This opinion column was written by Andrew Morin and was first published in the Tulsa World. Morin is a research assistant professor in the School of Cyber Studies at The University of Tulsa’s College of Engineering & Computer Science and an energy fellow in UTulsa’s Center for Energy Studies.
Growing concerns over the management of greenhouse gas emissions has become critical in the oil and gas industry, fueled by shareholders, insurance providers, government regulators, and the general public. All wish to see emissions handled in a transparent and accountable manner.
Recently, this has manifested in recent amendments to the Greenhouse Gas Reporting Program as part of the Inflation Reduction Act. It seeks to cut methane emissions by using financial incentives, putting fees on super emitters, and introducing reporting standards. That tracking is critical because we can’t manage what isn’t measured.
Enter innovation in the form of blockchain.
Devon Energy and Chesapeake Energy, both Oklahoma City-based energy companies, have reported joining Exxon Mobil, ConocoPhillips, Chevron, and many others at Blockchain for Energy, a nonprofit consortium of major energy companies dedicated to leveraging blockchain to improve transparency and efficiency. Similarly, Williams recently announced it has partnered with Context Labs to provide a blockchain solution to sustainable and accountable natural gas production.
So, what makes blockchain such an attractive solution to emissions transparency and accountability hurdles?
The answer lies within two of the primary traits of blockchain: decentralization and immutability.
Data stored on a blockchain is inherently transparent, allowing stakeholders to observe emissions reports at any time. Meanwhile, cryptography provides observers with assurance that blockchain data has never, and will never, be modified. What’s more, smart contracts built on top of these blockchains could provide further benefits, such as traceable carbon credits and reducing “greenwashing.”
The use of blockchain for emissions data has potential to provide significant benefits to stakeholders and industry. However, stakeholders must still be cognizant of blockchain limitations; it is not an accountability and transparency cure-all. Two of the largest limitations are data accuracy and blockchain governance.
First, while the data on the blockchain is cryptographically guaranteed to be consistent, it offers no proof of authenticity. Emissions data — collected by a variety of sensors, vehicles, and satellites — is gathered beyond the scope of the blockchain. The data is then cleaned, processed, and packaged in a format compliant with blockchain storage. Then data is uploaded through a decentralized process, and the benefits of the blockchain are realized.
On the other hand, blockchains have proven to be unwieldy and rife with crime, possibly opening organizations and participants up to costly scams and manipulations.
As this frontier is explored and these questions are pondered, it is crucial the limitations and risks of blockchain technology are well understood. Companies and their boards must account for these possibilities if they decide blockchain is truly an improvement over existing processes.