Oil IT Journal continues its dutiful if reluctant reporting on what seem like increasingly improbable ‘applications’ for blockchain in energy. For the blockchain skeptics that we are the announcement that the venerable American Petroleum Institute (API) has joined the Blockchain for Energy consortium came as a shock. Even more so when we learn from the release that the API plans to leverage its BfE membership to ‘focus on environmental, social and governance issues, as the consortium continues to build and expand its industry grade solutions’. The API/BfE association is spearheaded by BfE chairperson, Chevron’s Raquel Clement. For API, Aaron Padilla stated that ‘blockchain can be used for transparent and efficient tracking of GHG emissions’.
Blockchain for Energy got an endorsement from the Society of Petroleum Engineers which has obligingly hosted a podcast by BfE president Rebecca Hofmann where you can learn how ‘blockchain is fundamental for low carbon energy, including geothermal’ and how the technology ‘improves the supply chain, carbon credits, regulatory reporting, and compliance’.
We provided both the API and BfE with our Financial Times letter for comment. BfE spokesperson Martin Juniper replied thus…
“Your article makes some interesting points. I would counter that it’s not what one uses but how one uses it that has the most impact. Blockchain for Energy is focused on using Blockchain as part of a mix of secure decentralized technologies rather than the solution to every problem. Our team is very careful to engage across the industry and only apply those technologies that are suitable. I do think that healthy discourse is a big part of what we do at B4E and we welcome these types of challenges as a way to prove our worth.”
David Hone who is chief climate change advisor for Shell blogged recently on ‘Blockchain, carbon emissions and NFTs’ stating that ‘blockchain is becoming a tool to support the energy transition’, in particular, the non fungible token (NFT) that ‘can be associated with a digital or physical asset’ and sold or traded. Hone suggests that in the a voluntary carbon market, the NFT represents a carbon removal or carbon reduction such as carbon storage in a tree, or in a geological formation. NFTs would then provide a public certificate of authenticity or proof of ownership and a license to use the asset for a specified purpose. That use could be as an offset against emissions generated by the holder of the NFT. Having said that, Hone adds that blockchain and NFTs could do the job of tracking carbon units and ensuring integrity, but that ‘current systems also do this and have been doing it satisfactorily for some time’. It feels like the new kids on the block are a solution looking for a problem, but at least as far as unit tracking goes, there isn’t a particular problem. He does hold out some hope that blockchain and might solve the complex problem at the heart of the climate issue, the carbon budget. This might involve a global decentralized autonomous organization granting NFTs to worthy stakeholders.
We shared our FT letter with David Hone who kindly provided the following in response to our blockchain challenge.
“As I said in the article, blockchain is not my area of expertise. However, I did make a similar to point to yours in that simply using this technology to replace carbon unit accounting systems that already work seems like a rather pointless activity. So, without a deep knowledge of blockchain, I ventured the idea that the technology might be better suited to the much more difficult task of managing the global carbon budget, for which there is no current solution. I take your point that blockchain may have flaws within it, making it completely unsuitable for a number of different uses, but I am not in a position to comment on that.”
A new report Managing Climate Change in the Energy Industry With Blockchains and Oracles claims to ‘reveal the role blockchains can play in managing climate change’. Chainlink Labs, aided and abetted by Tecnalia show how smart contracts address ‘key interoperability and economic complexities in the transition to renewable energy’. The report recommends tokenizing carbon credits and consumer rewards that can then be used as collateral in decentralized finance applications. One (non-energy) poster child cited in the report is the ‘Lemonade Crypto Climate Coalition’ which provides crop insurance to smallholder farmers, ‘triggering automatic payouts when rainfall or temperature data from sources like AccuWeather meets a certain threshold’.
Great American Mining, a
‘bitcoin mining company that provides a solution for oil and gas
companies to reduce flaring and increase oil production’ and Cathedra Bitcoin
have parted their ways. The idea was to using otherwise flared gas as a
power source for a bitcoin mining operation. Due to ‘severe winter
weather conditions’ in North Dakota (isn’t that where Fargo is?), the
operation saw its performance down to only 45% of the anticipated
expected hash rate. The companies are now working to conclude the
business relationship. Notwithstanding the difficulties, GAM reports
that it has scaled the past year from approximately 1 megawatt to over
20 megawatts of deployed hash rate on the oil fields of North Dakota.
More from GAM.
eMission Software is partnering with the HBAR Foundation to incorporate the latter’s Hedera Hashgraph technology and open source Guardian ESG marketplace software into emissions reporting that is ‘auditable to the metric tonne’.The partnership will align the Guardian to current Canadian reporting requirements including the GHG Reporting Program and the National Pollutant Release Inventory.
Our challenge to eMission Software brought the following response from CEO Richard Hepp
“I don’t think a ‘rebuttal’ is required. We view blockchain and hashgraph technology as a tool that can be utilized to achieve a specific goal with specific benefits and detriments, like any new piece of technology. Our unique usage of this tool sits nicely in our business plan, and allows us to offer a solution to less-carbon intensive industrialized nations/industries, mitigate traditional financial issues like inflation of foreign currency, and resource constrained organizations that would like to improve their emission calculations and reporting simultaneously providing benefits to global emission accounting, (transitivity of data over M&A transactions in the energy space over specific pieces of infrastructure, for one example). As for your examples, they are too narrow in scope and ambiguous for me to understand your question or point.”
Ogallala Life, with help from AcreNFT,
has raised some $200,000 by selling Non-Fungible Tokens to ‘save the
Ogallala aquifer*’. The Ogallala aquifer has lost 10 trillion gallons
of water over the past 40 years putting US grain production in peril.
Ogallala Life proposes a ‘marriage of geology, art and tech’ to save
the aquifer. The plan is to build check dams along stream channels to
capture and prevent mass evaporation of rainwater and install direct
borehole groundwater recharge zones to replenish the aquifer. All of
which will be funded by a perpetual endowment backed by the Angel
Protocol and decentralized finance on the Terra blockchain. Finance is
raised by selling artwork NFTs on the AcreNFT. More from Ogallala Life.
* As featured in Annie Proulx’s book That Old Ace in the Hole.
But not all blockchain news merits our skepticism. We learn that the grandiosely titled Texas Blockchain Council acted in a public spirited manner when ERCOT, the Texas grid operator asked folks to ‘turn off’ and conserve power during a recent heatwave. The TBC neatly spun this into a big plus for the bitcoin mining industry which can ‘turn off in a trice’, making it a ‘perfect resource for the grid regarding frequency balancing and demand response.’
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