DigFin Green is our series profiling leaders in fintech companies addressing environmental, social, and governance (ESG) solutions, using technology to power financial services toward sustainable outcomes. Contact us if you would like to be included.
Ken Weber is head of social impact at Ripple, a real-time gross settlement system, currency exchange, and remittance network created by Ripple Labs in the U.S. Ripple supports tokens representing fiat currency, cryptocurrency, and commodities.
XRP is the digital asset built for payment that runs on the XRP Ledger, created before Ripple Labs was founded. Ripple says it is an open-source protocol that it does not control. In November 2020, the U.S. Securities Exchange Commission sued Ripple, claiming XRP is a security that was unlawfully traded. The case is ongoing but in the past several weeks, XRP’s value has risen by over 300 percent, making it the fourth-largest cryptocurrency with a market cap of about $80 billion.
DigFin: What problem are you addressing?
Ken Weber: My role focuses on three objectives. First, we want to decarbonize Ripple’s business by 2030 or sooner.
Second, we want to invest in carbon-removal technology that can scale.
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Third, we have decarbonized the XRP ledger. The currency was all pre-mined, so there’s no proof-of-work or mining activity involved. The XRP ledger operates light. Its electricity consumption is the equivalent to an email server’s.
The ledger is now carbon-neutral. We hope that organizations and developers will make the cryptocurrency field carbon-negative.
We are part of the Crypto Climate Accord, which was announced earlier this month [on April 8]. It’s an initiative of the Energy Web Foundation, an association representing the entire energy industry. The CCA is a big-tent meetinghouse for everyone in tech, building protocols, fintechs, financial institutions, energy companies – and even bitcoin miners who want their electricity generation to be 100 percent from renewables.
We’re a supporter of CCA. Its members have pledged to get to zero carbon emissions by 2030, and use 100 percent renewable sources of energy by 2025. We want to get everyone in the blockchain industry to decarbonize.
These targets could change – but the CCA isn’t a central authority deciding these targets arbitrarily. It’s a collaborative effort.
Bitcoin is enormously wasteful. Is the CCA at risk of just greenwashing the Bitcoin community?
That is the elephant in the room. Bitcoin is the dominant cryptocurrency, it is energy-intensive. As its price goes up, so does its energy consumption.
Because of its proof-of-work mechanism. Can this ever change?
Some people believe it cannot be modified. Some others believe Bitcoin’s proof-of-work is justified because it forces miners to move to renewables. But Ethereum is moving from proof-of-work to proof-of-stake, and that will be a very positive move. It will put pressure on others to follow.
Ethereum’s been supposedly moving to proof-of-stake for years.
Its stakeholders are engaged in the technical issues. They will soon arrive at an objective truth, to determine what innovations are required to complete the transition. ConsenSys is doing a lot of work on this, and I think they will come to the table with a lot of smart people and a roadmap.
But even in the Bitcoin community, there are progressive miners that want to be completely supported by renewables. The CCA is attracting enough members that it will put out a framework, and some innovation guidelines, and perhaps even suggest some financial incentives.
Bitcoin’s enjoyed an unobstructed ride so far. But as it moves to mainstream adoption, users are going to expect changes, especially corporations. Tesla says it will sell its cars in bitcoin, but Elon Musk also says Tesla’s all about helping against climate change.
More banks are jumping into crypto. Can banks be both involved in Bitcoin and ESG-compliant?
We work with banks, payment processors, fintechs – everyone in technology and global finance. A lot of people are excited about the CCA. What we’re saying is, “Do this now while the technology is still early.” It will be harder to reverse-engineer it to be green later on. When you’re operating a new business, you can be forgiven for putting your business needs first. But everyone is going to have to grapple with whether these products and their impact squares with firms’ commitments to getting to carbon-zero. This is part of the bigger movement to move from shareholder capitalism to stakeholder capitalism, in which businesses have to consider community impact.
More on the Crypto Climate Accord:
Energy Web, Rocky Mountain Institute, and the Alliance for Innovative Regulation launched CCA as a private sector-led initiative committed to making the cryptocurrency industry 100 percent renewable. Inspired by the Paris Climate Agreement, the Accord brings together the crypto and financial technology industry to build a sustainable future, with support from the United Nations Framework Convention on Climate Change.
Surging demand for crypto and accelerating adoption of blockchain-based solutions among businesses and individuals have highlighted a critical issue: the impact of the technology’s growing energy consumption on our climate. As cryptocurrencies become increasingly mainstream, it’s imperative to shift toward a renewable energy future now. The Accord intends to achieve this by working collaboratively with the cryptocurrency industry—including all blockchains—to transition to 100 percent renewable energy by 2025 or sooner. While many organizations are individually taking steps to decarbonize their operations, the Accord recognizes that an industry-wide coalition and scalable solutions can quickly multiply impact.
Energy Web, AIR, and RMI have developed three high-level objectives for the Accord, to be finalized with supporters in advance of the United Nations’ COP 26 Climate Conference later this year:
- Enable all of the world’s blockchains to be powered by 100 percent renewables by the 2025 UNFCCC COP Conference
- Develop an open-source accounting standard for measuring emissions from the cryptocurrency industry
- Achieve net-zero emissions for the entire crypto industry, including all business operations beyond blockchains and elimination of historical emissions, by 2040
More than 20 companies and individuals spanning the crypto and finance, technology, NGO, and energy and climate sectors have joined the Crypto Climate Accord as initial supporters, including:
- Compass Mining
- D-REC Initiative
- Decarbbitcoin Labs
- Energy Web
- Exaion (EDF)
- Global Blockchain Business Council
- Hut 8 Mining
- I-REC Standard
- Singapore Power Group
- South Pole
- Streambed Media
- Tom Steyer
- UNFCCC Climate Champions
- Web3 Foundation
- XRP Ledger Foundation