies need the ability to accurately track and report their emissions in order to establish baselines and reach climate commitments,” Miles Austin, CEO of Hyphen Global AG. “With validated climate data now available on blockchains thanks to our work with Chainlink, we can begin building more sophisticated, equitable and efficient financial products and services that enhance the mitigation of climate risks. We can now supply validated real-world measurements to dynamic carbon assets. This gives confidence to investors, capital markets, banks, regulators, and so on...".
In March, the Lemonade Crypto Climate Coalition launched with the mission of providing parametric crop insurance to smallholder farmers, triggering automatic payouts when rainfall or temperature data from sources like AccuWeather meets a certain threshold.
As temperatures continue to rise and the climate becomes increasingly volatile, high-quality data and increased transparency will be essential to meeting clean energy standards and helping mitigate the effects of climate change. Access to next-level technologies like blockchain and oracle solutions will enable the automation and management of clean energy solutions beyond their current capabilities.
One thing is certain: No matter the sector or the industry, the climate crisis and transition to renewable energy is a shared problem that requires our attention.
About Chainlink Labs
Chainlink Labs is the leading provider of secure and reliable open-source blockchain oracle solutions, enhancing smart contracts by connecting them to a wide range of off-chain data sources and computations, such as asset prices, web APIs, IoT devices, payment systems, and more. We are dedicated to the development and integration of Chainlink as the standard decentralized oracle framework used by smart contracts across any blockchain.