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Project Members
Problem
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 is a major source of value chain emissions (Figure 1) for fuel users (estimated at250 Mt to 1 Gt CO2e per year) and reducing these waste emissions is a first step to decarbonize the fuel supply chainsvalue chain.
Figure 1 Annual flaring and associated gas use, from EDF (2021)
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.
Value chain (scope 3) reporting standards help organization identify these type of indirect impacts. According to the Carbon Disclosure Project or CDP in a report by Patchell (2018) value chain reporting (e.g., Corporate Value Chain Standard) (CDP) value chain reporting has not been very successful in reducing emissions (Patchell 2018).
Value chain reporting involves may use the Life Cycle Assessment (LCA) methodology to assess indirect environmental impacts. LCA practice, which can be difficult for organizations to implement on their, and involves several challenges:
- Access the credible metrics restricted by data silos across emission measurement, reporting and verification (MRV) systems
- Rely on historic data based that may be several years old
- Employ of reliance on model estimates that may be subjective and hard to validate
- incentive structures that discourage data exchange and collaboration
The GHG Protocol provides a free tool to help measures cross-sector value-chain impacts, however it does not directly address data silos and collaboration.
CarbonChain provides an emission accounting platform for commodity supply chains. It focuses on providing centralized services rather than working on removing data silos, and providing new incentive structures to encourage collaboration.
The Environmental Defense Fund (EDF 2021) points out that investors need to pressure energy companies to improve flaring transparency, requiring collaboration across stakeholders to establish clear metricsLCA applied to fuel carbon intensity standards have no been very effective in mitigating emissions (Plevin et al 2017).
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Waste emission tracking tools
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 will require integrating with production data, e.g., World Bank . This is a key part of our solution to bridge reporting silos. (this effort could align with the World Bank's Imported Flared Gas Index).
Solution
We propose a non-fungible token (NFT) model contract to track waste emissions and break down organizational reporting silos.
The The carbon tracker NFT (C-NFT) contract has been introduced to has been implemented using the ERC-721 standard, as part of the Net Emission Token (NET) network to issue, transfer, and retire carbon tokens owned by different accounts:
- Voluntary Carbon Tracker Token (VCT) ,used by industry dealers
- Audited Emission Certificate (AEC) ,assigned to industry/consumers by auditors
- Emission Offset Credit (EOC) and R Renewable Energy Credit (REC) dealers
A C-NFT paints emission profiles provides a digital emission profile for accounts owned by a facilities, e.g., oil and gas field, combined heat and power (CHP) plant, and refinery (Figure 2).
Figure 2 C-NFT illustration
Each profile (reporting "silo") consists of inputs and outputs as NET transaction values - expressed as Carbon Dioxide Equivalent equivalent (CO2e) emissions.
- Inputs are retired NETs for direct (scope 1) or indirect (scope 2/3) emissions.
- Outputs are tokens transferred downstream.
- VCT are transferred as the CO2e of fuels sold to consumers (used in commercial trade).
- AEC are indirect emissions, e.g., from selling electricity/heat
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Emission profiles can explicitly reference a source C-NFT (arrows in Figure 2) to track embedded emissions.
In practice a supplier/emission dealer announces to its customer, I am sending emissions tokens (e.g. VCT) from this facility's emission profile (NFT).
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This
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allows organizations to connect the internal boundaries of traditional
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silos.
We are not aware of an existing system that enables stakeholders to explicitly share
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The consumer (e.g., Fuel user) can identify waste emissions through
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public view functions of the NFT, such as carbon intensity metrics:
- 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 example also subtracts offset credits purchased from a dealer (green box)
Linking the Fuel user's (Figure 2) consumption to a C-NFT can communicate all waste emissions, e.g., percentage and totals of flared gas.
Verification requires independent auditing during the MRV cycle. Flared gas inputs of the Oil & Gas producer's NFT(red boxes) can be verified by issuing AECs backed by an independent tracking service.
Figure 3 Architecture for verifying waste emission.
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The next steps involve building tools to pull in different measurement sources to support verification and independent auditing (MRV cycle):
- company voluntary reports/ ERP sensors of gas flaring
- independent tracking service
Figure 3 Architecture for verifying waste emission.
Figure 3 depicts and ongoing effort by the blockchain carbon accounting team to collect emission data points into a databased (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.
The GHG Protocol provides a free tool to help measures cross-sector value-chain impacts. It provides inputs typically used in LCA practices, which may only provide historic/aggregate data from several years ago. It is more focused on providing measures for individual organizations as opposed to connecting reporting activities.
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 Emissions Ledger Project for some time, with the Operating System for Climate Action providing much of the underlying code needed for this challenge.
Bertrand WILLIAMSRIOUX is an energy economist, engineer and programmer, putting together a startup to provide carbon accounting and management services for energy and energy intensive commodities
Si Chen is the founder of Open Source Strategies, Inc. and coordinates the Carbon Accounting and Certification WG of the hyplerledger Climate Action and Accounting (CA2 SIG.
Sherwood Moore is a CA2 SIG Co-chair on building the business case for tracking carbon emissions across supply chains
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?)