Accelerating the energy transition with Web3 technologies

“We are witnessing a paradigm shift from a centralized to a decentralized internet world, characterized by disintermediation and democratization. There is a lot of overlap in the way the energy sector is transforming to become more decentralized and distributed in nature,” says Sabine Brink, blockchain and Web3 lead at Shell.

There is a wide range of opportunities for the applications of Web3 and blockchain technology to support the urgent energy transition. For example, Shell and other global companies have launched Avelia, a record and claim solution to help scale the supply of sustainable aviation fuel. Tech companies like Toucan, Moss.Earth, and JustCarbon are tokenizing carbon credits, offering customers an easier way to offset carbon emissions. Peer-to-peer energy trading is becoming a reality thanks to companies like Powerledger, Grid+ and LO3 Energy.

Paul Brody, EY Global Blockchain Leader, emphasizes the transformative nature of this infrastructure technology: “In a blockchain-based ecosystem, you can have a very liquid digital interaction, where you can choose from a dozen different providers and you can evaluate them. all on a digital basis.”

Decarbonization requires decentralization

Addressing climate change has one requirement above all: the decarbonization of energy systems. This requires further electrification of economies and decentralization of the energy system.

Given the nature of renewable energy, especially solar and wind power, the electricity generated is not always available (without storage) and is often geographically remote from where the electricity is needed. Furthermore, with the advent of prosumers, consumers who also generate power that can be fed back into the grid, existing power systems need a major overhaul.

“We have many more players entering the energy market, as well as a different mix of low carbon energy products. This requires global orchestration of large-scale power systems to ensure we reach net zero across the board. On top of that, transparency, auditability and accountability will be key.” Brink explains. “Blockchain as a decentralized network technology makes a lot of sense to support this.”

These changes to the energy system will exponentially increase the number of transactions, including microtransactions, that will take place every day between many energy players and assets. These must be recorded and managed in ways that ensure transparency, trust and verifiability of the data. It is vital that transaction systems and regulations evolve to meet this need.

The role of blockchain technology

Blockchain technology, a decentralized, digital ledger that maintains multiple copies of transactions, makes data manipulation nearly impossible. Although it was developed for cryptocurrency, which is still strongly associated with digital currencies, the blockchain lends itself to many uses. Its main benefit, incorruptibility, generates a valuable asset for the markets: trust.