Thinking Differently (Part 6): Re-industrializing the Planet for a Digital Green Economy

This is the sixth installment of "Thinking Differently in the Web3 Era," a series of articles aimed at sparking fresh insights and innovative solutions to some of the most pressing challenges of the digital age.

The existential threat posed by climate change has reached a critical juncture, demanding immediate and transformative action. While the digital revolution brought unprecedented economic growth and globalization, it has also exacerbated the climate crisis. The advent of the Internet and related technologies facilitated outsourcing and the globalization of supply chains, driving an economic boom that, paradoxically, has had disastrous effects on our environment.

The problem is multifaceted. The fragmentation of public discourse, fueled by the rapid spread of information (and misinformation) online, has enabled the short-term beneficiaries of fossil fuels to deny basic scientific facts and sow confusion among the population. This disinformation campaign has been perpetuated by myopic, unscrupulous, and often conflicted politicians who spread misinformation about science and downplay the true problems and dangers associated with climate change.

It’s now impossible to deny that consequences of climate change are becoming increasingly dire. According to the World Meteorological Organization’s State of the Global Climate in 2023 report, extreme heatwaves, droughts, and devastating flooding have harmed millions of people and cost billions of dollars last year alone [1]. In the United States, Canada, and other countries, climate-related disasters such as fires, droughts, and floods—all foreshadowed—have already come to pass. Europe now experiences unprecedented summer heatwaves, and over a billion people worldwide face the imminent loss of their water supply.

The social consequences of climate change are staggering too. Around the world, millions of people are being forcibly displaced from their homes due to rising sea levels, severe storms, and prolonged droughts. This mass displacement exacerbates social tensions, strains resources in host communities, and leads to significant humanitarian crises.

Moreover, climate change is driving an alarming rate of species loss. This loss of biodiversity threatens ecosystem services that are vital for human survival, such as pollination of crops, clean water, and disease regulation. Rising temperatures and shifting weather patterns are also enabling the migration of infectious diseases and disease-carrying insects. For example, diseases like malaria and dengue fever are spreading to new regions, putting millions more people at risk.

Despite the overwhelming evidence of climate change and its impacts, a significant portion of the global population remains either skeptical or uninformed about the severity of the issue. This skepticism is often rooted in the widespread disinformation campaigns, which are designed to protect vested interests in fossil fuels and other polluting industries.

The Old Solution: States Need to Change Corporate and Citizen Behavior by Taxing Carbon

In the battle against climate change, traditional approaches have largely centered on regulating carbon emissions through mechanisms like carbon taxation. The principle behind carbon taxation is straightforward: by imposing a financial cost on carbon emissions, governments aim to incentivize corporations and individuals to reduce their carbon footprint. The logic is that if emitting carbon becomes expensive, businesses and consumers will seek out cleaner, more sustainable alternatives.

Carbon taxation is typically implemented by setting a price per ton of carbon dioxide emitted. Corporations that exceed certain emission thresholds must pay taxes proportional to their excess emissions. This method intends to internalize the environmental costs of carbon emissions, compelling companies to innovate and adopt greener practices to minimize tax liabilities. For individuals, carbon taxes can manifest as increased costs for carbon-intensive goods and services, such as gasoline, electricity, and heating.

While carbon taxation is a necessary step towards curbing emissions, it is insufficient on its own to address the multifaceted and urgent problem of global climate change. Here are seven key shortcomings of this approach:

1. Limited Impact on Corporate Behavior: For many large corporations, the cost of carbon taxes can be absorbed or passed on to consumers, which diminishes the incentive to significantly alter their business practices. Companies with substantial financial resources might view carbon taxes as a manageable expense rather than a catalyst for meaningful change.
2. Economic Inequities: Carbon taxes disproportionately affect low-income individuals and communities. While wealthier individuals and corporations can afford the increased costs associated with carbon taxes, those with limited financial resources bear a heavier burden. This regressive impact exacerbates social inequalities and creates resistance to the adoption of carbon taxation policies.
3. Insufficient Scale: The effectiveness of carbon taxation is contingent on widespread adoption and rigorous enforcement. In practice, many nations either do not implement carbon taxes or set them at levels too low to drive substantial emissions reductions. Moreover, global coordination is challenging, leading to inconsistent application and competitive disadvantages for countries with stricter carbon tax regimes.
4. Inadequate Addressing of Systemic Issues: Carbon taxation does not address the root causes of emissions embedded in industrial processes, supply chains, and consumer behaviors. It is a reactive measure that penalizes emissions rather than a proactive approach that fosters systemic transformation towards sustainability.
5. Technological and Innovation Stagnation: Relying solely on carbon taxes can stifle innovation by focusing on punishment rather than incentivizing positive change. Without complementary measures that encourage the development and deployment of clean technologies, carbon taxes alone cannot drive the comprehensive innovation needed to combat climate change effectively.
6. Complex Implementation and Administration: Administering a carbon tax system involves significant bureaucratic and administrative efforts. Governments must establish accurate monitoring and reporting mechanisms to ensure compliance, which can be costly and complex. Additionally, there is the risk of tax evasion and manipulation, particularly in countries with less robust regulatory frameworks.
7. Global Disparities: Carbon taxes can exacerbate disparities between developed and developing nations. Developing countries, which often rely on carbon-intensive industries for economic growth, may find it more challenging to implement and enforce carbon taxes without undermining their development goals. This creates a global imbalance where the burdens and benefits of carbon taxation are unevenly distributed.

Thinking Differently: We Must Re-industrialize Planet Earth Through a Technology-Powered Global Mobilization

To address the climate crisis, we must think differently about our solutions and embrace a technology-powered global mobilization to re-industrialize the planet. There has been progress. The US surged past 20% renewable electricity last year [2]. If the country follows the trend set by others at the leading edge, wind and solar will account for half of US power-generating capacity just ten years from now.

However, the green economy must be a digital economy. To reduce carbon emissions by 90% by the year 2050, the global economy must be re-engineered around climate action, engaging—all levels of business, government, and society. The urgency of the climate crisis requires a response akin to the global mobilizations seen during world wars or the recent COVID-19 pandemic. Every sector of society must be mobilized and coordinated towards a common goal: sustainable development and climate resilience. This entails not just adopting renewable energy, but also transforming industrial practices, supply chains, and consumption patterns. A digital green economy integrates climate action into the very fabric of our economic and social systems.

Web3 technologies, including blockchain, artificial intelligence (AI), the Internet of Things (IoT), and extended reality (XR), offer powerful tools to support this global mobilization. Here's how these technologies can help:

Blockchain for Transparency and Accountability

Blockchain can be used to create transparent and immutable records of carbon emissions, renewable energy credits, and sustainability initiatives. For example, supply chains can be tracked from raw materials to finished products, ensuring that each step complies with environmental standards. This transparency builds trust and encourages responsible practices.

AI for Optimization and Efficiency

AI can optimize energy usage, predict maintenance needs for infrastructure, and improve resource allocation. For instance, smart grids powered by AI can balance energy supply and demand in real-time, integrating renewable energy sources seamlessly. AI can also help in predicting climate-related risks and enhancing disaster response.

IoT for Real-Time Monitoring and Data Collection

IoT devices can monitor environmental conditions, energy consumption, and industrial processes in real-time. Sensors placed throughout cities and industrial sites can provide data on air and water quality, energy usage, and waste management. This data, when fed into AI systems, can drive more informed decision-making and prompt immediate corrective actions.

XR for Immersive Engagement and Education

Extended reality technologies can transform how we engage with climate action and education. Virtual simulations can help policymakers and the public visualize the impacts of climate change and the benefits of sustainable practices. XR can also facilitate virtual collaboration and training, enabling global teams to work together on climate solutions.

(See also "Embracing Technological Innovation for a Sustainable Future: The Role of dMRV").

As we venture into a digital green economy, it’s imperative to recognize that while Web3 technologies are instrumental, they are part of a broader solution framework required to combat the climate crisis. To fully appreciate the breadth of our challenge and potential responses, we must introduce additional considerations and strategies that extend beyond technology alone.

The Role of Global Cooperation and Governance

Addressing climate change effectively requires unprecedented levels of global cooperation. Nation-states, international organizations, and non-governmental entities must work in concert to create and enforce regulations that transcend borders. This means strengthening institutions like the United Nations and the IPCC, enhancing their ability to implement and monitor international agreements. Furthermore, we need to develop new frameworks for global governance that are agile enough to respond to emerging challenges, such as climate-induced migration and cross-border environmental impacts.

Innovative Financing Mechanisms

Financing the transition to a digital green economy is a monumental task. Traditional funding models and public budgets are insufficient to meet the trillions of dollars required for resilient infrastructure and sustainable development. Innovative financing mechanisms, such as green bonds, climate funds, and carbon credits, must be scaled up. Additionally, decentralized finance (DeFi) platforms can democratize access to capital, enabling more inclusive participation in climate initiatives. Public-private partnerships will also be crucial, leveraging the strengths and resources of both sectors to drive large-scale projects.

Education and Public Awareness

A crucial yet often overlooked element in tackling climate change is the role of education and public awareness. Empowering citizens with the knowledge and tools to make sustainable choices is foundational to any systemic transformation. Local communities often possess unique knowledge and practices that can contribute to climate resilience. Incorporating indigenous wisdom and local innovations can enrich global strategies, making them more adaptable and effective. Community-led initiatives, supported by technology, can drive sustainable practices from the ground up. For instance, localized renewable energy projects, sustainable agriculture practices, and community-driven conservation efforts can collectively have a significant global impact.

Re-evaluating Carbon Taxes and Emissions Trading

There are some misconceptions about carbon taxes, particularly the belief that they unfairly burden consumers by increasing prices for goods. However, in countries like Canada, only major emitters—like power generation companies, mining operations, fossil fuel producers, and concrete manufacturers—are taxed. The tax is designed to encourage reductions in emissions without directly impacting consumer prices for everyday goods. Furthermore, the system is complemented by emissions trading, where companies that emit less than the industry average can sell credits to those that exceed their limits. This Cap and Trade system, exemplified by the EU ETS and Canada’s Output-Based Pricing System, incentivizes companies to lower emissions. Under Article 5 of the Paris Agreement, countries will have National Carbon Accounts, facilitating international emissions trading to meet targets. This is where the carbon fight is headed. By debunking misconceptions and pointing to future strategies like global Cap and Trade, we can think differently about carbon taxes, making them part of a broader suite of solutions necessary for addressing climate change.

Therefore, while the integration of Web3 technologies is necessary for the digital green economy, it is not a panacea. The United Nations calls for “system-wide transformations” to avoid catastrophic impacts. According to the IPCC, global warming will continue to increase in the near term (2021–2040), and is "more likely than not" to reach 1.5°C even under the very low greenhouse gas emission scenario, and "likely" or "very likely" to exceed 1.5°C under higher emissions scenarios [3]. Even at the lower end of estimates, we’ll struggle with the migration of large numbers of largely unbanked climate refugees, supply chain disruptions, food insecurity, fast-moving pandemics, and the need for financing mechanisms that will support trillions of dollars of new crisis-resilient, green infrastructure.

As we navigate the complexities of the climate crisis, it's clear that we need to think differently about our solutions. To truly address the multifaceted challenges ahead, we must embrace a holistic and collaborative approach that integrates advanced technologies with systemic change. We, as humans of planet earth, must learn to work together cohesively, leveraging our collective ingenuity and resources to build a resilient, sustainable future. In a world where crises are increasingly the norm, our success hinges on our ability to innovate, cooperate, and adapt on a global scale. We must think differently and act boldly. Your role in this transformation is critical. Our planet's fate rests in our hands, and it’s imperative that we rise to the occasion with innovation and unity.

Don Tapscott is author of 16 widely read books about technology in business and society, including the best-sellerBlockchain Revolution, which he co-authored with his son Alex.? He is Co-Founder of BRI, an Adjunct Professor at INSEAD, Chancellor Emeritus of Trent University in Canada and a Member of the Order of Canada.

[1]World Meteorological Organization (WMO). “State of the Global Climate 2023,” March 2024. https://library.wmo.int/idurl/4/68835?

[2] U.S. Energy Information Administration, Electric Power Monthly, February 2024; preliminary data

[3] Calvin, Katherine, Dipak Dasgupta, Gerhard Krinner, Aditi Mukherji, Peter W. Thorne, Christopher Trisos, José Romero, et al. “IPCC, 2023: Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, H. Lee and J. Romero (Eds.)]. IPCC, Geneva, Switzerland.” Intergovernmental Panel on Climate Change (IPCC), July 25, 2023. https://doi.org/10.59327/IPCC/AR6-9789291691647.

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