Blockchain vs Climate Change: Industry
Exploring applications of blockchain technology to reduce greenhouse gas emissions across industry.
The US EPA calculated that global industry was responsible for 22% of GHG emissions in 2017. Despite total industrial GHG emissions trending gradually downwards there are still huge gains to be had, particularly through the reduction in waste and the GHG emissions generated through production, transportation and disposal of goods. This can be achieved by greater visibility of product lifecycles enabling better prediction of future supply and demand. Highly polluting industries such as chemical manufacturing must evolve over time to reduce their impact on climate change. The following three ideas explore applications of bockchain across a range of industry applications to enable a reduction in GHG emissions.
Use case 1: HFC lifecycle management
Time horizon: Short term
Hydrofluorocarbons (HFCs) contained in refrigeration and air conditioning units are highly potent GHGs that are between 1000 and 3000 times more effective than CO2 in trapping heat in the atmosphere. If current emissions are left unchecked, HFCs could offset all climate mitigation pledges made by nations by 2050. Current emissions arise predominantly from decommissioned appliances that have not been disposed of properly.
DLT technology could be applied to tokenise appliances that utilise HFCs, thereby allowing all actors in a unit’s lifecycle to understand the history of the appliance and ensure it is decommissioned by a registered actor who will minimise or negate any risk of HFC emission. By tracking the token and the associated good to the end of its lifecycle, regulators could ensure safe decommissioning and hold anyone accountable who may disrupt the process through constant ownership transparency.
Use case 2: Cement credit trading
Time horizon: Short term
The cement industry emits more GHGs than every country except the the two biggest polluters; the USA and China. It is also the most widely used man-made material in the world. If global GHG emissions are going to be reduced to relieve the impact of climate change, the cement industry has to be a top target. Right now there isn’t an incentive scheme in place to encourage building companies to look to other, more carbon-neutral construction materials. A system underpinned by DLT, similar to one that may be used for carbon credit trading, could be used to enable a liquid, transparent cement carbon credit market. A credit system would incentivise the use of less-polluting alternative materials, ultimately leading to a reduction in the usage and therefore production of cement and its resultant GHG emissions.
Use case 3: Supply chain optimisation
Time horizon: Long term
Supply chains are the host of languishing inefficiencies, largely due to the number of players involved, each with different and often competing goals. Many of these inefficiencies arise from a lack of transparency of goods as they move between different parties in the chain; each participant tends to maintain their own understanding of a record of events as opposed to all operating from a shared source of truth. The application of blockchain technology to supply chain optimisation is well thought through and documented, and in my opinion is one of the most compelling use cases for the technology. This will briefly explore its potential impact on reducing the climate impact of inefficient supply chains, but could easily justify an entire article in itself (and may do so in the near future).
It is estimated that supply chains globally hold an excess of $8tn worth of goods. These are goods that more likely than not incurred a carbon cost during their production, which could be reduced by using blockchain to increase transparency and enable optimisation of inventory production and throughput.
Many of these goods are perishable items such as fresh food which require extensive climate control systems to elongate their lifespan. It is estimated that globally one-third of all food produced is wasted. By reducing this waste, huge amounts of GHG emissions can be prevented. One of the ways to do this is through tokenisation using blockchain to provide a holistic, real-time view of food as it moves through the chain. This would give actors visibility of their inventory to reduce the time food spends in climate controlled warehouses and shipping containers, resulting in lowering the overall utilisation of refrigeration units and reducing the GHG emissions of running them. A reduction in waste could lead to a further reduction in food production, resulting in even less need for extensive climate control systems in supply chains.
Transparency of goods through a supply chain using blockchain can provide consumers with information on the provenance of what they are purchasing. This information can help consumers make climate-conscious buying decisions, incentivising producers to reduce the carbon cost of manufacturing the items they are selling and leading to a knock on effect of GHG emission reduction.
Conclusion
Global industry is a major source of GHG emissions, however offers a range of opportunities for emission reduction through the use of blockchain. Tokenisation and tracking of appliances that utilise highly potent GHGs such as HFCs can be traced throughout their lifecycle to ensure correct decommissioning. The introduction of a liquid, transparent cement credit market can incentivise constructors to turn to more carbon-neutral building materials. Tokenisation and real-time visibility of inventory throughout supply chains can enable market level inventory throughput optimisation, reducing the carbon cost of excess production and storage; particularly in perishable goods that require extensive climate control systems to elongate their lifespan. An overall reduction in food wastage through better managed supply chains would drastically reduce the carbon emissions associated with perishable goods.
Navigation
Use the links below to navigate to the other sections of the series:
Part 1: Electricity generation and provision — 5 min read
Part 2: Transport — 5 min read
Part 3: Buildings and cities — 4 min read
