【Idea Exchange】Andy Yiu, CESGA
Everybody talks about the Metaverse, but what exactly is the Metaverse? What does the Metaverse have to do with ESG? In recent months, I have attended the annual conference events of the Hong Kong Institute of Certified Public Accountants (HKICPA) and the Royal Institution of Chartered Surveyors (RICS) to share the latest developments in the Metaverse and its potential impact on the traditional professions. The first question I was always asked: what is the Metaverse?
The definition of the Metaverse varies, and its origin can be traced back to science fiction from decades ago. In my opinion, the Metaverse consists of the following three key elements: (1) immersive experience, (2) socializing activities, and (3) asset ownership. First of all, with the development of hardware technologies, such as data bandwidth and wearable devices, software and hardware applications of Extended Reality (XR for short, including AR (Augmented Reality), VR (Virtual Reality), MR (Mixed Reality)) began to emerge. The cost is lower and more reasonable to retail users, reducing the threshold for mass adoption.
Second, it is about socializing activities. From the current online “play-to-earn” games to futuristic digital smart cities, the Metaverse focuses on improving the well-being and productivity of human society through the combination of virtual and physical worlds. Thirdly, it is the use of digital assets enabled by blockchain technology as an economic model to incentivize the development of the Metaverse. From Web1.0 era which transmission of information is one-way, to Web2.0 where large social platforms own all the user data, we are progressing towards a new economic model of Web3.0 that advocates the “creator economy”.
In the “14th Five-Year Plan”, the Chinese government lays down the plan to develop the digital economy. Key industries include blockchain, internet of things, virtual reality, and other essential components of the Metaverse. Since 2021, both the national and local government levels have announced their Metaverse-related development policies. To date, as many as 24 provinces and cities, including Beijing, Shanghai, Guangzhou, Wuhan, Chongqing, etc., have announced their Metaverse development policies.
Another major national policy of China is to achieve carbon peaking by 2030 and carbon neutrality by 2060. So, can the Metaverse technology help the grand goal of carbon reduction? In his book “How to Avoid a Climate Disaster”, Bill Gates emphasizes that everyone should have the chance to live a healthy and productive life. It is unethical and impractical to ask backward countries to give up using more energy to improve their lives. The solution should be to invest in breakthrough technologies to achieve carbon neutrality.
The use of blockchain and even metaverse technology to solve the climate crisis is no longer just a concept, and many business cases have already been implemented. The digital twin technology can model the whole process and perform sandbox simulations. For instance, it has been applied in the real estate industry for planning and design instead of making physical models, reducing carbon emissions. Singapore, Boston, and San Francisco have established city-level digital twins to analyze and plan urban development with real-time data, simulate policy effects, and strengthen risk management capabilities to respond to crises.
Cases in other countries include NFT trading platforms to facilitate peer-to-peer trading of renewable energy certificates and carbon credits. An Australian company called Power Ledger uses the blockchain decentralization technology to try to innovate the electricity trading market. For example, consumers can trace the source of electricity production through the immutable ledger on the blockchain, so that they can have a choice on clean energy. Its trading platform allows consumers to conduct P2P buying and selling of solar power. Another company in South Africa, The Sun Exchange, uses Bitcoin and other cryptocurrency technologies to promote third-party investment in solar panels, and lends electricity to local schools, retirement homes, and small and micro enterprises through its online micro-leasing marketplace. Investors earn interest income from it, borrowers obtain clean energy required for production, and the local environment achieves carbon reduction, achieving a win-win-win situation.
Earlier, I attended the HKUST 30th Anniversary Web3 Carnival, an alumni event of Hong Kong University of Science and Technology. In his keynote speech, Professor Yang WANG, Vice President of the university, pointed out that Hong Kong, as the most international city of China, should take advantage of “One Country, Two Systems” to become the sandbox and the bridge to the world for China’s digital economy and the development of the Metaverse. Hong Kong needs to develop the Web 3.0 digital economy as one of the key catalysts to address its own social issues. The vision is to establish “Metaverse Hong Kong” (MetaHK), striving to make Hong Kong a Metaverse-powered Smart City.