One of the positive recent developments when it comes to reducing emissions is the growing understanding of their different scopes. Emissions generated by company supply chains often make up the largest share of their carbon footprints and are the hardest to measure and reduce. The CarbonPrime initiative is directly focused on these pain points and by using primary data aims to forge a path for industrial decarbonization at scale.
The project was conceived in 2020 by Mark Lyra, Senior Director of Energy Innovation at Sumitomo Corporation, and was based on his work in the ethanol industry in Brazil. There he gained insights into how different supply chain stakeholders act when it comes to commodity negotiations, as well as things like carbon intensity. Crucially he was also involved in a project that developed a full verification scheme for sustainability which addressed everything from carbon intensity to land use and human rights.
By combining this with his previous tech experience in AT&T and tech consulting company Razorfish, he realized that blockchain could provide a solution for some of these challenges by collecting and preserving the primary data and eventually accumulating it for analysis, rather than relying on reference data for making investment and resource allocation decisions related to emissions (which is the predominant approach today).
After pitching the project internally within Sumitomo, CarbonPrime was launched in 2020 with the goal of attracting companies from a variety of industries in order to understand, map and visualize complete supply chains with all of their emissions.
The first proof of concept (POC) has been underway since then and managed to attract companies from Brazil, a country in which legislation on the matter is strict.
The POC consists of life sciences enterprise Bayer, food company JBS, agricultural producer AMAGGI and logistics company Rumo. All four have been sharing their primary emissions data for their complete operations – seed processing, planting harvesting, feed production, logistics as well as the distribution within the country and globally.
“We managed to get them to work really as a team, sharing data, and working on these allocation frameworks, and ultimately agreeing to put the results out there,” says Lyra about the collaboration.
To make this collaboration happen SINAI Technologies‘ decarbonization intelligence platform was utilized, as it builds inventory from the bottom up, which then enables stakeholders to make decisions based on numbers rather than projections. SINAI’s platform not only allowed data to be captured and managed at a very granular level, but also provided secure third-party access so privacy could be assured throughout the process.
“I think there are many unique accomplishments with this partnership. And I think the biggest one is allowing these companies to actually share the information among the participants, because companies are always skeptical in sharing their Scope 1 data in detail,” said Maria Fujihara, CEO of SINAI.
Looking at the process from CarbonPrime’s perspective, it has four steps. The first one is the creation of an emissions inventory with primary data. This is followed by transfering the data to the cloud, where it becomes a “single source of truth” which allows for automating analysis and reporting.
The third one is the connection with industry experts who develop sector allocation frameworks, synchronized with the World Business Council’s Value Chain Carbon Transparency Pathfinder, a guidance framework for the accounting and exchange of product life cycle emissions.
After the frameworks are complete the final step is to make them “open source” and available on a distributed ledger where they can be integrated with the Carbon Action Data Trust.
One of the key moments for the POC came in the first 12 months of the project. “After about maybe a year of trying to analyze all of this data, we realized that it’s going to take us a long time, and we’re going to have to stop somewhere to actually do the work. And not only that, but when we get this [data] out there, we want to give third parties the opportunity to audit and validate the work,” shared Lyra when asked about the hardest part of the project.
The framework for the auditing process is already under construction. “We have started discussions with some of the ‘big four’ accounting firms and we intend to have the results audited this year”, explained Lyra. “The audit process should be relatively simple as one of the key principles of this effort was not to reinvent the wheel. The team followed the WBCSD Pathfinder framework and industry standards such as emission factors and GHG Protocol allocation principles. The main innovation was to allow industry experts to access primary data and develop a specific framework for applying these standards. This framework will be made publicly available and will likely evolve over time.”
To complement this, since its inception the initiative has involved different specialists from the Rocky Mountain Institute, IETA, and others to help validate the concept and evaluate its feasibility. This is all done in order to connect the effort with potential monetization of emission reduction through a carbon asset.
This market element is being jointly developed with the World Bank’s Climate Warehouse project, which has also worked with CarbonPrime since the start. The goal here is to tokenize emission reductions and make those tokens available for sale to other companies in the same supply chain. This would create a virtuous circle whereby risk is distributed across the supply chain (lowering it for smaller members and incentivizing them), while supporting actions and investments that reduce emissions.
To this end, IETA, the World Bank and the Government of Singapore announced the launch of the aforementioned Climate Action Data Trust, which is the first part of the Climate Warehouse digital ecosystem to go live. According to Lyra, the expectation is that this infrastructure will serve as a gateway for the private sector to lead efforts to decarbonize the supply chain based on audited primary data flows.
The proof of concept is just the first step and CarbonPrime is open to participants from all industries. Maria Fujihara points out that “we are testing out our value chain management piece with other supply chains as well. So anybody interested can reach out.”
CarbonPrime has ventured into uncharted waters when it comes to decarbonizing entire supply chains. Its holistic approach to these emissions stands out in comparison with other efforts, as it addresses the vast majority of challenges when it comes to industrial decarbonization. By putting data first and embedding itself in companies’ decision-making process, it could become the blueprint for reducing the hardest of all emissions.