In sustainability circles, there’s been a lot of buzz around how blockchain requires immense energy usage. It’s a nuanced dilemma, but mining cryptocurrency or buying digital tokens like non-fungible tokens (NFTs) – both of which use blockchain technology – are computationally-intensive, and therefore huge energy consumers.
However, the tech is also being hailed as a solution to verifiable supply chain tracing, upfront carbon measurement and transparent carbon offsetting.
For example, tech start-up XELS now wants to become the one-stop-shop for companies to calculate, offset, and transparently disclose carbon reduction initiatives.
It is launching a blockchain platform for transparent, traceable sustainability reporting in an effort to help companies across the globe meet and exceed their environmental sustainability goals with regards to scope 3 emissions.
While scope 1 emissions are tied to operations, and Scope 2 emissions arise from purchased energy, scope 3 emissions are a tougher nut to crack as they are generated across an organisation’s entire value and supply chains – from supplier, to distributor, to retailer.
Founder and chief executive, Takeshi Nojima says his start-up aims to solve that problem.
“While many companies have taken steps to clean up their side of the street, we see a lot of them struggling with scope 3 emissions.”
“By creating a simple and transparent platform that any organisation can easily navigate, we’re incentivising all the moving parts in a product lifecycle to get on board and do their part when it comes to reporting climate goals and moving forward with open and honest carbon elimination.”
Founded in 2017, XELS is traded on Bittrex Global and MXC digital asset exchanges. Its new platform will be launched later this month offering a carbon offset education portal, a carbon emissions calculator, an open venue for reporting ESG targets, and a transparent offset publishing platform that shows an organisation’s carbon credit purchase history on an immutable public ledger.
The platform aims to become the “Squarespace of emissions reporting” by making it easy for companies to create customisable online reports that both consumers and business partners can view and reference.
The company partners with companies in the green technology space to offer carbon offsets tied to protected land and reforestation efforts in the Asia Pacific, with satellite imagery and artificial intelligence to visualise and quantify carbon sequestration.
“We believe that it’s important to put the brakes on emissions by decarbonizing, and that projects to absorb, capture, and store the huge amount of CO2 that we’ve already emitted will become increasingly important in the future,” Nojima adds.
“The XELS platform will continue to evolve to improve the transparency and reliability of such initiatives.”
Forbes’ describes blockchain as “units called blocks containing information about each transaction, including date and time, total value, buyer and seller, and a unique identifying code for each exchange.”
There are two main mechanisms for managing these transactions: either individuals create and link blocks together in the proof of work system (PoW), or consensus mechanisms validate transactions through randomly selected validators in the proof of stake system (PoS).
The problem is, it’s impossible to specifically and accurately quantify the energy required by servers to undertake these tasks, as every piece of computational hardware will consume power differently depending on the algorithms it is running.
It’s such a massive problem that Scandinavia has been working on how the heat given off by massive data centres can be turned from byproduct to useful resource.
It’s been done in Finland, and now it’s being done in Sweden and Norway: Stockholm Data Parks in partnership with the City of Stockholm, energy company Stockholm Exergi, power grid operator Ellevio and others, aim to recycle the heat given off by data centres.
The Bitcoin blockchain alone currently uses 204.5 Terawatt-hours of electricity per year, comparable to the power consumption of Thailand – and generates a carbon footprint of 97.14 mega tonnes carbon dioxide, comparable to the carbon footprint of the country of Kuwait – so using every useful piece of the process (including the heat generated) is essential if we are to not let all that energy go to waste.
A competitor to XELS is ESGclear, launched by Xpansiv Company APX to provide a registry and ledger for environmental markets that now includes a corporate registry for scope 3 emissions and impact transactions.
The company aims to improve transparency for transactions that require ESG reporting, financing, and mitigation across supply chains.
Chief executive Joe Varnas said that companies are now required to prove their sustainability reporting at a more detailed and transparent level, and that this technology was an effective way to do so.
“Reporting requirements are becoming more prevalent and corporates must prove ESG claims at the transaction level,” he said.
“Evidencing compliance requires a centralised corporate ledger, and ESGclear empowers participants to capture transactions with ESG-linked attributes, proving progress toward increasingly aggressive goals.”
Chief commercial officer Brian Fellon reiterated the point: “ESG claims must be proven for every transaction. As opposed to the siloed spreadsheets that have historically hampered progress on this front, ESGclear provides a centralised, interconnected corporate ledger to facilitate accountable, transparent reporting.”
Sustainability director Jeff Cohen said that blockchain technology provided an innovative path forward:
“We must reconsider our customary toolbox of instruments, policies, and incentives to identify new tools that can accelerate change toward true systemic transformation. Innovative technologies, including…distributed ledger technology (DLT) embedded into digital ecosystems…together with other innovations, including remote sensors and mobile devices, can be a lever for transformational change towards net zero pathways.”