If six years is a long time in terms of the climate, it is an eon in technology. The Climate Ledger Initiative was founded in 2017 at the Marrakesh COP. Now, its Navigating Reports themselves represent a fascinating history of the evolving trends of recent years, of what was at the time hype, and is now an emerging, albeit very different reality.
Reflecting on the past six years, a number of conclusions emerge. First, none of the innovative, ground-shaking technologies have changed the world in terms of its response to the climate emergency. There was never really any chance of a silver bullet and none has or is likely to emerge. But this does not mean that digital innovations such as DLT and machine learning have not made gains or shown promise, or that the promise of IoT is entirely unfulfilled, as evidenced by the use cases explored throughout the 2023 report.
A calm look at the relative successes and scaling of these technologies tells us that blockchain/DLT and tokenisation both have a foothold in carbon markets and development finance, even if not yet fully realised. Their greatest potential may lie in settings where governmental capacity would most benefit from support, such as in a developing country context. However, the use of DLT/blockchain needs to be justified in each individual case and is not self-evident. In digital measurement, reporting and validation (D-MRV) for carbon market projects we have seen interesting use cases and innovation, but universal truths and good governance remain elusive, although this is certainly an area of huge potential. Major programme standards such as CDM, VCS, and Gold Standard, as well as verifiers such as SustainCert are working on integrating D-MRV, digital methodologies and accounting into comprehensive digital platforms that seek to cover the entire carbon project cycle to a greater or lesser extent. Later in the period, we saw artificial intelligence and machine learning applications emerge at astonishing speed, to great excitement and much greater attention from the public and media.
The emergence of all these technology types has certainly been messy. This is partly for cultural reasons, with many technology innovators with limited knowledge of climate action perhaps buying into the euphoria too much, while underestimating the complexity of the subject matter. In some areas there has been the attitude that we must entirely get rid of what went before and replace it with new digital approaches, only to find that the old guard were perhaps a great source of ideas and expertise all along.
Equally, it is certainly fair to say that incumbents working in the climate and development space felt somewhat lost in the flood of news on digital innovation, and were afraid of the perceived risks of the new technologies. They have not always been welcoming or helpful to those innovators. What is clear is that the most exciting work emerges when each side lets its guard down and collaborates in good faith. The work in this nexus between tech communities and climate practitioners is exactly what makes our work in the CLI network so exciting.
A good example of this was the emergence of tokenisation in carbon markets. Here it was clear that the tokenisation community expected to blow away the old systems and revolutionise the space with new finance, transparency and automation. The challenges identified as key fixes, such as the avoidance of double counting, greater transparency and security, were not the key problems the market faced, however. Further experiments, such as Klima DAO, proved that not speaking to experts can lead to expensive and often perverse outcomes. But good can emerge, as some of those innovators that were watching and participating began to collaborate with established players, such as Gold Standard, to further the useful application of DLT and tokenization.
One recurring question of our time is whether and how technology will replace human employment. Perhaps the most cited would be its impact on validation and verification bodies (VVBs) where automation, the use of validated data, digital MRV and remote monitoring are all spoken of potential replacements. This has not happened and indeed will not happen. A more measured prediction might be that they will help to move VVBs towards greater efficiency and a focus on the issues that really matter. In many ways technologies such as those that have emerged in the past six years are often at their best when considered as co-pilots, lifting complexity and reducing the risk of error for human experts.
What might the next five years hold?
Certainly it is true that technologies emerge faster and more chaotically than the hyperbole suggests, before bedding down into a more mature understanding of their uses. That will continue to be true. The coming period is likely to be one of consolidation and further uptake and testing, rather than one of revolution, though in some areas (such as AI) we may see more rapid changes to our day-to-day working lives.
Carbon markets: If we were to predict the future of digitalisation in carbon markets, we would expect standard setting bodies to increasingly venture into digitalised approaches to project cycles. This would include certification workflows and methodologies, as well as a greater use of validated third-party data and algorithms. D-MRV and the related digital approaches may also support the current drive in the market towards high-integrity credits. That said, tech alone will not rectify the fundamental lack of environmental integrity of the majority of the current market.
A great challenge in this area will be the transparency of open vs. proprietary approaches, quality of governance, and access afforded by technology platforms, which remains a very underregulated area. Similarly, privacy and security will likely become of greater legal and ethical concern, and we would predict issues for some applications with unforeseen or simply unmitigated risks in these areas. In that regard we would certainly encourage and expect to promote a greater discourse on governance, ethics, privacy and security. These are all topics which can feel like an anathema to the free-thinking innovation technology communities, but they are the inevitable ceilings on their growth and must be properly addressed.
Financing and tracking of climate action and sustainable development: A further growth area will likely be found in the management and administration of the liabilities and beneficial outcomes of climate finance and action in sustainable development. Historically, the main financing mechanisms, such as carbon markets and donor grant money, have been kept separate from host country and corporate value chain targets. We expect this to change significantly in the coming years, with nearly all outcomes potentially appearing in different ways as different actors report progress towards their targets. These actors are host and acquiring countries’ NDCs, donor country ODA and climate finance pledges, private sector net-zero pathways. Their reporting covers sustainability claims along entire value chains. There are times that this variation will be acceptable, and times when it damages ambition. This is a good thing, overall, given that the overlap represents the multiple interests of the entities concerned, but it can impact on the efficiency and efficacy of reporting and claims. Technology solutions, transparent and open data, and governance of data and allocation, will be essential to solving these issues.
As we look to the next five years, we may draw three conclusions. First, that although reality rarely matches the hype, experience has been gained in how to short-circuit this learning curve and move straight to real collaboration between innovators and experts. The real use cases in this report prove that reality is often even more interesting than speculation. Given how little opportunity is left to avert climate and nature emergencies, we will not have time to spend inefficiently fawning over the tech.
Second, however boring it may seem, good governance and consideration for ethics and moral hazards are essential to credibility. Technology solutions and applications simply cannot take off if they are encumbered by reputational and legal risk. This does not mean there is not room for rapid prototyping, but it does mean that the move to scale needs to be properly thought through. Similar issues exist with privacy and security, where the use of complex data can be fraught with legal risk.
Finally, collaboration is key. The moonshot mentality that exists within technology communities is exciting and energising, but can lead to a dismissive attitude towards established experts and practitioners. This is particularly true of the climate space, where the very harsh realities and complexities are already well known and cannot be fixed by any technological magic bullet. But this cuts both ways and the defensiveness of incumbents is equally unhelpful.
To end on a positive note, what we have seen and learned in six years is incredibly exciting and has the potential, if combined with strong governance, ethics and collaboration, to change the way we do climate action. Technology cannot save the climate crisis, only we humans can do that. But human efforts can be enhanced, accelerated, unlocked and made fairer and more transparent with the efficacious use of technology.
Close of this phase and outlook for the initiative
With the Navigating Report 2023, the SDC-funded CLI phase has come to an end in 2023. More than 15 use cases successfully implemented by CLI partners, over 80 presentations, workshop and webinars held, 12 knowledge products, fact sheets and whitepapers developed with more than 10 partners - and all summarised in 6 Navigating Reports - remain a sound basis for future endeavours in digital climate action to build on past experiences and best practice. The most important outcome of the phase is found in the numerous partners, practitioners, policymakers and experts with whom we have had the privilege to discuss and work on digital solutions to climate action in recent years. They will continue their work, building on the established network of actors and experience. From 2024 on, the CLI will continue in a somewhat adapted form, leaving the more general awareness-raising work behind and increasingly focusing on two areas. These are the practical implementation and scaling of digital approaches with our partners in specific areas of climate action, and seeking impact. Contexts may include work in development cooperation, the decarbonisation of private-sector value chains, or carbon markets including Article 6. In this sense, the journey is only starting, and we are looking forward to having you on board as we enter this new and exciting phase.
This text was originally published in the Navigating Report 2023.