The impact of greenhouse gas emissions and carbon footprint throughout the world is forcing nations as well as organizations to redesign their manufacturing processes and decrease their carbon footprint. But, despite global agreements, there is a lack of a standardized and global system for measuring carbon emissions and trace where it is generated throughout the supply chain. Without the presence of such a system, sustainable plans will only have a limited impact.
New blockchain platforms address the increasing demand for organizations to report sustainability practices and meet social and corporate environmental targets. Such a solution allows transparent disclosure to investors and helps them track greenhouse gas emissions.
Integrating the existing systems of organizations and IoT sensors with outside information sources helps establish validated data-trial of emissions. Organizations are working with a variety of partners for getting the initiative off the ground. It also includes various companies working in the field of climate technology.
Current Scenario of Carbon Footprint and Greenhouse Gas Emissions
In 2020, organizations worldwide may report sustainability results and practices for meeting corporate social and environmental governance demands of capital market investors. At the same time, the requirements for carbon emissions continue to expand and evolve.
For achieving both compliance and Enterprise objectives, they require a transparent and trusted system for accounting, measuring and reporting on the information on emissions.
Blockchain sustainability is the primary topic, presently, with numerous navel-gazing and commitments taking place. Quite sometime before this month, various companies committed to turning out to become carbon net-zero by 2030. Also, they are all urging the crypto players to hold themselves responsible – analyzing their energy consumption for making more greener choices.
While the investors broaden their concentration beyond financial circumstances for including other practices, companies are enhancing their efforts to decrease carbon footprints along with transparent disclosure of progress.
Before delving deeper into the solution, understanding the challenges in implementing low-carbon supply change would be beneficial.
The high cost of measuring carbon emissions:
The cost of measuring the carbon footprint of a particular product can be as high as 30000 dollars. Moreover, this might also turn out to be a recurring cost. The expense arises from the effort spent in coordinating with numerous parties to glean detailed data which might be essential for payment to get access as well as not readily available.
The requirement for a single regulatory body:
The success of the system by which greenhouse gases or carbon is tracked depends upon the establishment of a single regulatory body that can measure, price, issue and standardize credits to companies and projects that need these to succeed. Moreover, the validation process for carbon granting and offsetting must additionally be standard. Presently, the problem lies within the lack of standards for credit grants and verification. Therefore, the need for or better verification, reporting and measurement for driving effective carbon credit trading is essential.
Effort spent on tracking carbon footprint:
Measuring the carbon level of a particular product is costly and complex. Besides requiring product provenance, it additionally needs tracing every ingredient or component of the product from the source of their respective supply chain and throughout their manufacturing processes to measure the associated emissions. Various technologies, personnel and methods are essential, and it’s pretty time-consuming.
Limited governmental involvement and regulation:
Limited transparency with and governments for measuring greenhouse gases and carbon credits is a key challenge. It leads to poor visibility and minimal investments, compromising widespread adoption by organizations.
The challenges mentioned above are universal throughout nations as well as products. For example, a company shelved a proposed project to label all installed products with their carbon footprints, considering the need for extensive effort as well as the lack of support from other supermarkets. But such challenges remain outside the scope of this article. Therefore, the lack of transparency within partners, inability for tracking carbon credits among peers and the absence of universal ledger are some of the main hurdles for worldwide adoption of the credit and carbon measurement system for tracking greenhouse gases and emissions.
The blockchain solution for carbon footprint
Blockchain is one of the most befitting and compelling tools to help organizations meet the demand for reliable, standardized, readily available and accurate information for carbon emission and greenhouse gas calculation. The architecture and design of blockchain technology promote immutable data records, smart contracts and instant authentication. Such features make it a proper solution to integrate logistics, manufacturers, service providers, stocking locations and suppliers into a single network for rule-based communications and value generation.
The blockchain technology can transform the particular effects of the organizations into a network of effort. It is sone with the central goal of the overall carbon footprint reduction of the ultimate product. Blockchain is likely to provide a standardized algorithm for calculating carbon emissions. Within a blockchain network, every party will be capable of reporting the carbon emissions throughout their value change. It will be according to the standardized metrics, thereby creating a particular platform for carbon measurement. That is going to be one of the main advantages of the integrated platform. It will help the concept’s acceptance throughout the globe and across parties.
Carbon credits are the ideal candidates for cryptocurrency. It is because these are data-driven, depend on multiple validation steps. They happen to be independent of the real impact to which they correlate. Blockchain addresses each of the concerns and problems associated with the lack of regulation and standardization. It is done through verifiable transactions and smart contracts. Linking blockchain with various sources and systems will simplify gathering information throughout the supply chain. It will thereby enhance visibility at the lower effort, time and cost. It will serve to be an answer to the huge effort and cost of calculating carbon emissions through supply chain entities.
Blockchain comes with the platform where each partner throughout the supply chain (distributors, manufacturers and suppliers) can work together within a transparent and accountable manner. Also, the work is done with the original equipment manufacturer or retailer. It is for driving a unified carbon ecosystem with proper measurement and credits.