What is the Paris Climate Agreement?

The Paris Agreement was adopted by 195 countries at COP21 (Conference of the Parties, #21) in December 2015. It became effective one year later. It is the first-ever universal, legally binding global climate deal in which all countries, including developing nations, have committed themselves to climate action. The Paris Agreement sets a collective temperature goal of ‘substantially below 2 degrees, if possible 1.5 degrees’ of warming compared to pre-industrial levels.

The Agreement establishes a process for countries to step up their efforts to reduce emissions over time, including the use of climate finance and market-based mechanisms. It also provides for countries to offer more information on their adaptation needs and measures and improves transparency about action and progress. In implementing the Paris Agreement, the core challenges will be information-sharing between countries and ensuring that they accept accountability for their mitigation and adaptation activities. This is the only way to establish transparency and trust over time.

Innovative digital technologies such as Internet of Things (IoT), Artificial Intelligence (AI), sensors, remote sensing and blockchain may provide a way of supporting projects and countries alike to ensure this transparency and build the necessary trust. The Climate Ledger Initiative (CLI) seeks to leverage these technologies to accelerate climate action in line with the Paris Agreement and the Sustainable Development Goals (SDGs).

Why are digital technologies relevant to climate action?

Digitalisation can help increase the efficiency and reliability of data transmission, which increases trust in that data. For instance, a blockchain-based database might increase the active involvement of country parties and enhance public and private-sector participation and ambition across the three major pillars of the Paris Agreement: mitigation, adaptation and finance.

Unique identification and tracking properties ensure a high level of transparency within the network as well as considerable confidence in the stored data. What's more, combining the mechanisms of the Paris Agreement with blockchain technology could open the door to many new and innovative approaches to climate change mitigation, adaptation and finance, lowering transaction costs and improving fraud protections.

Digital technologies such as blockchain hold the potential to generate much-needed value in work to implement the Paris Agreement. CLI recognises that these technologies should be seen as one element in the fight against climate change, and not as a one-size-fits-all solution to all challenges.

The term 'blockchain' is used here for simplicity's sake to refer to broader distributed ledger technologies.

What is blockchain, or more generally distributed ledger technology?

In a simplified view, blockchain can be seen as a new kind of database system. Instead of following a centralised structure like a conventional database that tracks transactions in a bank, for example, it is dispersed across many decentralised nodes, which are the 'distributed ledgers' in the name. Each ledger contains a copy of the database, and each new entry into the database has to be verified decentralised by numerous entities. Once approved by the network it is stored in all copies of the ledgers.

Another key element of blockchain technology is the cryptographic architecture that “chains” each new entry or “block” in the database to earlier entries in such a way that entries can no longer be changed. This provides security and a traceable history. Such blockchain-based databases can be used not only to trace the transfer of money or other assets, but also to track greenhouse gas emissions, report on progress with the implementation of climate finance projects, and give poor communities access to financing to tap into clean energy, for example. Find more information in our factsheets.