IBM Japan has partnered with Mitsubishi Heavy Industries (MHI) to develop a solution, CO2NNEX, that uses blockchain technology to track the capture and re-usage of CO2. Mitsubishi will be responsible for the physical infrastructure that captures the CO2 and IBM will be in charge of the digital platform to trace it. According to the Nikkei, MHI plans to create a marketplace of buyers and sellers to be piloted in 2022.
Excessive emissions of CO2 are one of the most immediate challenges that need to be addressed to combat climate change. Various regulations have been put in place by governments and international agreements to limit the amount of CO2 that companies can emit in production, and many organizations are aiming to achieve carbon neutrality.
The issue is that many companies have not discovered a way to eliminate CO2 emissions, which has led to the emergence of carbon markets, where companies trade their limited rights to CO2 emissions. Another emerging area is CO2 Capture, Utilization and Storage (CCUS).
CCUS equipment captures, transports, and stores CO2 output generated by industrial activities and enables it to be stored deep underground or re-used in production. One of the key uses of the excess CO2 is for oil and gas extraction, but others include producing plastics, carbonating drinks, fire extinguishers and numerous other applications. Mitsubishi claims to have a 70% market share for carbon capture equipment.
Capturing the CO2 at the point of emission from power generation or cement production is significantly cheaper than taking the CO2 out of the atmosphere. The United Nations estimates the cost of capturing between $10-$100 per CO2 ton, but that doesn’t include transport and storage. It’s possible 10-30 gigatonnes of CO2 could be removed annually by 2050 although there isn’t currently the capability to do so.
With the use of blockchain, CO2NNEX traces the collection and distribution of CO2, providing transparency. It supports companies in achieving carbon neutrality by yielding data on capture and usage rates of CO2. In addition, the full visualization of the carbon supply chain can enhance its investment potential.
A Proof of Concept for IBM’s digital platform was conducted in May of this year. Following its success, the trading market platform for carbon is being developed alongside the use of Mitsubishi’s equipment.
The use of blockchain in carbon trading is becoming more common. CIBC, NatWest, and NAB are developing a blockchain-based project for a voluntary carbon marketplace. The UP Alliance launched a tradable carbon token. DBS, SGX, StanChart and Temasek are planning a global carbon exchange using blockchain.