DLT for Environmental Impact: Is Blockchain Technology Able to Enhance Sustainable Development Projects?

Demystifying environmental challenges and opportunities of blockchain technology


The ever-ongoing discussion about the environmental impact of blockchain technology is a huge area of concern that has become increasingly top-of-mind for the broader public. Statistics on high energy consumption, that is required to run the network, are increasingly compared to that of some countries and are leading to a growing antipathy towards blockchain technology in general. Yet what is less known is that blockchain technology itself is not linked to high energy consumption perse. While the Proof of Work (PoW) consensus mechanism, that is used in certain blockchain networks, involves excessive energy consumption that has indeed a negative impact on the environment, the Proof-of-Stake (PoS) model is more environmentally friendly and in conclusion sustainable in the long run. Ethereum Merge in 2022 has successfully shown the transition from a PoW to a PoS model, mitigating the excessive energy consumption involved in mining cryptocurrencies, that results in a 99.95% reduction of energy consumption by the Ethereum network. But what is even less known: Blockchain technology is involved in many cases that directly target sustainable development around the world. This article’s aim is to shed the light on significant positive impact of blockchain technology towards environmental and social projects.


Potential use cases with environmental impact: deep dive energy sector


Blockchain technology has the potential to provide environmental benefits through its ability to facilitate the tracking and verification of sustainability in the following use cases:

1. Supply Chain Management: blockchain technology can be used to create transparency and traceability in supply chains, which can help to reduce waste

2. Carbon Offsetting and Credits: tracking and trading carbon credits, allowing for more efficient and transparent carbon offsetting and emissions trading

3. Conservation: to track and verify sustainable land use practices, helping to prevent illegal logging, deforestation, and other environmentally harmful activities

4. Smart Cities: creating more efficient and sustainable smart cities by enabling real-time tracking of energy and resource consumption, and facilitating the use of renewable energy sources

5. Renewable Energy: Blockchain technology enables peer-to-peer energy trading platforms, making it easier for individuals and communities to buy and sell renewable energy


In the energy sector, blockchain technology is being explored as a way to especially improve the efficiency and transparency of energy transactions:

One of the biggest use cases of blockchain in the energy sector (33% of all initiatives) is in peer-to-peer (P2P) energy trading. This refers to the buying and selling of energy between individuals or small groups, rather than through a traditional utility company. In P2P energy trading, individuals and businesses with solar panels or other forms of renewable energy generation can sell excess energy to others on the network, rather than sending it back to the grid. Blockchain technology can be used to facilitate this process by creating a decentralized and transparent platform for buying and selling energy. This can increase the efficiency and scalability of renewable energy generation, and create new business models for the energy industry.


Another potential use of blockchain in the energy sector is in the tracking of renewable energy credits (RECs). RECs are used to track the production of renewable energy and are often bought and sold in order to meet renewable energy targets. By using blockchain, the tracking of RECs could be made more efficient and transparent, making it easier for companies and individuals to ensure that they are using truly renewable energy.

Own illustration, source:


Democratizing power for a sustainable future


One example of a startup in the blockchain space that is revolutionizing the energy sector is Power Ledger. The company is using blockchain technology to create a decentralized energy marketplace that allows individuals and businesses to buy and sell excess solar power directly with one another. This allows for more efficient use of renewable energy resources and can help to reduce reliance on fossil fuels. Power Ledger’s platform also includes a feature called “Autonomous Asset Management,” which uses smart contracts to automatically manage the buying and selling of energy in real-time, further increasing the efficiency of the system.


Blockchain for social impact


As for developing countries, especially social contributions of blockchain technology are numerous:

1. Financial Inclusion: to provide financial services to underbanked and unbanked populations, allowing them to access banking services and participate in the global economy

2. Digital Identity: creating secure and verifiable digital identities, helping to reduce fraud and improve access to services for marginalized populations

3. Transparency and Trust: to create transparent and tamper-proof record-keeping systems, which can help to increase trust in institutions and reduce corruption

4. E-Voting and Charitable Giving: secure, transparent and tamper-proof systems for voting and tracking charitable donations, which can help to increase voter turnout, reduce fraud as well as helping to increase trust in charities and the impact of donations

5. Healthcare: securely store and share patient data, which can improve communication between healthcare providers, help to prevent medical errors, and reduce administrative costs


Leveraging DLT in humanitarian settings: Blockchain pilot project for UN Women


UN Women, the United Nations entity dedicated to gender equality and the empowerment of women, has recently launched a blockchain pilot project to promote financial inclusion and empowerment for women in developing countries. The project, which is being implemented in partnership with the World Food Programme (WFP) and the United Nations Development Programme (UNDP), aims to use blockchain technology to improve access to financial services for women in countries such as Afghanistan, Jordan, Pakistan, and Tunisia. One of the main goals of the project is to use blockchain to create secure and transparent digital identities for women, which can be used to access financial services such as bank accounts, loans, and insurance. By providing women with secure digital identities, the project aims to reduce the risk of fraud and financial exclusion, and increase financial inclusion for women in these countries. In addition to creating digital identities, the project also aims to use blockchain to improve the delivery of aid and social services to women. By using blockchain, UN Women and its partners will be able to create tamper-proof records of aid and social service delivery, which can be used to ensure that aid and services are reaching the intended recipients and are being used effectively.


Conclusion and outlook of blockchain promoting sustainable development


There are many reasons to believe that blockchain technology really contributes to sustainable development projects, rather than running counter to them. Blockchain technology has truly the potential to promote significant environmental and social impact by its ability to facilitate transparency and accountability in various sectors. Numerous initiatives being pursued by a large number of companies, startups and research institutions underline this positive development. However, it’s worth noting that the successful implementation of blockchain in promoting sustainable development depends on the quality of data, privacy and security regulations and the overall ecosystem.