Major oil and gas players have been announcing emissions cutting programs, yet there is little to no information about how these companies intend to achieve these stated goals.
To reduce the carbon footprint of the oil and gas supply chain, companies must be able to accurately and repeatedly collect and track reliable and trusted data. As efforts and incentives escalate momentum from fossil fuels to clean, green and renewable energy sources, legacy companies must showcase their abilities to make headway on emission targets.
Blockchain offers not only the ability to retain a record of immutable truth across real-world actions by multiple players, but it can also enable companies to pioneer new ways to improve ecological compliance benefits across the industry’s supply chain. As Houston, a city deeply entrenched in traditional oil and gas culture, makes strides to adapt to its emerging moniker — “the energy transition capital of the world” — the move to track and reduce industry’s carbon footprint is already underway.
Smart contracts’ proven application
Through the implementation of distributed ledgers powered by smart contracts, the same data employed to garner visibility, transparency and accuracy in automated payments can be applied to other uses like automating reporting of fuel quality and CO2 emissions and to claim credits for improvements. Similarly, data used to pay for trucking costs and demurrage demonstrates a reduction in vehicles on the road, lowering emissions and reducing accidents. In multiple contracts — from sub-supplier to supplier, contractor to end-use customers, founder to mill, manufacturer to field use or maintenance contractors — blockchain can track the carbon footprint of the entire supply chain as supplier contracts are executed.
Blockchain and smart contracts lend an immutable system of trust that can be applied to tracking data and sharing records with authorized agencies, providing the first of its kind ability to improve the carbon footprint of the supply chain as a whole. How it works is that blockchain technology records source and transactional data like operational field data, Internet of Things (IoT) information, performance records, etc., as it occurs in real-time in an immutable, distributed ledger that can be shared with permissions with relevant parties up and down a supply chain.
As mentioned above, the ability for blockchain to reduce the supply chain’s carbon footprint lies in its core values to businesses—cost efficiencies, risk reductions and supplying trust to the consensus-based processes that support commodity-driven relationships.
A chain reaction for change
With public emission targets declared, oil and gas companies have a row to hoe ahead.
Carbon credits, a long-standing system that permits carbon allowance within a specified time frame to an entity, also referred to as carbon offsets, exists in both voluntary and compliance markets. Yet often emissions tracking and offsetting is not executed with transparency or reliability.
Furthermore, flaring is one of the most carbon-intensive portions of oil and gas production, and is also beset by lack of tracking and visibility. These sample facets of industry could deploy blockchain to serve as a method for proving veracity of events for both companies and governmental sources and regulatory agencies, as well as provide an immutable record for tracking.
As international oil companies tackle carbon neutral progress, innovative technology like blockchain provide a foundation for unlocking change for companies and the greater good.