Leveraging Blockchain Technology for Innovative Climate Finance under the Green Climate Fund

Earth System Governance Working Paper No. 39, 2020

26 Pages Posted: 9 Sep 2020

See all articles by Karsten Schulz

Karsten Schulz

University of Groningen, Campus Fryslân

Marian Feist

United Nations University - Institute for Environmental and Human Security (UNU-EHS)

Date Written: April 2020

Abstract

The rapid development of digital technologies such as block-chain and distributed ledger-based systems holds trans-formative potential for the financial sector. Promising applications include asset management as well as peer-to-peer networks for the transparent exchange of data and information. International climate finance stands to benefit in particular ways from these new opportunities in financial technology. Distributed ledger technologies could be leveraged to support climate action, for example by facilitating transparent and standardized transactions, or by enabling more efficient monitoring and accreditation processes. In view of these promising opportunities, we focus our inquiry on the case of the Green Climate Fund to explore how distributed ledger technologies can be used for innovative climate finance. Based on our analysis of different digital system models and potential use cases, we then discuss some of the technical and political challenges that may arise, for example with regard to standards and safeguards, governance processes, country ownership, and further capitalization. Our findings show that distributed ledger-based systems could benefit the work of the fund in key areas such as multi-stakeholder coordination and impact assessment. However, our analysis also points to the concrete limitations of technology driven solutions. Digital technologies are not a standalone solution to persistent resource allocation and governance challenges in international climate finance, especially because the design and deployment of these digital systems is inherently political.

Keywords: Block-chain; Distributed Ledger Technology; Climate Finance; Green Climate Fund; FinTech

JEL Classification: O32, O33

Suggested Citation

Schulz, Karsten and Feist, Marian, Leveraging Blockchain Technology for Innovative Climate Finance under the Green Climate Fund (April 2020). Earth System Governance Working Paper No. 39, 2020, Available at SSRN: https://ssrn.com/abstract=3663176 or http://dx.doi.org/10.2139/ssrn.3663176

Karsten Schulz (Contact Author)

University of Groningen, Campus Fryslân ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

HOME PAGE: http://https://www.rug.nl/staff/k.a.schulz/

Marian Feist

United Nations University - Institute for Environmental and Human Security (UNU-EHS) ( email )

Platz der Vereinten Nationen 1
Bonn, 53113
Germany

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