Blockchain Technology in Renewable Energy Certificates in Brazil.
| Autor | Yamaguchi, Joao Akio Ribeiro |
| Cargo | Research Article |
INTRODUCTION
The need to limit global warming to even 1.5[degrees] C above pre-industrial levels demands rapid, far reaching, and unprecedented changes in the current production and consumption model (Intergovernmental Panel on Climate Change [IPCC], 2018). In 2010, 35% (17 GtC02eq) of global anthropogenic greenhouse gas (GHG) emissions were released in the energy supply sector. When GHG emissions from electricity and heat production are attributed to the final consumer sectors (i.e., indirect emissions), the shares of the industry and buildings sectors represent 31% and 19% of global emissions, respectively (Intergovernmental Panel on Climate Change [IPCC], 2014).
Besides decarbonization, i.e., the necessary reduction in carbon intensity of energy generation, the electrical power systems are being affected also by two other main drivers of change: digitalization of energy trading, which offers opportunities for new business models based on peer-to-peer (P2P) and transparent transactions; and decentralization of power systems, including distribution networks that comprise decentralized generation (most based on renewable energy sources), storage and active participation of the consumers, some of them turned into prosumers, as they also produce energy on the decentralized system (Silvestre, Favuzza, Sanseverino, & Zizzo, 2018).
In energy markets, it is impossible for consumers to distinguish between the consumption of renewable energy (RE) and non-renewable energy. The decarbonization of the electricity generation is addressed by governments through traditional policy tools, such as taxes and subsidies, and through the implementation of certification schemes to promote the use of RE, such as renewable energy certificates (RECs) (Hulshof, Jepma, & Mulder, 2019). RECs are a market-based policy instrument that represents the property rights to the environmental, social, and other non-power attributes of a fixed amount of electricity, usually one megawatt-hour (MWh), generated and delivered to the grid from a renewable energy source (RES), typically covering a range of renewable technologies in an undifferentiated way (Criscuolo, Johnstone, Menon, & Shestalova, 2014; United States Environmental Protection Agency [US EPA], 2017). And although RECs have different characteristics in each country depending on grid and market specificities, as well as on national laws and regulations, there has been criticism of the RECs trade process, particularly due to the existence of double counting of this type of certificate (Frenkil & Yaffe, 2012).
Within this context, the blockchain technology "could contribute to greater stakeholder involvement, transparency and engagement and help bring trust and further innovative solutions in the fight against climate change, leading to enhanced climate actions" (United Nations Framework Convention on Climate Change [UNFCCC], 2017, online), by improving carbon emission trading, facilitating low-carbon energy trading, and enhancing climate finance flows (UNFCCC, 2017). Blockchain was initially identified as the technology used in Bitcoin cryptocurrency (Nakamoto, 2008), thus was first applied in the development of cryptocurrencies. Simply said, blockchain is a decentralized and distributed ledger used to store transactions, contracts agreements in a digital record able to combine the more efficient information security methods by using various cryptographic protocols and by recording information in a distributed database (Kushch & Castrillo, 2017). However, in the last five years, the interest in blockchain application has grown in different areas, including sustainability applied to the energy sector. For instance, blockchain can be a tool to avoid double counting of RECs, by allowing greater traceability and transparency in transactions (Abou Jaoude & Saade, 2019; Pournader, Shi, Seuring, & Koh, 2020; Silvestre et al, 2020), to reduce the operational costs of developing a REC market platform (Castellanos, Coil-Mayor, & Notholt, 2017) and to encourage consumer participation in the RECs trading market on energy systems with a high percentage of RE available (Zhao, Guo, & Chan, 2020). However, certificate trading schemes, such as RECs, based on blockchain applications remain in a nascent stage (Burer, Lapparent, Pallotta, Capezzali, & Carpita, 2019). It is not clear in the literature, however, how organizational positioning in a given market (sustainability and RECs), influences the implementation of blockchain and the artifact developed.
To make a contribution within this subject, in this study, through a review of the issues on blockchain applied to the energy sector, and specially on RECs, and using design science research (DSR) and case study methodology, we structure the problem space (Maedche, Gregor, Morana, & Feine, 2019) to identify how two organizations in the Brazilian sustainability field, with different market positions and backgrounds, understand their problems and propose blockchain-based technological artifacts to produce and trade RECs. Among the aspects considered are traceability, transparency, and the influence of the regulatory and political context for the development of blockchain applications (Brilliantova & Thurner, 2019; Burer et al, 2019).
Additionally, we discuss the impact that blockchain could produce on the Brazilian RE market, in which RES accounted for 46% in the national matrix in 2019, almost triple the global average in 2017 (14%). The electricity generation is predominantly from renewable sources (83%), based mainly on hydropower (65%), followed by wind (8.6%), biomass, such as sugarcane bagasse (8.4%), and solar photovoltaic (1%) (Empresa de Pesquisa Energetica [EPE], 2020). Considering the decarbonization commitments assumed by countries under the Paris Agreement, and by companies on a voluntary basis or in response to regulation, the high share of RES in the Brazilian energy matrix makes the country a player with great potential in the global RECs market. At the same time, members of the energy supply chain might benefit from blockchain technology applied to RECs issued in Brazil to attract new participants and turn this market more efficient. By studying the relationship between organizational positioning and blockchain technology, we hope that these findings can guide entrepreneurs in the energy sector in the process of thinking about their business models and its relationship to technological development.
LITERATURE REVIEW
Blockchain applied to the energy sector
Sustainability became one of the key objectives of energy policy and an important driver of innovation in the energy sector. Energy strategies are built around the following hierarchy in energy options from the most to the least sustainable: energy conservation through improved energy efficiency and rational use of energy, increasing use of RES and exploitation of unsustainable resources using low-carbon technologies (Saygin & Cetin, 2010). Energy systems are undergoing rapid changes to be able to accommodate the increasing volumes of embedded RE generation. RES went through massive development enabled by the unbundling of the energy sector and privatizations, boosted by international and national energy policy initiatives and financial incentives (Andoni et al, 2019), represented in the 2015's United Nations Global Opportunity Report by three distinct avenues of action to address the risk of lock-in to fossil fuels (table 1).
This scenario leads the energy sector to undergo a far-reaching shift toward decarbonization of energy generation, decentralization of energy supply, allowing increased customer participation and demanding innovation at the distribution level, and digitalization of energy trading, based on by peer-to-peer and transparent transactions. Combined, decarbonization, decentralization, and digitalization (the three Ds) impact the way that electrical power systems are managed and coordinated, as well as its business models (Brilliantova & Thurner, 2019; Silvestre et al., 2018).
Blockchain technologies play an important role in this changing scenario. Andoni et al. (2019) indicate that the energy industry stakeholders, utility companies, and energy decision-makers are interested in blockchain technologies. Thought an analysis of 140 blockchain applications in the energy sector, they identified eight categories of blockchain applications for energy applications: (a) metering, billing, and security; (b) cryptocurrencies, tokens, and investment; (c) decentralized energy trading; (d) green certificates, including RECs, and carbon trading; (e) grid management; (f) internet of things (IoT), smart devices, automation, and asset management; (g) electric e-mobility; and (h) general purpose initiatives developing underpinning technology. Among the applications examined, 33% of the applications concern decentralized energy trade; 19% concern cryptocurrencies; and 7% accounts for green and RE certificates and the carbon market. Blockchain applications expand the possibilities of solutions and applications to be implemented in the energy sector, and indicate that this technology can bring benefits to energy system operations, markets, consumers, allowing disintermediation, increasing transparency, and empowering consumers and small RE producers.
Similarly, O'Donovan and O'Sullivan (2019) also explore the evolution of blockchain applications in energy: of the 129 cases found, only nine (7%) are related to energy certificates and carbon credits. Fields with greater representativity are: 46 (36%) related to decentralized energy transactions, 26 (20%) to cryptocurrencies, and 16 (12%) to IoT and smart devices. Analysis by Andoni et al. (2019) and O'Donovan and O'Sullivan (2019) confirm the low presence of RECs blockchain-based application development in the energy sector.
Analyzing some of these applications, some authors are already able to identify the main groups and...
Para continuar a ler
PEÇA SUA AVALIAÇÃOCOPYRIGHT GALE, Cengage Learning. All rights reserved.
