Innovation Tagline: Non-fungible tokens (NFTs) as digital ink for tracking waste emissions. Using the blockchain to create supply chain incentive to help reduce up to 1 Gt CO2e of Greenhouse Gas emissions per year.
Project Keywords: #NFT #TokenEconomy #ValueChain #CarbonEmissions #Flaring #Scope3
Project Members
Problem
Under any reasonable scenario, the oil and gas industry will remain a significant and important part of the global energy system for several decades to come. During this transition, however, we must do everything possible to reduce the climate impact from continued use of fossil fuels.
The first priority should be reducing the amount of methane that is leaked and flared during the production of oil and natural gas. Phasing out fossil fuels is an important climate action, but it will take time, and a future without fuels is unlikely. Flaring, and venting, of associated natural gas by oil producers at oil wells happens because methane is trapped in the geological formations of the oil wells. During the extraction of oil and gas, it must be removed to keep the well operating safely. In some wells, this methane is captured and sold as natural gas. In other wells, such as those located in remote areas, the lack of pipelines or other infrastructure to transport the natural gas makes it uneconomical to do so. In those cases, it is simply burned (flared) or worse still, released directly to the atmosphere.
Because methane has 25 times the climate impact of CO2, this methane leakage and flaring is a major source of value chain emissions (Figure 1) for fuel users (estimated at250 global Greenhouse Gas (GHG) emissions. The Environmental Defense Fund estimates the total global oil and gas methane leakage and flaring at between 250 Mt to 1 Gt CO2e per year (Figure 1) and reducing these waste emissions is a first step to decarbonize the fuel value chain.. The latter amount is greater than the total emissions of Germany and all the world's airlines combined.
Figure 1 Annual flaring and associated gas use, from EDF (2021)
In recent years, there has been a concerted effort on the part of The Environmental Defense Fund (EDF 2021) points out that investors need to pressure energy companies to improve flaring transparency, requiring collaboration to establish clear metrics., the Oil and Gas Climate Initiative, major international oil companies, international organizations such as the United Nations Environmental Program, and institutional investors to reduce methane leakage and flaring. Nevertheless, this remains a difficult goal to achieve because of a lack of data and proper financial incentives. Many oil wells do not have equipment to record how they are handling excess underground methane, and many companies do not report on the level of the methane that is released. As a result, even though methane is a valuable commodity (natural gas), it is not possible to estimate the value that could be captured from the leaked or flared methane and therefore determine the returns from investing in infrastructure to capture them.
In this project, we will work on using the blockchain to provide trusted data on methane and transfer that data to fuel consumers to incentivize methane reduction at the point of production.
Value chain (scope 3) reporting standards help identify these type of indirect impacts. According to the Carbon Disclosure Project (CDP) value chain reporting has not been very successful in reducing emissions (Patchell 2018).
...
LCA applied to fuel carbon intensity standards have no been very effective in mitigating emissions (Plevin et al 2017).
| Anchor | ||||
|---|---|---|---|---|
|
Waste emission tracking tools
Several EDF 2021 urges investors to engage energy companies to improve flaring transparency, requiring collaboration to establish clear metrics, and several new data sources ranging from satellite imagery to instrumentation at oil wells will be coming online to improve the data. Several independent tracking tools are being introduced (GGFR, Flaring Monitor, MethaneSat, UNEP IMEO,flare-intel) for waste emissions.
Converting this data into useful fuel value chain metrics require integration with production data. Flaring Monitor has made some progress on this, and will provide key part of our solution to bridge reporting silos for waste emissions. (this effort could align with the World Bank's Imported Flared Gas Index).
Solution
We propose a non-fungible token (NFT) contract to track waste emissions.
...
- company voluntary reports/ ERP sensors (gas flaring)
- independent tracking service focusing on Flaring Monitor
...
Figure 3 depicts an ongoing effort by the blockchain carbon accounting team to collect emission data points into a database (orbitDB) using IPFS or Fabric. These are connected to Ethereum contracts (NET/C-NFT) using a ChainLink oracle service or DAO.
Other Value chain scope 3 tools/services
To our knowledge there is no system focused designed to bridge the MRV systems used by organizations to direclty identify value chain emissions.
...
CarbonChain is a comparable solution to help organizations assess emission impacts across commodity supply chains. However, it operates as a centralized services, focusing on gathering data into a bigger silo not connecting them.
Minimum viable product
Our target product is a portal where and oil&gas producer:
- registers as an industry dealer of the NET network
- construct a (voluntary) emission profile (C-NFT) for current inventories (using VCT)
- connects its C-NFT profile to the waste emission verification system (Figure 3)
- list inventories as digital VCT that can be transferred to other industry/consumer accounts.
Accomplishment and Team
Our team-members has been working on the Supply Chain Decarbonization Project for some time, with the Operating System for Climate Action providing much of the underlying code needed for this challenge.
...
b. Identify talent/resource gaps and needs (Do you need more support developing the blockchain solution? Do you need support with front end development? Do you need support developing the business model?)