Why Open Source Carbon Accounting?

Last week I gave a talk for the Blockchain Supply Chain Association, which covered:

  • Why is carbon accounting hot now?
  • Why do we need blockchain/web3 for carbon accounting?
  • A demo of the hyperledger-labs/blockchain-carbon-accounting open source project
  • How to build a commercial carbon accounting system and related businesses from our open source code
  • What’s ahead for carbon accounting

A recording of the presentation is here:

The audience also asked some good questions:

How is Carbon Accounting Related to Carbon Offsets?

They’re not. The carbon accounting we presented is Greenhouse Gas (GHG) emissions accounting, which could be used to calculate the emissions of an activity, such as a flight, shipment, or utility bill, or total emissions of a company with all its operations. Carbon offsets are based on the emissions reductions or removals for a particular project.

Do Carbon Tokens on the Blockchain Affect Your Work?

The blockchain tokens from carbon offsets are not related to carbon accounting. In the future, we could envision tokens for supply chain emissions reductions, as discussed in a previous post and this white paper.

Is this the Same Thing as Blockchain Supply Chain Tracing?

No, blockchain supply chain tracing is for tracking the movement of goods through a supply chain. We’re tracking the emissions across a supply chain, from suppliers to shipping to customers.

An important difference is that if the emissions footprint could be calculated and tokenized, then emissions reductions could be detached from the physical product and sold to someone else who would pay more for it.  This is really important for fuels and energy, which would require huge infrastructure of pipelines or grids to transport, so being able to trade emissions reductions virtually is key to funding them. See this post for more details.

What Standards are You Following for Carbon Accounting?

The open source blockchain-carbon-accounting application follows the Greenhouse Gas (GHG) Protocol and could be used to calculate emissions for an activity, a product, or a company.

Who Enforces the Standards for Carbon Accounting?

If company level emissions accounting is used for climate disclosures, then those disclosures are overseen by the same financial market regulators, such as the SEC in the US, as financial disclosures. A company’s Board of Directors and auditors could be held liable for the disclosures made to investors.

Who Should the Auditors Be?

For simple audits of a flight, shipment, or electricity use, someone just needs to compare the supporting documentation (boarding pass, tracking number, or utility bill) with the user’s information.

For company climate disclosures, an auditor familiar with corporate emissions auditing would be required.

 In either case, we designed it so that auditors would have assigned roles on the network, and the system would randomly assign audits to auditors.

What Data Sets Should We Use?

The open source application has the UK Government’s Greenhouse Gas Reporting Conversion Factors, and US EPA’s eGRID electricity emissions factors, and EU EEA emission intensity of electricity generation databases built in. These provide factors for calculating emissions from electricity generated in the US, UK, and EU and a wide range of activities from burning of fuels to shipment of goods to hotel stays and air travel. If more detailed emissions calculations are needed, commercial emissions factors data sets such as EcoInvent or time of use electricity grid emissions factors should be used.

How Far Along is this Project?

It is in early stages of roll out. You can try it at https://emissions-test.opentaps.org/dashboard

What Blockchain Network is it Compatible with?

Our code runs on any Ethereum compatible public blockchain.  The key is to find a low energy/emissions one.  What you saw is written in Solidity and working on the Binance Smart Chain testnet. We chose the Binance Smart Chain because it seems to have one of the lowest energy and emissions footprints.