Innovation Tagline: Non-fungible tokens (NFTs) as digital ink for tracking waste emissions.
Project Keywords: #NFT #TokenEconomy #ValueChain #CarbonEmissions #Flaring #Scope3
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 value 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 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).
Value chain reporting may use the Life Cycle Assessment (LCA) practice, which can be difficult for organizations to implement on their:
- 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 on model estimates that may be subjective and hard to validate
LCA applied to fuel carbon intensity standards have no been very effective in mitigating emissions (Plevin et al 2017).
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 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.
The carbon tracker NFT (C-NFT) has been implemented using the ERC-721 standard, as part of the Net Emission Token (NET) network to issue, transfer, and retire carbon tokens 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 Renewable Energy Credit (REC) dealers
A C-NFT provides a digital emission profile for accounts owned by facilities, e.g., oil and gas field, power plant, refinery (Figure 2).
Figure 2 C-NFT illustration
Each profile (reporting "silo") consists of inputs and outputs as NET transaction values - Carbon Dioxide 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
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). This allows organizations to connect the internal boundaries of traditional silos.
The consumer (e.g., Fuel user) can identify waste emissions through 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)
The next step will involve building tools to pull in different data sources to support independent auditing and verification (MRV cycle):
- company voluntary reports/ ERP sensors (gas flaring)
- independent tracking service focusing on Flaring Monitor
Figure 3 Architecture for verifying waste emission.
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.
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 currently acting Co-chair of the Climate Action and Accounting Special Interest Group (CA2SIG). He holds a Masters in Business Administration and has over 10 years of experience planning and executing Go-to-Market strategies for early stage tech start-ups. He also has expertise in the field of internet governance, where in his current role at the Internet Corporation for Assigned Names and Numbers (ICANN), he helps support a multistakeholder decision making model designed to allow the global community reach consensus around the protocols, standards and policies needed to support the internet's Domain Name System.
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?)