A Global REC Market: How Bitcoin Can Leverage North American Capital to Sustainably Decolonize and Electrify Emerging Markets
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Climate change is an existential threat to humanity, and humanity is responsible for its imminence. This is a global problem that will require a global solution. Yet that is not how REC markets operate. Unbundled RECs can be purchased from any renewable energy producer within the United States, but only about 20 percent of U.S. electricity came from renewable sources in 2020. If climate change and the need to sustainably fuel human activity are global problems, why can’t we use Bitcoin — chiefly Stacks — to create a global REC market that connects U.S.-based energy buyers with producers all over world to drive innovation and fund infrastructure both domestically and abroad?
At least 38 nations used more renewably-generated primary energy than the United States (8.71 percent) in their energy mix in 2019, nine of which tapped renewable sources for 30 percent or more of their country’s power use. Because of energy’s lack of fungibility and currently limited capacity for transfer, power generated in Paraguay can’t be used in Pennsylvania. But why can’t a certificate representing one clean milliwatt-hour of electricity produced by a hydroelectric plant outside of Ciudad del Este in southeastern Paraguay be equivalent to a certificate for one clean milliwatt-hour of electricity from a hydroelectric plant located in the Pacific Northwest of the United States? Why can’t we use the most open and secure global settlement network in existence to collaborate and compete and conquer climate change together as a worldwide effort with incentives for everyone?
Bitcoin makes this possible.
Stacks makes this viable.
How Would This Work?
A nation overflowing with clean energy but lacking the capital necessary to maintain and improve their infrastructure could monetize the renewable nature of their electricity production by issuing and selling RECs. These RECs would deploy as smart contracts that mint an NFT for the buyer upon execution. The NFT will contain all of the pertinent energy source info found in a REC, a timestamp, and is backed by the security and global connectivity of Bitcoin. Climate-forward Bitcoin miner operators in renewably-challenged locales could power their plants with what would effectively be 100 percent clean electricity.
Not only would this market provide stiff competition to U.S. power producers in the current REC market, but international REC purchases would introduce new sources of capital for developing nations without the paternalistic oversight and centralized interest of the traditional banking system, or the boots on the ground and sovereign “pressure” of traditional colonialism.
Existing international renewable energy standards can smooth global energy growing pains. I-RECs, Greenhouse Gas Protocol Scope 2 Guidance, and the CDP have provided comparable frameworks for global renewable energy production benchmarks. A global REC market that rewards green electricity producers irrespective of location drives down the cost of — and fuels competition for — renewable electricity representation, further incentivizing U.S. producers to build green energy capacity at home.
A Cleaner World Already Exists
Paraguay generates 100 percent of its electricity from renewable sources. The South American nation exports 85 percent of the electricity it generates each year, supplying one-fifth of the total electricity used by Brazil. The sale of renewably-generated electricity (primarily to Brazil and Argentina) makes up over seven percent of Paraguay’s GDP. Simultaneously, Paraguay has the second lowest energy consumption per capita in South America, and a third of the population is impoverished. Inflation — as measured by Banco Central Del Paraguay — has risen from .5 percent in June 2020 to 3.7 percent in May 2021.
Plentiful clean energy production in South America is not exclusive to Paraguay. Venezuela — a founding member of OPEC and home to the world’s largest oil reserves — generated 58.37 percent of its domestic electricity from hydroelectric sources and 25.39 percent of its total primary energy from renewables in 2019. In fact, seven of the thirteen South American nations — Chile, Colombia, Peru, Ecuador, Brazil, Venezuela, and Paraguay — each derived over 262 percent more of their primary energy from renewable sources than did the United States.
Bitcoin accounts for about 189 terawatt-hours of annualized global power usage. RECs generated from hydropower production in Paraguay, Venezuela, Colombia, Peru, and Ecuador alone would offset more than the entire annual Bitcoin carbon footprint.
I highlight Paraguay because the 48.93 TWh of hydropower their plants produced in 2019 could make it one of the biggest winners in a global REC market. Paraguay’s clean energy generation should be a feature of a nation that’s an example to the world, not one struggling to keep up with it.
Bitcoin makes this possible.
Stacks makes this viable.
