How Blockchain Technology Can Address Circularity and Trace Emission in the Energy Sector

Abstract

This paper outlines the European perspective on circularity in the energy sector and details how blockchain could support it. Moreover, while the need for raw materials and e-fuels is increasing (due to the economic, industrial, and societal ecological transformation to slow down the pace of climate change), their supply becomes more and more risky. Therefore technologies to support tracing and certification are on the spot. To achieve resilience to new threats, Europe is pointing at circularity in all fields. Circularity requires the need for tracing substances and devices, food, and products, to retrieve and recycle as much as possible. Else than the need to limit the exploitation of the planet’s resources and thus stay within the planetary boundaries, circularity is tightly connected to strategic dependencies from highly unstable or politically distant countries. This issue is further aggravated by the Russia-Ukraine crisis. Digital technologies, like Distributed Ledger Technologies, can well support the implementation of circularity in many fields. The paper identifies challenges and proposes potential solutions related to the implementation of circularity. It also explores the application of circularity principles in the energy sector, with a focus on energy communities. Energy communities involve local stakeholders coming together to generate, consume, and manage renewable energy collectively. Overall, the paper provides insights into the European perspective on ecological transition, highlighting the importance of systemic transformation, resilience, and circularity in addressing climate change and achieving sustainability goals. It explores the role of digital technologies, such as Distributed Ledger Technologies (DLTs), in supporting circular practices and discusses specific applications in the energy sector.