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23 Dec 2016
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Masdar’s Global Gen Z Sustainability Survey, launched at COP22, revealed much insight into young citizens’ perspective: they see climate change as the biggest threat over the next decade. Masdar have asked people all around the world to explain, in their view, what will be the most important technological development over the next 10 years that will have the greatest impact in reducing climate change risks. These are my thoughts...
When thinking about this question, many will answer by saying that technologies like energy storage, solar PV and electric cars will have the biggest impact in reducing climate change risks over the next decade. While all these technologies have grown exponentially over the last decade and will revolutionise our energy system over the next ten years, it is difficult to focus on one solution that will deliver the change required on its own. Because focusing on the solutions ignores the real problem; to me there is not a question of what we should be delivering, but how we should be delivering it. I genuinely believe all the tools are at our disposal now to tackle climate change head on, and since Paris 2015 there is even the political will to let it happen. The challenge now is joining up the problems with the engineering solutions and the finance to pay for them, on a scale large enough to make the impact we need. In this respect the most important technological development that will have the greatest impact on reducing climate change risks is the emergence of the Decentralised Autonomous Organisation or DAO.
The concept of a DAO is still in its early stages, but is moving forward quickly. Its routes are heavily linked to the development of the Bitcoin cryptocurrency, but also draws upon trends such as crowd-sourcing, crowd-funding and the gig economy. For example, while not recognised as a DAO, JumpStartFund provided the incentives and platform for around 100 experts to give their time to develop the HyperLoop concept, which is now being looked at by governments around the world. Similarly, through its mining concept and the underlying blockchain, Bitcoin has rapidly scaled to provide a global currency with no central bank backing.
It is a challenging concept to explain but here’s how a DAO might work. Through open-source data made available by all stakeholders, project information can be made available to a wide network of peers. This information could relate to the performance of a power network or geographic and demographic information for a community for example. Through a voting and incentivisation system, these peers are encouraged to identify potential solutions, such as network upgrades or a microgrid solution for a community. The best proposals are voted on by the network, identifying the projects that are most likely to be successful, which can then be taken forward for investment. By leveraging smart contracts, investment can be delivered by contractors who develop the detailed design and construction solutions and deliver the works. At this stage an operator could be engaged through the DAO, or the project could be operated and financed by more conventional means.
The first key strength of this approach will be in the scalability of this model, which has the potential to engage vast networks of peers and identify solutions on a much greater scale, driven by open-source data and a system level view. By providing a platform for participation, the principles of crowd sourcing and the gig economy can be leveraged. Rather than identifying solutions across countries or regions, project portfolios could be developed across countries or continents. Furthermore, by transitioning to a DAO delivery method, the adoption of new technologies for solving problems, such as Artificial Intelligence algorithms, becomes more conceivable at a larger scale.
The next key strength is that this approach will overcome one of the key challenges we face at the moment; developing engineering concepts that offer investors bankable projects where the risk is clear and understood. In a low interest rate but rapidly changing and uncertain world, there is no shortage of capital, but there is a distinct shortage of risk capital.
Finally, it has to be recognised that renewable technologies are often criticised for being too expensive and still subsidised in many regions. This is changing quickly and we are now at or close to a tipping point where in many regions, renewables are at parity or even cheaper than conventional generation. While their intermittency remains a challenge, smart solutions with demand side management, improved supply and demand forecasting, interconnection and storage can be orchestrated to help manage this. But in the project delivery value chain, I still see significant inefficiencies that cumulatively increase the expense to the end consumer. I believe through application of DAOs, many of these inefficiencies will be removed, and thus make delivery of scalable and rapidly deployable renewable technologies even more competitive with conventional solutions.
With some imagination and application, I believe DAOs have the potential to change the game over the next decade, helping to mobilise all the will, finance and ingenuity at our disposal in a far more efficient way, to quickly transition to a more sustainable future.
If you agree with me, please vote for my entry to the MASDAR blog contest and share this piece with your network. Thanks for reading!
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