The decentralized approach of blockchain allows for tracking and reporting of reductions in greenhouse gas emissions along the entire supply chain, including manufactures, suppliers, distributors and consumers.
The decentralized approach of blockchain allows for tracking and reporting of reductions in greenhouse gas emissions along the entire supply chain, including manufactures, suppliers, distributors and consumers.
On March 15, 2022, the Council reached agreement on the Carbon Border Adjustment Mechanism (CBAM) regulation, which is one of the key elements of the European Union’s ‘Fit for 55’ package.
The main objective of this environmental measure is to avoid carbon leakage. It will also encourage partner countries to establish carbon pricing policies to fight climate change.
The products of the following sectors will be covered by CBAM: cement, aluminium, fertilisers, electric energy production, iron and steel.
The European Commission states: “Blockchain can be utilized through smart contracts to better calculate, track and report on the reduction of the carbon footprint across the entire value chain. It can provide instant authentication, verification of real-time data and clear data records.”
“Blockchain technologies can transform individual efforts of companies into a networked effort. And, it can clearly pinpoint the contributions individual actors make to reduce their carbon footprint. The spirit of competition and market-based incentives create a win-win situation for all.”
Brands and their upstream counterparts must abide by ‘green’ protocols and report emissions data as part of their ongoing operations. Unfortunately, not all data can be proven legitimate or be independently verified and so there is a pervasive issue of distrust in carbon emissions data as well as a lack of transparency.
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Source: IBM
Unique features of blockchain: Decentralized, Transparent, Immutability.
Some steps the EU is taking to harness blockchain for climate action include:
- promoting the development and adoption of blockchain technologies best suited to reduce their carbon footprint and consider the societal impact of their actions;
- developing technical assistance and investment programs that support blockchain-based digital innovations that contribute to climate change mitigation and adaptation;
- accelerating blockchain-based solutions that establish a network between suppliers and consumers to include all societal stakeholders;
- supporting sustainable finance initiatives and promoting the use of blockchain-enabled technologies for financing climate actions through green bonds;
- supporting EU countries and national government agencies to collaborate in the development and adaptation of blockchain-based solutions that support climate actions and the reduction of greenhouse gas emissions.
Sustainable Development Is The Only Future: Carbon Footprint
The data provided by the United Nations is alarming, to the extent that even if all countries were to meet the targets established in the Paris Agreement, we would still be a third away from meeting the reduction needed to keep the planet at a sustainable margin.
In order to tackle this situation, it is essential to calculate and record each company’s carbon footprint, on top of taking the necessary steps to offset it. Blockchain technology is very useful in this situation, and we are going to tell you why.
Blockchain’s CO2 Emissions calculator
Blockchain is a powerful tool for organizations to improve the transparency, accountability, and traceability of their gas emissions. With it, they can provide more accurate, reliable, standardized, and more accessible data. Applications of blockchain technology are almost limitless. One of the most relevant areas of application is within carbon emission data management; an area rife with opacity.
The Internet of Things (IoT) is the concept of connecting any device (so long as it has an on/off switch) to the Internet and to other connected devices. The IoT is a giant network of connected things and people. Source: IBM
One of the biggest contributions of Blockchain technology is the ability to measure the carbon footprint through smart sensors compatible with IoT. The combination of the two makes it possible to calculate energy consumption and generate data that can be analyzed, debugged, and aggregated in the Blockchain.
This chain transforms carbon emissions into tokens or “carbon credits”, which companies and public organizations will be able to exchange to offset their footprint. The information collected thanks to Blockchain technology will be traceable and transparent, representing a unique opportunity to neutralize carbon emissions.
Thanks to the use of this technology when creating the corporate social strategy of a company or institution can help boost and strengthen the commitment to:
- Transparency: Every emission offset transaction is visible to anyone who wants to access the information,
- Improved trading of carbon emissions: It facilitates the control and compliance with carbon quotas,
- Improved climate finance flows: It facilitates the development of platforms for renewable energy exchanges,
- Improved tracking of reports: This is a key point that would help in drafting policies that encourage greenhouse gas emission reductions.
Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss. They can also automate a workflow, triggering the next action when conditions are met. (Source: IBM)
The way of using it to fight climate change is through Smart Contracts that calculate, track and report carbon footprint reduction. One of the key points of this technology is that it provides instant, real-time authentication, and verification with seamless records.
The most important thing to keep in mind about introducing this technology into business models is that individual, isolated efforts can now become a network where everyone’s contributions to this climate fight can be identified. It’s a win-win for everyone.
USE CASE – Carbon Accounting by the Chinese blockchain VeChain
China is arguably facing the greatest challenge of all, having vowed to reach net-zero emissions by 2060, with carbon emissions peaking no later than 2030. VeChain, with its array of mature blockchain technologies, intends to help catalyze the digitalization of carbon data and help facilitate China’s emissions reductions ambitions.
VeChain built VeCarbon, a blockchain-based carbon emission data management SaaS platform. It combines carbon consulting and carbon reduction methodology services, allowing enterprises to quickly flesh out and act on carbon reduction strategies. VeCarbon enhances the carbon management capabilities of businesses and allows for precise, targeted reduction efforts, helping enterprises achieve their low carbon aims. It creates a number of new possible application scenarios for governments and enterprises such as carbon footprint calculation, visualisations of a product’s carbon footprint and new financial services in carbon markets.
The VeCarbon SaaS platform has recently begun operating across multiple industries including chemical, building materials, food and beverage. The United Nations‘ Global Corporate Net Zero Pathway highlighted the many urgent challenges facing global food production. Produce goes through multiple production stages before it reaches the table, including R&D, harvesting, storage, processing, distribution and ultimately, retail — all of which generate greenhouse gases.
Viewing the supply chain and its participants holistically will deliver many climate-related and social benefits such as reducing packaging and more effectively tackling food waste.
Food Supply Chain Carbon management — The VeCarbon platform features a carbon management system that helps enterprises in the food sector manage their carbon emissions as well as those of their suppliers. Stakeholders are able to easily implement carbon reduction measures at key emission points, facilitating the optimization of production processes and driving low carbon food manufacture, reduced waste and lowered energy consumption.
The platform calculates emission reductions using a carbon reduction methodology that form a carbon neutrality index for the sector, providing benchmarks that act to guide national food production down a green path.
A supply chain carbon emission management system for a Chinese brewing company. Through VeCarbon’s carbon inventory management system, the carbon emissions of the brewer’s suppliers and their production facilities were accounted for, helping detail the carbon intensity of their supply chain. The brewing company was able to accurately manage the carbon emissions of their factories and have oversight of upstream and downstream supply chains.
Carbon asset management services — By integrating with VeCarbon’s emission reduction system, the user gains a carbon asset module able to digitise and manage the carbon assets of enterprises. The platform helps construct and implement carbon emissions reduction methodologies by providing a quantitative calculation service and auditing/documentation of key data related to digital carbon assets. With this, VeCarbon enables participation in carbon market trading, opening access to further secondary markets.
Green eco-marketing; Carbon footprint labels that empower consumers — As more enterprises join the ecosystem and more precise and refined carbon data is gained, VeCarbon can provide ever more granular insights, providing highly precise carbon labels from products themselves. The label would include the carbon data of raw materials, procurement, packaging and logistics and so on, empowering consumers to choose products based on carbon emissions data.
The Low Carbon Ecosystem helps enterprises quantify users’ green and low-carbon emission reduction behaviors, issuing carbon credits with data verified through the blockchain. In turn, users can exchange these credits for benefits such as insurance, healthcare and other benefits, creating a positive cycle and motivating societal action through reward.
Three other Carbon Footprint calculation tools
Throughout France, 218 operators are approved to perform these assessments. Among the multiple French actors authorized (Greenflex, ClimatPartner, Sami, Karbon, Planet Score…), two were chosen. Note that Greenflex is a subsidiary of TotalEnergies.
Carbon footprint and carbon balance are two closely related concepts, but they do not refer to the same thing. The carbon footprint is the trace of greenhouse gases (GHG) that we leave behind our production and consumption. On the other hand, the carbon footprint is the analysis of GHG emitted by the different activities.The carbon balance is a tool for measuring a carbon footprint at a given time.
The carbon balance is a tool for measuring a carbon footprint at a given time.
USE CASE – Greenly
Greenly performs carbon balances. This is a method of accounting which, in the case of agriculture, answers the following formula: greenhouse gases emitted minus the carbon storage achieved on the farm. A priori, the carbon footprint of organic agriculture should be lower than that of traditional agriculture… In addition, the carbon footprint of farms varies greatly depending on the country.
In addition to defining the profile of their customer, the method used by Greenly includes the automatic calculation of CO2 emissions from the banking expenses made. Their calculator is based on each expense to categorize them and indicate the environmental impact. Each purchase is then taged to calculate an average weighted value. Greenly offers an eco-friendly alternative for each purchase. The company highlights its reasonable cost, 5 times cheaper than its peers.
Conclusion
Most of the carbon footprint or carbon footprint calculators use almost all the same methodologies: those validated by the European Union and/or by their national official body.
Technically, these calculators all respect the process — I remain doubtful about those that use weighted averages. Nevertheless, most of the calculators seem to forget two essential points: zooming in on the ecosystem of the audited companies and proposing the full transparency that should go with it.
Blockchain allows this, while integrating with the company to manage and solve other issues… in a word, becoming an asset of the company.
Consumers will soon want to know easily if a company is really working on these issues or if it is just planting 2–3 bushes from time to time. A sticker saying “this company is carbon footprint sensitive” will soon not be enough. #StopGreenwashing.
