Blockchain and energy commodity markets: legal issues and impact on sustainability

Abstract

In this article, we explore the application of blockchain, a type of distributed ledger technology (DLT), in the field of energy trading. Specifically, we focus on crude oil trade. We argue that the application of blockchain technology and supplementary smart contracts supports responsible sourcing in complex supply chains and helps reduce information asymmetry in both the physical trade and paper trade of energy commodities markets. In order to apply blockchain technology to the energy market, we begin with a discussion on the architecture of blockchain and the different types of blockchain that might be applied in this sector. Further to this, we examine the current oil trading markets, particularly their relevant components, as part of the discussion on blockchain application. Subsequently, we look at how the various types of blockchain may be applied to the markets and examine their advantages and disadvantages. In conclusion, we look at the legal issues that may arise from such application, the potential solutions, and the potential impact of blockchain technology on the United Nations Sustainable Developmental Goals in the future and how a green fintech application can be developed.