Under the framework of the International Conference on Renewable Energies for Developing countries (REDEC), ESCWA is organizing, in partnership with the Institute of Electrical and Electronics Engineers (IEEE) and the Lebanese Association for Energy Saving & for Environment (ALMEE), a workshop on the role of blockchain in the sustainable energy transition in the Arab region. The workshop aims to tackle the role of blockchain technology in enabling and accelerating the just, inclusive and sustainable energy transition in the Arab region. The conclusions and recommendations of a forthcoming ESCWA technical paper on the topic are also discussed.
Role of blockchain in sustainable energy transition
- Increased energy sector complexity, due in part to the influx of small-scale, distributed energy resources (DER) as well as the electrification of buildings and transport, requires new digital tools to effectively manage grids while ensuring flexibility and transparency. Blockchain is just one tool among others (including internet of things and artificial intelligence) which can help manage this complexity as part of a just, inclusive, and sustainable energy transition in the Arab region.
- To increase awareness and buy-in from policymakers and other decisionmakers, focus must be on the solutions enabled by blockchain, as opposed to the technology itself. Energy sector stakeholders are risk averse and need to see working pilot projects to feel comfortable before implementing new digital technologies like blockchain.
- Countries in the Arab region can leapfrog developed countries in Europe and elsewhere by implementing blockchain where appropriate, i.e., where decentralised solutions can increase efficiency, security, privacy, and transparency, similar to how countries in Africa innovated pay-as-you-go models.
- Through blockchain technology, assets at the grid edge can be more effectively identified, and therefore managed by energy sector stakeholders. This can increase grid flexibility and resilience as well as compensation for service providers who own and manage DER, electric vehicles, smart appliances, etc.
- There are many use cases being tested around the world in the realm of blockchain and energy. The traceability offered by blockchain is perhaps the most important quality of the technology in the Arab region in the medium-term due to the regional ambitions to export clean electricity and fuels (such as green hydrogen and derivatives) to Europe and elsewhere. Blockchain can be used to give customers confidence that the products are sustainable, via guarantees of origin stored securely on chain.
- Key barriers to blockchain implementation in the Arab region include:
- Insufficient awareness among energy sector stakeholders (including public and private sector as well as consumers) regarding the potential use cases for blockchain
- Insufficient capacity building initiatives and funding mechanisms to promote new digital technologies in the energy sector
- Insufficient digital and physical infrastructure, lack of reliable energy access in some areas, and aging communications networks
- Cross-cutting challenges, including political and economic instability
- Lack of regulations and standards for emerging digital technologies in the sector
- The overarching goal within the Arab region remains the just, inclusive, and sustainable energy transition and blockchain is one of many tools to enable this transition without leaving anyone behind.
ESCWA’s scene-setting presentation covered the following topics ahead of the panel discussion:
- What is blockchain?
- What role can it play?
- Select use cases from the Arab region and globally
- Challenges to adoption and implementation in the region
- Conclusions and recommendations from ESCWA’s upcoming technical paper
Managing the complexity of the energy sector requires digital tools like blockchain, AI, and IoT. However, focus should be on blockchain-enabled solutions that provide tangible benefits to people in the region, rather than the technology itself. Blockchain aids in asset identification and management, enhancing stakeholder participation and grid resilience. It also supports traceability for sustainable energy export. Despite its benefits, hurdles for blockchain in the Arab region include insufficient awareness, insufficient initiatives and funding, inadequate infrastructure, and a variety of regulatory challenges. With working pilot projects, risk-averse stakeholders can more easily test and adopt emerging digital technologies like blockchain. Arab countries could leapfrog others by implementing blockchain to increase efficiency, security, privacy, and transparency, by learning from lessons from the global south.