In recent years, the Environmental Defense Fund, major oil companies and the Oil and Gas Climate Initiative, international organizations such as the United Nations Environmental Program and the World Bank, and institutional investors have made an effort 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 methane, and many companies simply do not report . Even if they do this information is stuck in data silos, making it difficult to share and verify reported values. As a result, each year at least $50 billion worth of methane is flared rather than being sold as a commodity (natural gas) and extracting rents from investing in infrastructure to capture it.
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Through this we hope to help provide greater visibility to the oil producers, their investors, government agencies and NGO's involved in reducing methane flaring and leakage. We also hope to create an additional lever, where fuel consumers can actively participate by purchasing emission reduction and methane performance certificates.
The Solution
We propose to use a blockchain oracle, such as Chainlink, to integrate the different sources of data from methane emissions. Several independent sources, such as GGFR, Flaring Monitor, MethaneSat, UNEP IMEO, flare-intel, could be combined with company reported figures to arrive at an answer. A blockchain oracle assigns tokens for each source of data and weighs the data according to the tokens held by its source. It could increase or decrease the tokens for each data source as the data is subsequently validated or refuted.
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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.
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- company voluntary reports/ ERP sensors (gas flaring)
- independent tracking service such as Flaring Monitor
Other Value chain scope 3 tools/services
According to the GHG Protocol Guidance on Upstream Transportation and Distribution, supplier provided carbon intensity is an acceptable metric for calculating GHG emissions and preferred over industry averages and model based figures.
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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, rather than connecting them.
Active Issues
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Resources
Oil & Gas Methane Partnership 2.0
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