Blockchain applications in tracking carbon emissions and carbon trading (Part 33)
Welcome to the 33rd part of the 100-part series on Blockchain.
Carbon emissions lead to a change in the environment, which results in serious health consequences for us. According to the U.S. Environmental Protection Agency, carbon emissions, in the form of carbon dioxide, make up more than 80 percent of the emitted greenhouse gases. These carbon emissions raise global temperature by trapping solar energy in the atmosphere. This, in turn, alters weather patterns and water supplies; further, it changes the growing season for food crops and threatens coastal communities as chances of floods increase with the rising sea level. Rising sea levels can also cause saltwater to infiltrate some freshwater systems, thus increasing the need for desalination and more vigorous drinking water treatment. To summarize, it is essential to fight against global warming and reduce these carbon emissions for a better and healthier tomorrow.
Sustainability initiatives are gaining momentum as organizations are becoming increasingly interested in monitoring their business practices, and many companies have even started recognizing that sustainability is beneficial for all. Sustainability initiatives are not only good for the planet but are also a great way to boost the brand image as these initiatives are getting noticed and appreciated by both consumers and investors. Research shows that supply chains are often responsible for a large share of a company’s overall greenhouse gas emissions, with transport or shipping being the major culprit. In fact, the greenhouse gas emissions through the supply chain are four times higher than the company’s direct operations.
Challenges faced while calculating carbon emissions
Let’s understand how carbon emissions are calculated in the current scenario by these businesses and organizations:
1. Organizations first need to identify all the carbon emission sources like transportation, electricity consumption, HVAC emissions, and other business operations.
2. Then, they are required to calculate the emissions from these sources. This is calculated by first noting down the energy consumption by every individual process of the company. Then this reading is multiplied by the standard conversion factor to calculate the carbon footprints. For example, the electricity grid provides the emission factor by taking the standard amount of CO2 that would be released when you use one unit of the energy. This value would be different for different grids.
3. Similarly, every fuel has its own emission factor, and you can use this value to calculate the carbon emissions from different modes of transport, business operations, etc. For example, there are fixed conversion factors for calculating emissions from 1 liter of petrol or using 1 liter of diesel as a fuel.
4. After calculating the emissions from all the sources, they are all added up to find out the total emissions.
But the problems that companies face in calculating the carbon emissions through these methods may be:
· Since calculating carbon footprints is a manual process and requires human intervention, the chances of errors increase.
· Besides, this is a time-consuming process.
· Moreover, it is an approximate method as the real-time carbon emissions are not calculated but are calculated based on fuel, electricity, etc., consumed using the standard conversion factor for each different fuel or electricity used.
Blockchain & IoT- The solution
Blockchain and IoT sensors can solve this problem of calculating carbon emissions accurately.
Carbon emissions collection
There will be two types of IoT sensors to calculate carbon emissions:
(a) First, IoT smart meter that can measure power consumption by the companies. It will ease the pain of the company’s manpower to take readings manually, which can be prone to manual errors.
What is The Internet of Things or IoT, and how can Blockchain benefit IoT? (Part 21)
Welcome to the 21st part of the 100 part series on Blockchain.
(b) The second IoT sensor can directly exchange information with the environment and capture carbon emissions either by the company’s operations or during transportation.
Data on blockchain
The data collected from IoT sensors will be stored on the Blockchain. As soon as the platform receives the data, smart contracts will get executed and calculate the carbon footprints based on factors including the type of electricity generator and energy sources (diesel or coal), meters efficiency, conversion factor, company’s total fuel consumption, etc. Thus smart contracts will help create a reliable and authenticated carbon footprint report for a company.
The company’s carbon footprint report will be stored on the Blockchain in a tamper-proof manner. Further, Blockchain can enable the companies to prepare their Carbon footprint report with more accuracy and that too in a reduced time frame.
In fact, the carbon trading approach has been initiated through Blockchain with an intention to control pollution levels by providing incentives to the companies achieving emission reductions.
In this case, a carbon credit will be given to all organizations that grants a business to emit a certain amount of carbon emissions. All of these carbon credits would be maintained on a Blockchain. These carbon credits on the Blockchain can even be traded between 2 companies. In such a system, any transaction of carbon credits between the companies will be recorded on the digital ledger in a transparent and immutable manner. Further, when carbon credits will be transferred from one company’s account to another automatic payment will be done to that company in return for these carbon credits using smart contracts.
Say, for example, there are two companies A and B which have their own carbon permits. Suppose company A is under its carbon cap and company B is over its carbon cap. In that case, company A can sell its surplus carbon credits to company B who seeks additional carbon credits for the carbon emissions. This can be a way to incentivize companies with low carbon emissions and it can become a second revenue stream for these companies.
The second advantage of carbon trading is that it will encourage organizations to adopt carbon-friendly energy practices that can reduce their carbon footprint.
Tracking real-time carbon emissions from vehicles
IoT sensors can also be attached to vehicles that can track the real-time carbon emissions from these vehicles. This information can then be stored on the Blockchain to ensure a better and safe environment. If carbon emissions exceed the stipulated limit, the smart contracts will get executed, and an alert will be sent to the respective person or department.
The respective pollution control regulatory body regulates carbon emission norms in every country. Vehicles are checked for their emissions, and if emissions are within the specified limit, a certificate is issued for the vehicle, which generally comes with an expiry date. However, this system has its own loopholes — the system only checks for the emissions on the date of the test.
Also, the emissions from the vehicle might change based on the age and condition of the vehicle. Other factors like adulteration of fuel, etc., might temporarily increase pollution to an unacceptable level.
Therefore if IoT carbon sensors are attached to vehicles and the information about carbon emissions is stored on the shared ledger, it will help regulatory bodies to keep a better track of carbon emissions by vehicles. The regulatory body can even issue warnings to vehicle owners whose carbon emissions exceed the stipulated limits. In this way, a strict pollution check regime can be implemented, and a concrete step can be taken towards a healthier environment.
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