Objectives

This project will create a network for decarbonizing a Supply Chain, which could span multiple parties across industries and countries.  It will include an emissions ledger to record emissions data, a DAO for collectively deciding on decarbonization options, and a tokens network for transferring the emissions reductions (decarbonization) across the members of the network. 

Use Cases

Decarbonization of supply chain, or Scope 3, emissions remains a hard problem for many reasons, even as regulatory compliance, such as the EU carbon border tax, the EU Carbon Boarder Adjustment Mechanism targeting imports of energy intense commodities, make it increasingly important.  Our solution offers the following advantages:

  • Cost of carbon foot-printing - We're free. (smile)
  • Creating incentives for suppliers - Customers, either big ones or a group of small ones, could set up their own "cap and trade" scheme: Declare their supply chain emissions targets which decline over time, aligning with the Paris Agreement (-50% by 2030, zero by 2050.)  Allocate tokens to suppliers based on those targets.  Suppliers can trade their emissions with each other but over time must reduce them as a whole.

  • Providing turnkey solutions - Again using tokens, major customers could either invest in emissions projects directly and provide them to their customers (like Apple and "Enabling carbon neutrality across the value chain" in this article) or provide financing or guarantees for financing for suppliers.

  • Verification - Could be done through this ledger.
  • Going deep - Suppliers could get their suppliers on the ledger, and tokens could be transferred further up the supply chain.
  • Address the pain points, needs and interests of emerging regulations like the CBAM on the international stage
  • Communicate the importance of corporate carbon reduction efforts

Implementation

Information from a variety of sources, from freight bills of lading (BOL's) and carrier tracking information, to mobile and IOT devices attached to vehicles, will be compared against published emissions factors to determine the emissions from transportation.  

Product emissions databases can be used to determine the emissions of the component products.

The calculated emissions are either recorded on Hyperledger Fabric or encrypted and recorded on IPFS.  

Tokens are then issued using the Emissions Tokens Network.  Transportation and shipping emissions are calculated based on standard emissions factors such as the UK Government Greenhouse Gas Reporting Factors (see below) and stored as Audited Emissions.  The CarbonTracker tokens from the Oil & Gas Methane Emissions Reduction Project will be used to calculate the actual carbon emissions of fuel based on the producer it was purchased from.  This is done by calculating the carbon intensity implied by the standard emissions factors and comparing it against the CarbonTracker tokens' fuel carbon intensity.  By presenting an Audited Emissions tokens based on the standard emissions factors and a CarbonTracker token for actual fuel purchased, the smart contract will calculate the difference and issue an additional Audited Emissions token.  This new token represents the adjustment for actual emissions based on the purchased fuel's carbon intensity, versus the "average" carbon intensity of the standard fuel.  It may be a positive or negative number, depending on the actual purchased fuel's carbon intensity versus the average.  

The Decarbonization DAO will govern the auditing and calculation of the carbon intensity of the different producers' fuels, validation of sustainability attributes of different fuels, and any carbon offsets in addition to direct emissions reductions.

References

Examples

Walmart Project Gigaton

Apple Supplier Clean Energy Program

IKEA Supplier Renewable Energy Program


Development - Active Issues

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13 Comments

  1. jeff stollman

    I like the idea of this project and have considered similar ideas in the past.

    The reason I have not moved forward is that it requries a massive amount of data collection, calculation, and speculation.

    For example, if a product is delivered by a gasoline powered van, an natural gas powered van, a hyrdrogen powered van, or an electric van, how will you assess the GLG impacts of each?  While you can estimate the emissions from the van itself without too much difficulty, what about the emission in 

    1. drilling, refining, and transporting the gasoline
    2. drilling, refining, and transporting the natural gas
    3. creating and distributing the hydrogen
    4. generating and transmitting the electricity (which, itself might be generated using a variety of feedstocks including coal, natural gas, sunlight, wind, nuclear, etc.).

    The project quickly becomes a nightmarish input-output analysis in which it is necessary to speculate on the input parameters or else create a weighted model that considers all possible process flows.  It is doable, but daunting.

    1. Si Chen

      It's a big project for sure.  There will be a lot of data gathering, which is what a blockchain connecting different parties on a supply chain would do.

      For your particular list of questions, however, there are in fact data already available.  Electricity emissions is published by the EPA, European EPA, and other national electricity authorities like India's.  We use them for the Emissions Data Channel.

      For oil and natural gas, I think there is a "fuel carbon intensity index."  I'm not too familiar with it but there is an Oil & Gas Climate Initiative, and we should ask them.

      For hydrogen it is a new thing...full of opportunities for us! (smile)

  2. Nikos Daskalakis

    Hi, have been thinking along the same lines and agree with Jeff that the data gathering will be a nightmare. Was therefore exploring a different avenue, sketchy at the moment, that I will share with you. 

    What if we used invoices instead? 

    Say I operate a small manufacturing company -ACME. The input is electricity and raw materials the output are the products ACME sells. Say that the power company that supplies ACME power  when issuing the power bill had to include also the amount of CO2 emitted for the production of this power, as an "info" item. How? In Europe for example power companies are part of the ETS and have to calculate in a verifiable way the emissions they produce. So an average CO2/KWh sold can be established. If this info (the CO2 part) of the invoice could be captured in a blockchain it would be known that ACME has indirectly used than much of CO2 for their production.  Lets suppose that ACME does not procure any other raw material where  CO2 is involved -(impossible proposition but for the sake of example). Through accounting rules that have to be established,  ACME should include in each of their sale invoices a certain amount of CO2 so that the total amount of CO2 in their sales invoices equals to the total amount the are  "debited" by the power company. So the next entity in the value chain would be debited the CO2 amount for whatever they purchased through ACME and they would have to do the same, sort of the VAT chain.  If ACME was selling stuff to the final consumer then the consumer  could see on the receipt issued how much CO2 the product is debited with. 

    To expand the example, if ACME was also using a transportation company to move its goods around, they would be debited CO2 from the transportation company as part of he invoice thr truck co issues to ACME. How much? As much as the truck co was debited from the gas station when they filled the trucks tank with diesel (2.68kg CO₂/litre). 

    Why do I choose invoices? In Greece for example all invoices issued have to bear a unique digital stamp so this allows for data capturing directly into a blockchain -capture the stamp, the seller, the buyer and the CO2 in the invoice. The general public could view the blockchain and see how "dirty" ACME is, the authorities can set rules to verify that balances are correct -for example apart from the unique digital stamp the invoice could be made to bear the hash code of the blockchain when the data was submitted into the chain. 

    So suppose  ACME was  Volkswagen (just as an example). VW purchases power and various raw materials and spare parts. They all debit VW with CO2 emissions. Eventually VW would have to pass on the CO2  (through the accounting rules) to the cars they sell. So as a consumer other things being equal between say a VW and BMW model I could choose the one debited with less emissions. VW would be incentivized to purchase green power and their suppliers would be incentivized likewise, as other things being equal VW would purchase form the supplier with the less emissions. 

    So the main idea is to use something similar to the VAT chain to capture CO2, through the invoices that -in general, allow for: 1. digitization, 2. audit.

    Happy to entertain any thoughts you might have. 


    Nikos


    1. Si Chen

      I think this comes down to a governance mechanism question.

      The same calculations would need to be made of emissions based on activities, based on probably the same emissions factors.  So which of these 2 options is better?

      • Data stays in each company.  Each company makes its own calculations, which only it sees.  The company would report it on its invoices.  Its customer would have to figure out how to integrate invoice data from many different suppliers.  An audit would involve going into all these different companies' systems.  It would probably require a government entity to do these audits.  Every jurisdiction would most likely end up having separate reporting rules and audit procedures.
      • A common distributed ledger where each company reports its activities.  Emissions calculations are made on ledger based on models and factors that everybody sees.  The resulting emissions are stored on ledger, for all to see.  To use them, you need one API to access all your partners' emissions records.  Audits could be done by regulators or customers.  

  3. Si Chen

    Bertrand WILLIAMSRIOUX Arezki DjiI came up with some ideas for how to adjust the emissions of actual purchased fuel versus industry averages and put them on this wiki page.  Pls let me know what you think?

    1. Arezki Dji

      Thanks!
      Si Chen I would like to understand what you mean by industry averages? Is it something decided by DAO? Or is it pre-recorded from public sources?


      1. Si Chen

        The industry averages would be the emissions factors from public sources, for example the ones from the UK are very comprehensive and detailed: https://www.gov.uk/government/publications/greenhouse-gas-reporting-conversion-factors-2020

        The EPA ones have a lot of different fuel combustion factors.

        1. Si Chen

          Arezki DjiThanks for the link to the French Resource centre for greenhouse gas accounting site.  I added it to the page.  At some point we should compare the different government databases to make sure they're all consistent.

    2. Arezki Dji

      Si Chen A second comment would be to link the work of Oil & Gas Methane Emissions Reduction Project and this project. We would need for instance to find a way to know if shipping line A has used fuel from fuel producer B.

      I am sure we can use port of departure for instance which is available on the bill of lading or through other data providers.

      If a shipping line A refuels at terminal B we may know (through DAO for instance) the companies supplying fuel at this terminal. It should at least partially if not all be public data. We may know thanks to Oil & Gas Methane Emissions Reduction Project the footprint of each fuel produced by each companies delivering at this terminal or port, then we may have an estimate of the fuel footprint which is inside the tank of shipping line A.

      Do you think it makes sense? Interested to hear your views.

      1. Si Chen

        Arezki DjiI've thought about that, but physical fueling would require infrastructure, which would be expensive and slow to build out.  So I was thinking of an alternative scheme where it is like the Energy Attribute Certificates or Renewable Energy Certificates, but for sustainable biofuels.  If the producer is certified (for example by DAO), then it could issue a certificate of sustainable biofuel.  Then it could just put its fuel into the existing physical fuel infrastructure and sell it at the prevailing market price.  The certificate, however, could be sold to a buyer who could then claim its sustainable attributes while buying standard fuel from wherever it is.

        This has worked well in the renewable electricity markets, as long as claims by the buyer require the right attributes, and the certificates define the right attributes.  For example, some grids are oversaturated with daytime solar generation, so the EAC/REC market is moving towards time- and grid-matching.

        1. Arezki Dji

          I think this makes more sense because this is exactly what the industry wants / does / is working on. This kind of certificate (Proof of sustainability) is mainstream (at least in the EU),

          1. Arezki Dji

            So basically the work of Oil & Gas Methane Emissions Reduction Project is an input to emit this EAC/REC right?

            1. Si Chen

              Yes, that is the idea!  Look at "As an example:" in Oil & Gas Methane Emissions Reduction Project and let me know what you think, how I can make that section better.