BY MARY McCULLOCH, PICKERING ENERGY PARTNERS
Successfully navigating the global energy transition will require a variety of innovative uses of digital technologies, including blockchain. While the concept of blockchain is nothing new, nor is its application to the oil and gas industry, the emergence of blockchain as a potential ESG-empowering force is relatively novel and right on time. Not only do companies want to prove the data behind progress on net-zero goals or emissions reduction targets, some also want to substantiate claims for marketing low-carbon gas.
Those that provide products to California and the EU will require some form of assurance imminently, and perhaps decentralized ledger technologies will be a viable answer. What we wholeheartedly know is that investors and other stakeholders need to be able to trust suppliers along the energy value chain. The concept of data being digitally tokenized as it moves through the system and verified by a neutral party suggests blockchain technology could work well for emissions.
Back in 2019, seven majors (ExxonMobil, Chevron, ConocoPhillips, Hess, Pioneer Natural Resources, Equinor and Repsol) established a blockchain consortium largely focused on lowering administrative costs and reducing payment disputes and chance for fraud. Then in 2020, the group formalized into a non-profit organization called Blockchain for Energy and has since gained more members, with API taking on an ESG-metrics focus. The idea is that a decentralized technology – blockchain – can provide transparency, efficiency and even interoperability around the vast differences in formats and uncoordinated reporting efforts.
Blockchain-enabled solutions like Context Labs’ applications are already being put to use with industry leaders sharing their stories in sustainability reporting. Additionally, MiQ has recently added methane emissions certificates to Xpansiv’s CBL Global Spot Exchange in a partnership aimed at greater transparency on methane emissions. Xpansiv has been creating an ESG-inclusive commodities market using Digital Asset’s blockchain technology to track “the digital commodity from launch through its entire lifecycle to provide investor confidence and surety that ESG intentions are achieved.”
These are only a few highlights in a bustling space for application providers, thanks to the unique ability for tokens to be fungible regardless of the blockchain used. We anticipate hearing more about blockchain disruptions in the industry as it relates to ESG data for all stakeholders, and especially as it relates to vendors and customers.
Energy Workforce partner Pickering Energy Partners provides insights on ESG due diligence, disclosures and reporting. Mary McCulloch is an Associate.
