GreenToken by SAP in blockchain recycling pilot with Japan’s DIC Group – Ledger Insights
GreenToken by SAP is a blockchain solution that aims to provide traceability of raw materials for recycling purposes. Major Japanese chemical manufacturer DIC has announced plans to conduct a pilot of its SAP blockchain solution involving recycled plastic materials. However, the use cases for GreenToken are not limited to plastics.
“Consumers’ awareness of the circular economy is high. This has increased the demand for sustainable packaging, says Yuji Morinaga, managing director and general manager of DIC’s packaging materials division. “Our work with GreenToken helps substantiate environmental claims, and supports our mission to promote plastic recycling and build a closed recycling system that uses chemical recycling.”
What is GreenToken by SAP?
Something you may not realize is that when you buy a product that says it’s recycled, it may only be semi-recycled. Suppose a company produces 1000 items and 30% of the raw materials are recycled. If so, it marks 300 of the 1,000 items produced as recycled if it uses the mass balance accounting method.
Some consider the mass balance method controversial if implemented in certain ways.
New plastics are often made with a mixture of sustainable pyrolysis oil, which is recycled, and crude oil. Chemically, the two inputs are similar, which is why pyrolysis oil is usable. But that makes it very difficult afterwards to find out what proportion comes from recycled raw materials. A manufacturer will know that it needs three tons of that raw material to produce 4 tons of the final product.
Therefore, during the production process, the idea is to use GreenTokens as a digital twin for the raw materials to enable accountability and transparency. Although perhaps auditability is just as valuable.
GreenTokens may have parameters specific to a company’s production process, such as conversion factors from raw material to the next production stage. Such details may be kept private. But when the results are sent to the next company in the supply chain, they may contain information about origin, carbon footprint and proportion of recycled material.
Previously, GreenToken was used in a Proof of Concept for plastic recycling that included BASF, Mitsubishi Chemical and SCG Chemical.
The solution uses the Quorum enterprise blockchain.
DIC project
DIC produces polystyrene for food packaging and has an existing recycling system that converts used polystyrene containers back into styrene monomer, polystyrene’s precursor. GreenTokens will be used to track the product throughout the recycling process and supply chain.
Meanwhile, plastic recycling is a popular application for blockchain. Many of the solutions use chemical markers to create digital twins with startups such as Circularise, Security Matters and Circulor.
