1) Project Name: Reducing Methane Leakage and Flaring through Supply Chain Tokens
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3) List the Hyperledger Project(s)(e.g., Hyperledger Projects that will be leveraged to develop your solution) We are building a carbon tracking network to tie together supply chain emission data. This will include a set of smart contracts as part of the open source blockchain carbon accounting tools built by the CA2SIG: a Utility Emissions Channel Project for auditing emission from electricity purchases, Net Emissions Token (NET) Project to tokenize emissions and offset credits, and a Climate DAO Project, the elements of an operating system for climate action. These projects are built on top of Hyperledger Fabric, Besu, and Bevel.
4) Project Members
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Using the derived methane tokens, an oil & gas facility (well) starts constructing an emission profile for its fuel production. The profile is digitally encoded as a non-fungible token (NFT) smart contract that track tracks embedded methane emissions across fuel supply chain stakeholders. A carbon tracker NFT (C-NFT) has been implemented using the ERC-721 standard as part of the Hyperledger Labs Net Emission Token (NET) network to issue, transfer, and retire carbon tokens by different accounts.
- Voluntary Carbon Track Tokens (VCT) are issue by industry members to note the amount of emissions
- realized from flared/vented methane
- contained in oil, natural gas, and derived fuels sold to other facilities
- Audited Emission Certificates (AEC) can be issued by independent sources to verify the realized emissions of a facility.
- AEC are also assigned to energy consumers to communicate embedded methane emissions downstream. Fuel consumed from high/low methane producers will carrier higher/lower embedded emissions.
- Credits, in the form of methane performance certificates, are used to transfer the lower embedded methane emissions from one party to another, helping the receiver meet an emission reduction goal, while providing the supplier an incentive to reduce its methane emissions at the well.
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Each step in the value chain (reporting "silos") consist consists of inputs and outputs , and are transacted using the NET network , in Carbon Dioxide equivalent (CO2e) of Greenhouse Gas emissions. Based on the Value chain (scope 3) reporting standards:
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In practice, we envision a supplier sends emissions tokens (e.g. VCT) to its customer from its facility's emission profile (C-NFT) with oracle-validated methane flaring. This allows organizations to bridge the internal boundaries of traditional data silos , and construct a complete view of the energy value chain. An NFT is attached to each quantity of fuel it sells so that the consumer could correctly calculate the total emissions.
The consumer (e.g., Fuel user such as a freight carrier or airline) can identify the embedded waste methane emissions through public view functions of the NFT, such as carbon intensity intensity (CI) 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
A CI certificate is simply a transferrable claim of origin backed up by data. The NFT(s) provide a methane performance certificates for the output fuel tokens, helping producers with lower carbon intensity to obtain greater value for their products. 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. Emission profile certificates tied to carbon tokens 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. This would require simultaneously transferring, with the aid of a smart contract, fuel tokens between the certificate sender and receiver.
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.
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- company voluntary reports/ ERP sensors (gas flaring)
- independent tracking service focusing on such as Flaring Monitor
Other Value chain scope 3 tools/services
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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). He is the author of the open source book, Open Climate Investing, and a co-editor of an upcoming book "Sustainable Carbon Economy with Blockchain: The Role of Oil and Gas Industry in The Energy Transition".
Woody Moore is currently acting Co-chair of the Climate Action and Accounting Special Interest Group (CA2SIG). He holds a Masters in Business Administration with 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 he supports ICANN's (Internet Corporation for Assigned Names and Numbers) multistakeholder decision-making model to help the global community reach consensus around the protocols, standards and policies needed to support the security, stability and resiliency of 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?)
Project Plan
We set the following goals for the a prototype methane reduction C-NFT
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- Collect and prepare emission data (16 weeks)
- Select a set of typically of oil/gas well and gather relevant data, sourced from company reports, independent sources, (Flaring Monitor), sensors, or simulated. 1 Month)
- Create/select a representative model/data set for intermediate processing of oil and gas in a refinery and a power plant to produce a consumer fuel.
- Setup up data sources to be storage within a fabric emission channel or IPFS database (Figure 3)
- Build the blockchain oracle (16 weeks)
- Select an oracle service
- Integrate the distributed database (fabric/ipfs) with the oracle
- Register "real-world" methane emission data as digital token in the layer 2 NFT contracts.
- Construct emission profiles (16 weeks)
- Design UI/UX for for constructing and linking emission inventories
- Using the NET network compile emission inventories (accounting boundaries) for each facility using the GHG Protocol corporate reporting standard
- Using C-NFT Bridge accounting boundaries following the Value chain (scope 3) reporting standards:
- Simulate trading of methane performance tokens / CI certificate using C-NFT (4 weeks)
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