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- CI of oil & gas supplied (Fuel trade out) -> flared gas + leakage / fuel outputs
- CI of Refined fuel trade -> other emissions (e.g., electricity/heat, flue gases) / refined fuel out
The consumer can reduce (or compl)y with a desired CI standard by purchasing carbon tokens from a low methane supplier. This token transfer could be arranged without physically taking delivery of the fuel. A CI certificate is simply a transferrable claim of origin backed up by data. The NFT(s) simply provides provide a methane performance certificates for the output fuel tokens, helping producers with lower carbon intensity to obtain greater value for their products. A CI certificate is simply a transferrable claim of origin backed up by data. It is It is similar to a Renewable Energy Certificate (REC), but whereas a REC attests that electricity produced is from a renewable source, the CI certificate attests the total emissions of the fuel produced. The consumer can reduce is fuel CI by purchasing carbon tokens from a low methane emission supplier. It could be transferred between two users of fuel so that a user which is looking to reduce its emissions footprint could pay for a lower carbon fuel, without physically taking delivery of it.
Ownership of CI certificates could be transferred between two fuel users at a premium allowing a user to reduce its emissions footprint. This would require simultaneously transferring, with the aid of a smart contract, fuel token (and associated embedded emissions) inventories of the consumer and the supplier.
This would require simultaneously subtracting the embedded emissions of the fuel inventory of the consumer and adding back it to the embedded emissions of the fuel inventory of the producer. In future transactions, the producer would have to attach a higher CI to the fuel it sells as it sells certificates of lower embedded emissions. This creates a mechanism where a producer of lower carbon fuels could monetize greater value for their output.
In contrast, an offset is an accounting of emissions reduction in return for an investment, such as equipment for capturing, storing, and transporting methane This creates an incentive to make capital investments at high carbon intensity producers to reduce them. To be valid, an offset must follow the general principles of carbon offsets, such as Additionality, Correct Baseline, Permanence, Real, and Leakage protection – In other words, the emissions reductions must not have occurred without the investment from the buyers of the offsets. The offset would be a token which would transfer the emissions reductions to the buyers of the offsets, which again could be a fuel user. Ownership of CI certificates could be transferred between two fuel users at a premium allowing a user to reduce its emissions footprint. This would require simultaneously transferring, with the aid of a smart contract, fuel token (and embedded emissions) inventories of the consumer and the supplier.
Investors could also purchase C-NFTs' with verified low methane emission profiles as part of their commitment to combat climate change and support the financing of additional infrastructure to reduce methane emissions.
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