How Shell uses Web3 and Blockchain for sustainability and energy conversion

Shell is one of the largest energy companies in the world. Although many of us may associate it primarily with oil and gas, it has embarked on an ambitious energy transition agenda in an effort to move away from the use of fossil fuels to green and sustainable energy.

This includes the goal of reaching net zero carbon emissions by 2050 or earlier, as well as a more immediate goal of reducing scope one and two emissions by 50 percent by the end of this decade.

To do this, it takes advantage of several new technology trends that are proving to be revolutionary in many industries outside their own sector. These include artificial intelligence (AI), the Internet of Things (IoT) and – as we will see in this article – Web3 and blockchain.

Blockchain is best known to most as the technology that underpins cryptocurrencies such as Bitcoin. The easiest way to think about it is that it is actually a relatively new form of database format. Blockchains have two key functions that make them different from other databases. First, instead of being centrally located on a specific computer or server, they are distributed. This means that they are spread over several computers, so no person has direct, overall control, and all changes must be validated by consensus.

Secondly, they are encrypted, which means that they are effectively tamper-proof, and only people with permission can add them or edit the data they contain.

These two features, in combination, make blockchain ideal for applications where data needs to be added, checked and validated by multiple parties, and security and integrity are paramount. A good demonstration of robustness can be seen in the fact that the Bitcoin network itself handles 270 million transactions every day, is worth (at the time of writing) around 400 billion dollars and has remained secure over the 13 years it has existed so far.

These features make blockchain an attractive technology for global organizations such as Shell, which need hyper-secure, scalable technology solutions to power a new generation of applications involving the collection and sharing of valuable data. Their “untrustworthy” nature enhances the current processes used across the industry, helps to reimagine energy value chains via tokenizing energy to create transparency and traceability, and creates new markets and new business models with DEFI / DAO / NFT etc.

I was recently joined by Dan Jeavons, VP of Computational Science and Digital Innovation at Shell, as well as Shell’s blockchain leader, Sabine Brink, to discuss some of these projects at my webinar.

Brink tells me: “The intersection between digital and energy is one of the most exciting areas. When we look at how we use this technology – web3, blockchain that accelerates the energy transition. This is an extremely motivating journey to be on.”

This enthusiasm has led her to spend the last five years researching all areas of the business where blockchain and related Web3 technologies can be implemented to drive sustainability and green energy goals. A number of projects have emerged from this, and the most promising ones are now entering pilot and production stages, where it is hoped that their ability to drive real global change will be realized.

I was particularly interested in hearing how the energy giant uses blockchain to track and verify the origin of energy made from renewable sources. As the world has begun to understand the urgent need to move to sustainable energy sources, enormous rewards have emerged – both in the form of financial incentives and customer loyalty – for organizations working to influence change. However, the process is often opaque – it is difficult for customers or partner organizations to be sure exactly how clean a specific energy source or supplier is.

Jeavons and Brink explained to me that Shell has developed a blockchain-based system that can demystify the complex network of sources.

He says: “So if you look at the electricity market today, we have energy attribute certificates (EAC) that represent green energy or gray [non-green] energy generated in a given month or year. For companies that aim to run on 100 percent green energy, their monthly or annual certificates can match their total energy consumption, but when the sun is not shining and the wind is not blowing, gray energy is actually consumed. So it’s hard to say that they actually use green energy on a 24/7 basis. “

Shell’s solution involves creating very granular certificates in real time at the source where the energy is created – which can be solar panels in the desert or wind farms in the ocean – to represent the green energy produced every half hour, synchronized with established systems for energy attribute certificates. Each point on the electron’s journey to the point it is consumed is tracked and registered on a blockchain.

“This is one of those solutions where blockchain creates transparency and assures us that there is no double counting of electrons in the system; we think this could be a game changer,” Jeavons tells me.

Another project that has just taken the step to the pilot phase is an ambitious investment between Shell, Accenture and Amex with the aim of increasing the availability and use of sustainable aviation fuel (SAF).

Brink says: “For me, this is one of the most exciting projects we have worked on. I am very proud of the team. It is one of the first public blockchain solutions that creates a credible and transparent way to help decarbonise the aviation sector. Thanks to its inherent technical features, blockchain offers SAF verifiability, transparency and security for environmental properties. “

The product is Avelia – one of the first blockchain-powered book-and-claim systems that will offer around one million liters of sustainable aviation fuel (SAF) and associated environmental benefits to companies that want to reduce emissions from business travel.

Currently, there is not enough SAF available at an affordable price. It is hoped that by pooling demand for SAF among business travelers who make up a more concentrated segment than leisure passengers, there will be a reduction in price – with SAF currently priced significantly higher than similar conventional aviation fuel. However, a growth in demand for fuel will theoretically lead to suppliers increasing their investments in production and thus a possible fall in prices.

“It’s very difficult to decarbonise the aviation sector,” Brink tells me. “Decarbonisation of the aviation sector cannot take place overnight. Today we do not have large aircraft that can be powered by green electricity that is able to travel around the world. Sustainable aviation fuel is actually a solution – sustainable aviation fuel that we can utilize today and implement with existing infrastructure. With Avelia, we hope to demonstrate that large-scale tracking of SAF data can be delivered in a credible way, thus proving to decision makers that a mechanism for companies and airlines to book and demand SAF is an acceptable form of emission reduction. In turn, this creates increased demand signals to structurally scale the SAF production required to reduce aviation emissions. “

Other blockchain and digital transformation projects currently undergoing evaluation or pilot status at Shell involve “digital passports” to track the life cycle of industrial parts, equipment and machinery at power plants operated by the company and its partners.

Of course, all of this technology-driven transformation is driven, at the root, by data, and Shell has worked to implement an integrated data platform that gathers 2.9 trillion rows of information harvested from all areas of the business. This includes IoT sensors installed across facilities and wind and solar farms, which eventually allow it to create digital twin applications to help it better understand the operation of its assets.

Jeavons says: “This is what my team is so excited about – the potential to do this on a large scale. We are rolling out digital twin … we are rolling out AI … and when you put it together with traceability, we believe that we could bring to market a whole range of decarbonisation solutions… where we can collaborate with our customers to help them accelerate their own decarbonisation journeys. We’ve just got started. “

You can click here to see my interview with Shell’s VP of Computational Science and Digital Innovation, Dan Jeavons, and blockchain leader Sabine Brink.

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