Car company Polestar monitors the carbon footprint of its vehicles and their raw materials using blockchain technology from a British start-up.
Electric vehicles (EVs) are considered the greenest cars available and will account for around 32 percent of the total market share in new car sales by 2030, according to a report.
Deloitte predicts their number will increase from 2.5 million in 2020 to 11.2 million in 2025 and 31.1 million in 2030. However, due to their reliance on batteries, the increasing popularity of electric vehicles means more minerals are needed to make them.
Without knowing the origin of goods or minerals, automakers find it difficult to ensure that the materials used in the manufacturing process meet the social and environmental standards that are becoming increasingly important to a growing number of environmentally conscious consumers.
To provide transparency across its supply chains, a British start-up called Circulor is using blockchain – a shared, immutable ledger to record transactions, track assets and build trust – to track everything from the raw materials in batteries to Carbon dioxide emitted during the construction of cars. This is how it drives change.
The International Energy Agency says an electric vehicle requires six times more minerals than a conventional vehicle, with lithium and cobalt typically found in the Li-ion batteries.
“Lithium raises concerns about water use and pollution in places like the Atacama Desert,” said Doug Johnson-Poensgen, CEO and founder of Circulor. According to research from Arizona State University, the sustainability concerns of lithium mining include threats to local hydrodynamics that are putting pressure on already limited water, exacerbating social tensions between mining companies and local communities. “Smaller producers are coming onto the market with offers to produce lithium more sustainably in places like Germany,” explains Johnson-Poensgen.
“This is the climate decade. Change and improvement must happen constantly now, and we cannot afford to wait. I am proud to say that we have reduced greenhouse gas emissions by 6 percent per car sold.”
Other concerns about the materials used in electric vehicles include the impact of nickel or manganese extraction, carbon emissions from battery manufacturers, and labor practices for mining cobalt, a scarce and toxic material used in most lithium-ion batteries and often associated with unethical exploitation Supply is associated chains.
Circulor’s software solution makes it possible to locate and resolve concerns (e.g. related to unethical mining practices). “Unlike other traceability solutions, we track actual material as it moves through the supply chain, not just transactions between participants. This means we are able to trace materials at every step of the supply chain and create accurate and insightful information about the origin or the embedded CO2,” explains Johnson-Poensgen.
To do this, sacks or barrels of a raw material are provided with a QR code that can be scanned, creating a digital twin. This process allows the high-tech tool to trace the physical flow of raw material as it changes state from mine to manufacture and throughout the manufacturing process, providing a level of transparency previously almost impossible.
No additional paperwork is required and the use of blockchain adds an extra layer of validity and security to the tool as it creates immutable records of transactions taking place within a supply chain, so a material’s origin and transport is not tampered with and altered be able.
Circulor is working with Polestar, an electric car brand, to develop a carbon neutral car by 2030. The automaker uses Circulor’s blockchain technology to track its cobalt for Polestar 2 batteries and trace mica from material source to finished product. The use of the technology has enabled Polestar to publish data on total vehicle emissions from cradle to grave. The brand’s “Product Sustainability Declaration” discloses the carbon footprint and traced materials and makes data available on its website and in the showrooms.
“[Sustainability] Goals set 10 or 20 years in advance can feel vague. This is where proper reporting comes in, holding us accountable for the steps taken each year towards that goal,” says Thomas Ingenlath, CEO of Polestar. “This is the climate decade. Change and improvement must happen constantly now, and we cannot afford to wait. I am proud to say that we have reduced greenhouse gas emissions by 6 percent per car sold.”
Circulor is also working with Volvo Cars to enable the manufacturer to trace cobalt from source to electric vehicle. In 2019, Volvo became the first automaker to start implementing traceability of cobalt used in the batteries of its electric and plug-in hybrid cars by applying Circulor’s blockchain technology, and plans to do more. “We plan to use it to track and reduce the carbon footprint in our supply chain, which will be a fantastic step forward,” said Kerstin Enochsson, purchasing manager at Volvo Cars, at a recent blockchain panel discussion in Davos, Switzerland. “We’re also working on getting lithium and nickel on the blockchain as well.”
Circulor can map emissions data to give a product or material a carbon footprint and also track the ESG (environmental, social and governance) certifications and standards that suppliers upload to the system and allocate this information to their share of the stream material .
Measuring the carbon footprint of building an electric car is one way to help automakers find savings. Polestar believes transparency is a key driver for climate action and uses CO2e (carbon dioxide equivalent) tracking to show embedded emissions generated as part of the production process per facility, as well as those inherited from suppliers through the supply chain . Using the blockchain-based greenhouse gas tracking tool is said to enable a more accurate carbon footprint than using generic emissions data from databases.
Of course, cars need more than just batteries, and even the finishing touches can have a big impact on the environment. According to a Leather Panel report, 17kg of CO2 is generated for every square meter of leather produced, and this figure rises to 110kg CO2e/m2 when cattle farming is taken into account.
Jaguar Land Rover (JLR) has partnered with Circulor, the Bridge of Weir Leather Company and the University of Nottingham to test the use of traceability technology in the leather supply chain. A digital twin of the raw material was created, allowing its progress through the leather supply chain to be tracked simultaneously in the real world and digitally. A combination of GPS data, biometrics and QR codes was used to digitally verify the movement of the leather at each step of the process using blockchain technology. This has enabled JLR to assess the carbon footprint of its leather supply network and track the lowest carbon option from farm to finished item.
By defining the verification process, a repeatable blueprint for tracing a single piece of leather was created for use throughout the global supply chain by JLR and other leather-dependent industries such as fashion and footwear.
Traceability-as-a-Service has already proven invaluable in the automotive industry, but could prove transformative in many other industries as well. Johnson-Poensgen believes any company with verified sustainable practices will have “a clear advantage.”
The competition between automakers to convince consumers of their green intentions and drive real change is good news for everyone. While this may be the first leg for traditional businesses embracing blockchain, the journey ahead will surely involve this emerging technology.
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