The energy sector is the most pollutive industry in the world, emitting 15.83 billion tons of greenhouse gasses each year. That’s more pollutive than the other industries in second and third place (transport and manufacturing), combined.
But global energy demand is only increasing. To keep pace with a growing population’s energy demands, the entire industry needs to find innovative solutions to increase efficiencies.
The way we generate and consume energy needs to become more efficient and sustainable. As blockchain technology and the internet of things continue to optimize different industries, one question is worth asking. Can we use blockchain for energy industry efficiencies?
Blockchain is a distributed database that allows for secure, transparent, and tamper-proof transactions. This makes it ideal for the energy sector, where there is a need for secure and transparent transactions. This article will explore how distributed ledger technology is already being used in energy, and how uses keep diversifying.
Industry-wide efforts
In the last few years, several organizations have emerged to explore uses for blockchain in the energy market. All of them work to monitor and improve Environmental, Social, and Corporate Governance (ESG) in the energy industry.
Blockchain for Energy
Founded in 2020, Blockchain for Energy is a growing consortium of business partners in the energy industry exploring blockchain. Using distributed ledger technology, they hope to reduce costs, improve timelines, and eliminate disputes within the industry.
The consortium looks for solutions and innovations across the oil and gas supply chain. As an independent nonprofit organization founded by business network operators, it hopes to influence the industry from a neutral platform. Though the oil and gas industry is the current focus, Blockchain for Energy hopes to transition to broader energy solutions.
Blockchain for Energy has monitored ESG in different areas of energy, including chemical haulage. In a month-long pilot project, using blockchain technology significantly reduced payment processing times and tracked a 100% invoice match.
Energy Web Foundation
Co-founded by Rocky Mountain Institute, a low-carbon energy think-tank, and blockchain developer Grid Singularity, Energy Web launched early 2017. Founded by 10 affiliates, EW had invested nearly $322 in energy blockchain startups by the first quarter in 2018.
In 2019, EW opened the first open-source blockchain for the energy sector, the Energy Web Chain. They now offer software development toolkits and an open-source stack of software and standards.
“As electricity systems around the world increasingly digitalize,” EW says, “we are proud to be one of the leading partners helping energy market participants harness decentralized technology in support of a low-carbon, customer-centric energy future.”
In a similar vein, Hedera offers Guardian 2.0, an open-source solution to ESG assets. Offering open-source solutions and a library of DLTs, the Guardian helps developers create or digitize carbon offsets and credits.
Energy Blockchain Labs
International Business Machines (IBM) founded Energy Blockchain Labs. In 2020, EBL published their global assessment of blockchain and vendor services. Using digital technologies, IBM’s Energy Blockchain Labs works to improve efficiency and transparency of the carbon emissions reduction market. IBM is a member of the Hedera governing council.
With Hyperledger Fabric, the IBM Blockchain Platform helps company owners build, operate, and grow blockchain solutions. From agriculture to manufacturing, IBM’s blockchain technology has found diverse uses. In the gas industry, IBM’s white papers detail how blockchain technologies can make transactions auditable, immutable, and transparent.
Use cases
Data management
Accurate data management is one of the most key issues in environmental efforts in the energy industry. Energy use information can be intentionally manipulated or omitted, or be accidentally misreported. These mistakes are costly to energy companies, governments, and the environment. Siloed data storehouses are opaque and difficult to audit. In comparison, a blockchain network collects and shares data instantaneously between all parties, without fear of tampering.
The Chilean National Energy Commission (CNE) has used the Ethereum blockchain to record, store, and track energy data since 2018. Doing so allows the public to access energy records, including things like energy law compliance and fuel prices.
Trading
Using blockchain, transactions in energy trading are instantaneously recorded. Because the ledger is immutable and transparent, blockchain in energy trading is an ideal way to settle disputes. But how does this connect to the environment? And how is blockchain used in renewable energy?
Well, there are a few ways. By tokenizing renewables and digitizing facilities, companies can buy energy attribute certificates (EACs) or CO2 removal credits. Hedera has a similar project in partnership with the Queensland Government. The project will provide the Queensland State Government and Cohort with granular energy usage statistics to empower their decarbonization initiatives.
DOVU uses the Hedera platform to provide a tokenized data economy for DeFi carbon offsetting. It connects land owners who’ve committed to carbon sequestering practices and investors or businesses who want to offset their carbon footprint.
Regulatory compliance
Blockchain can simplify the regulatory process by increasing data accuracy and transparency. Environmental regulations are often complex and geographically specific. Regardless of local or national regulations, storing uneditable data on the blockchain leaves no gray area for regulatory compliance. It will be clear to all environmental agencies which companies are or are not within code. TYMLEZ is a pioneer in the development and delivery of carbon reporting and guarantee of origin solutions built on the Hedera network.
Supply networks
What can blockchain do for power grids? In Australia, Energy Demand and Generation Exchange (EDGE) has been trying to find out.
EDGE works to coalesce distributed energy resources (DERs) into one flexible grid system. Individuals generating electricity from rooftop solar or other renewable sources can sell the energy they generate. Using a blockchain system streamlines the information exchange between individual homeowners, market operators, and the managers of grid utilities.
Each DER, customer, and aggregator company has a digital identity on the distributed ledger. All energy transfers, transactions, and payments are stored on the blockchain. This system allows grid systems to turn from a one-way energy supply to a flexible, bottom-up grid. Working with local DERs, community energy transitions from centralized fossil-fueled power plants to green energy, closer to home.
Oil and gas industry
Back in 2017, IBM began the first blockchain service to aid crude oil extraction. From shipment updates to delivery and payment status, blockchain transformed the information exchange process. Transaction time to authenticate and duplicate trade documents was slashed. Instead, all necessary information was shared across the single ledger.
So how is blockchain used in energy? It streamlines workflows, can optimize costs by removing intermediaries, and makes data more secure. There are lower risks of fraud and cybercrime by keeping transactions visible and shared with distributed ledger technology.
Electricity distribution
As the Internet of Things expands into an enlarging system of devices, data is collected and transferred in real time. Once the data is received, smart contracts can be executed automatically, without the need for an intermediary. Instead of maintaining and updating storehouses of data, information will be shared and monitored.
E-Mobility is a new dashboard based out of Germany that offers a universal green contract for electric vehicles in Germany. All distributed energy resources, EVs, and charging points receive a digital identity on the Energy Web Chain. EV owners each have a trusted account on the EWC. With smart metering through the E-Mobility Dashboard, users receive the same fees for charging as they get at home. They can get paid to charge (or not charge) their vehicles at specific times of day, to balance the grid.
The future
Hedera is committed to going carbon-negative and has all the tools needed to help web3 developers do the same. Released on Earth Day in 2022, the Guardian 2.0 leverages the Hedera public distributed ledger network to mint emissions and carbon offset tokens. It provides auditable, traceable, reproducible records that document the emission process and lifecycle of carbon credits, which reduce fraud in the ESG market.