This is a proposal. Please leave your feedback as comments.
This project will develop an emissions ledger which could be used by multiple parties in a supply chain to record emissions data. It could then calculate the net emissions for a product which is transported through the supply chain. The goals are:
- Quantify the amount of greenhouse gas (GHG) emissions per unit of product delivered at the destination of the supply chain, for example per kg of fruit or unit of equipment received. This include both the embedded emissions of the product itself, the emissions of the supply chain, and loss of product in the supply chain.
- Quantify the effects of leakage or spoilage or other loss in the supply chain on net emissions and compare that against the emissions of the supply chain itself.
- Compare different supply chain options to see their emissions impact. For example,
- Is it better to ship produce by air or sea freight?
- Is it better to refrigerate it during shipping to reduce the spoilage?
- Is it better to compress CO2 captured during carbon capture and storage (CCS) during pipeline transport?
- Make it possible to compare different products at the destination through different supply chains. For example,
- Is it better to transport the recycled plastics to a facility that could make new bottles from them, or use them at a local recycling facility that turns them into lower value products. While the calculator does not include emissions from downstream usage, it could be used to calculate the emissions of different products through different supply chains at the destination to determine which option is better.
The calculator could be run as simulation for analysis and baselines or used to record actual activities to calculate real emissions. It will integrate the upstream emissions of the products with the emissions of the supply chain, such as transportation, storage, and processing, to enable a true comparison. The end result is the emission of the product plus its transportation and logistics divided by units of products delivered at destination.
The destination emissions of the products could be used for regulatory compliance, such as the EU carbon border tax, and for meeting customers' climate objectives. They could also be used to help investors assess the risk of different products. Finally, by comparing the actual results versus simulations of business-as-usual alternatives, these calculations could be used to prove emissions reduction, certify products as low carbon, and create carbon offsets.
Longer term, this calculator plus the Emissions Tokens Network Project could be used to solve the hard problems of reducing emissions in the supply chain:
- Cost of carbon footprinting - We're free.
- 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.
Sample Supply Chains
Fruit and Produce: Fruit and produce is harvested at a farm, transported by truck, processed at a distributor facility, shipped by freight (air, truck, or rail) with refrigeration, and delivered to a grocery store or supermarket. Optionally we can consider storage at the grocery store or supermarket as an additional step in the supply chain to the final consumer.
Recycled Plastis: Recycled plastics is collected at residential homes, public places, beaches, etc. It is could then be transported and delivered to different types of facilities, which could then enhance it into different materials.
Carbon Capture and Storage (CCS): GHG emissions are captured at the point of burning natural gas, for example at a power plant, and transported via pipeline to underground storage. What's interesting here is that the product transported has very high GHG emissions content relative to the transport process itself.
Hyperleger Fabric with multiple members from the supply chain. REST API for access from members. Cactus for integration with outside ledgers (ie trade finance or supply chain ledgers.)
Ethereum tokens are used to store the embedded emissions at origin and destination of the supply chain. This opens up the supply chain to all parties who tokenize their emissions.
Hyperledger Avalon is used to perform the emissions calculations and store them back on Fabric. Fabric is used to record the steps of the supply chain and their emissions impact, but not to calculate the emissions. This allows calculations to be performed by a variety of parties and models.
The steps of the supply chain is simplified for emissions accounting purposes, so that it is a series of steps each recording:
- Supply chain ID - a unique identifier which identifies a particular product item, which could in reality be a single physical item or a lot or batch, through the supply chain. This could be used by a supply chain system to find the actual item.
Step ID - automated unique identifier for each step. A supply chain will have many steps each with the same supply chain ID and a unique step ID.
- Quantity of item at origin
- Type of activity - what happened at this step of the supply chain. Was something shipped? By air, sea, rail, or truck? Was a product compressed, flash frozen, stored in a warehouse?
- Activity party - Information about who performed the activity, which would be used to find the right emissions factors.
- Amount of activity - how far was the item shipped? How long was it stored?
- Previous and next node - link to the previous and next steps for this item by their step ID. Use ORIGIN for previous step if the current step is the origin of the supply chain and FINAL for next step if the current step is the final or destination of the supply chain.
- Emissions - calculated emissions of this step based on the type of activity, activity party, and amount of activity. This will require standard emissions factors similar to the ones used in the Utility Emissions Channel Project, but for all the different types of steps in the supply chain. One source could be GHG Protocol's new calculator.
In addition we will need for the supply chain itself:
- Per unit embedded emissions of the item at origin - This is the embedded emissions of the item at the origin of the supply chain. It is added to the emissions of the supply chain itself to get the final emissions at destination. This could be an audited emission specific to the item or, if not available, generic emission for this type of item.
- Meta information about the supply chain
Services available from the implementation will be able to
- Calculate net emissions for a supply chain by adding up all the steps' emissions, plus the emissions of the item at origin.
- Tokenize the net emissions per unit of item
- Issue tokens back to each segment based their relative contribution
Data sources could come from:
- GHG Protocol Emissions Calculator
- EPA Emisisons Factors
- Searates distance and time calculator for transport or similar
- Ecoinvent database or similar