A Path to Environmental Sustainability?

Blockchain is emerging as a promising technology that could positively contribute to the enhancement of sustainability in urban areas. Earth.Org takes a closer look at several ways blockchain can play an enabling role in the development of smart cities and how it can help build a more sustainable urban future.

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Rapidly growing and expanding cities in the world today face enormous challenges, such as pollution, resource depletion, and ineffective waste management. The United Nations estimates that by 2050, nearly 68% of the global population will live in urban areas. In response, new ideas such as smart cities, new ecosystems that bring improvements in urban citizens’ lifestyles with the help of technology, emerge. 

One of the promising technologies that could greatly enhance environmental sustainability for smart cities includes blockchain technology. Blockchain can help reshape the urban ecosystems in more resilient and sustainable ways by giving transparency, efficiency, and decentralized governance.

Exploring Blockchain Beyond Cryptocurrency

Most basically, blockchain is a decentralized, distributed ledger technology that securely records transactions across a number of computers. Unlike traditional databases, blockchain is immutable. Once information is recorded, it cannot be retroactively altered without the alteration of all subsequent blocks (information) and the acquisition of network consensus. This special attribute will make transparency, security, and trust among participants certain.

Although blockchain initially acquired fame in the world of cryptocurrencies, such as Bitcoins, its applications go beyond the financial system. Blockchain’s full power is gradually being tapped into in areas like supply chain management, healthcare, and energy.

According to Custom Market Insights (CMI), the size of the blockchain technology market was estimated at US$4.8 billion in 2021 and is projected to reach approximately US$69 billion by 2030, with significant investments flowing into different industries.

With regards to smart cities, this technology has the potential to perform resource management, enhanced service delivery, and foster sustainability.

More on the topic: Using Blockchain Technology in Environmental Conservation

Blockchain for Environmental Sustainability: Can Blockchain Help Create Smart Sustainable Cities?

Smart cities are those that leverage advanced technology to enhance citizens’ quality of life, improve operational efficiency, and reduce environmental impacts. In this transformation path, blockchain can play a significant role in driving change through various applications. 

1. Waste Reduction and Recycling

Tracking waste from source generation to disposal, blockchain supports cities in raising their recycling rates and reducing contributions to landfills. Incentives are given to residents, if the reward scheme issues them for proper recycling, thereby encouraging sustainable behavior.

2. Supply Chain Transparency

With blockchain, the supply chains of foods and goods can be more transparent. Consumers will be tracing the paths taken by products for sustainability in products for traceability, ensuring their purchase decisions are more environmentally aware.

3. Effective Resource Management

Blockchain enables the development of decentralized energy grids where surplus energy sourced from renewable means, such as solar panels, can be sold, traded, or bought by consumers. The approach encourages the adoption of renewables and cuts down on transmission losses. A report from Ernst & Young Global suggests that Distributed Energy Resources (DERs) – a local decentralized energy generation and conservation model – and smart grids will be key to securing energy supplies and getting the world to net zero by 2050.

Blockchain technology also allows for real-time monitoring of water usage through the use of smart meters for better conservation, less wastage, and efficient rationing in case of shortages.

Blockchain Applications for Smart Cities

The International Institute for Management Development (IMD) has developed a measurement called the Smart City Index (SCI), which aggregates data from various social and environmental sectors to measure the city’s level of smartness. 

The graph below represents the SCI rankings of Dubai, Helsinki, and Los Angeles from 2020 to 2024. While the cities rank varies significantly, with Finland’s capital leading and the Californian city lagging behind, all three cities have introduced a range of blockchain initiatives to foster sustainability. 

Below, we take a closer look at each of their programmes.

Dubai, United Arab Emirates

As part of the city’s digital transformation initiatives, Dubai is aiming to be the world’s first city powered by blockchain through the Dubai Blockchain Strategy. The government has been leading the strategy since 2016 thanks to a partnership between Smart Dubai Office and the Dubai Future Foundation. In an aim to innovatively disrupt the way government services are conducted, this strategy seeks to integrate blockchain into most sectors in the city.

One of the key use cases of this strategy is in the electric vehicles (EV) green charger system based on a blockchain that Dubai Electricity and Water Authority (DEWA) launched in 2020. Conjoined between the goals of Dubai Blockchain Strategy and Dubai Green Mobility Strategy, this initiative reduces carbon emissions while strengthening the sustainability initiative of the city. It uses blockchain technology in facilitating secure transactions, as well as sharing real-time data between electric vehicle users and charging stations for the mass adoption of a unified secure network of electric vehicles within the city.

Dubai is the most populous city in the United Arab Emirates (UAE).

To highlight the cost optimization of the city’s blockchain strategy, estimates for government efficiency suggest that achieving paperless transactions could save the government at least US$1.5 billion annually on document processing, the equivalent of the cost of building one Burj Khalifa.

This strategy aims to position Dubai as one of the smartest cities in the world, opening up new economic opportunities for entrepreneurs, startups and businesses.

Helsinki, Finland

The city of Helsinki has also entered the race to deploy blockchain technology and capitalize on using it to modernize their waste management system. In 2022, the city announced a collaboration and investigation of blockchain-based platforms to solve circular economy challenges related to supply chain traceability and transparency as part of Helsinki’s fight against climate change. This would enhance the responsibility of companies and individuals involved in waste disposal and the process of recycling. Real-time monitoring of the disposal of waste and efforts to recycle is expected to facilitate integration of citizen participation.

In addition to local initiatives in Helsinki, there is the Cross-Border Dimensions of Disruptive Information Technologies (CroBoDDIT) Project. A collaboration between Helsinki and Saint Petersburg, the project aims at modernizing solid waste management using digital solutions, such as IoT, big data, and blockchain. Between 2020 and 2022, with a budget of approximately US$868.000, the initiative was said to have contributed positively toward cross-border cooperation on climate and environmental development, successfully meeting the relevant targets set by the European Union.

Los Angeles, United States

Los Angeles is also planning to leverage blockchain technology in the pursuit of urban sustainability. In 2020, the state announced that it was participating in a blockchain-enabled renewables project that had been awarded a state grant valued at US$9 million from a total of US$20 million raised. Novel elements that make up this project include a smart community solar and storage system, a campus microgrid resilience hub that delivers clean backup power, and an aggregated virtual power plant combining solar energy with battery storages at 50 single-family homes. The goal was to provide locally produced renewable energy solutions within a disadvantaged community in the region.

This initiative is part of the city’s 2015 Sustainable City pLAn to make Los Angeles more energy-efficient, strengthening the grid by preventing power outages, in an effort to reduce greenhouse gas emissions. The city works to expand the blockchain project alongside other sustainable projects to different areas of Los Angeles as part of their ambitious carbon-neutral goals for 2050.

Potential Issues

Despite the potential, there are several challenges in the adoption of blockchain in smart cities. 

First, there are scalability problems. Blockchain networks, by their design, are slow and power-consuming, which negatively influences their efficiency for large-scale urban applications. In overcoming this challenge, several solutions have been developed, including Layer 2 protocols, sharding, and hybrid blockchain models, new approaches that enable faster transactions while consuming less energy. Scalable solutions for such technologies have recently been considered in the active pursuits of smart city projects in Dubai.

Scalability is not all that will make life easier. Another challenge concerns the regulatory aspect. Most countries lack standardized legal frameworks on blockchain, which makes it hard to ensure compliance. However, countries like Estonia have been able to implement blockchain in some public services, especially in the cyber-security area, where the government has clearly established legal frameworks.

General public awareness and trust in the technology of blockchain is another factor to consider. A 2024 survey from the UK government, for example, found that about 81.4% of the adult population had never heard about blockchain.

Whether it is people not knowing or just not believing in the ability of blockchain, without public support, this technology will never reach popular adoption like the Internet did. 

This issue could be overcome through educational and awareness-raising campaigns, as well as better blockchain-based services, where there is greater utility and more accessible public applications of the technology.

The Future of Blockchain Cities

The future of blockchain-powered cities promises progress on dimensions of transparency, efficiency, and sustainability. While cities around the world are still finding their way to overcome environmental challenges, blockchain provides them with a strong solution by smoothing data management and improving the effectiveness of resource utilization. Moreover, blockchain, innately decentralized, develops all aspects of accountability and trusting in public services, making them more sustainable. According to a 2020 study by PwC, blockchain can increase global GDP by US$1.76 trillion by 2030; the strongest sectors where this impact will be felt includes energy and logistics. 

As cities continue to innovate, integrating blockchain is one major step toward making them smarter, more efficient, and truly environmentally conscious.