Automotive company Polestar is keeping tabs on the carbon footprint of its vehicles and their raw materials with the help of blockchain technology from a British start-up.
Electric vehicles (EVs) are hailed as the greenest cars available, and by 2030 they will account for around 32 per cent of the total market share for new car sales, according to one report.
Deloitte forecasts their numbers will grow from 2.5 million in 2020 to 11.2 million in 2025 to 31.1 million by 2030. However, due to their reliance on batteries, the increasing popularity of EVs means more minerals are needed to create them.
Without knowing the provenance of goods or minerals, it is difficult for carmakers to ensure that materials used in the manufacturing process comply with social and environmental standards, which are increasingly important to a growing number of eco-conscious consumers.
To provide transparency across its supply chains, a British start-up called Circulor is using blockchain – a shared, immutable ledger for recording transactions, tracking assets, and building trust – to track everything from the raw materials in batteries to carbon dioxide emitted during the construction of cars. Here’s how it is driving change.
The International Energy Agency says that an EV requires six times more minerals than a conventional vehicle, with lithium and cobalt typically found in the Li-ion batteries.
“Lithium raises concerns around water use and pollution in places like the Atacama Desert,” says Doug Johnson-Poensgen, CEO and founder of Circulor. According to research by Arizona State University, sustainability concerns from lithium mining include threats to local hydrodynamics, pressuring the already limited water, which aggravates social tensions between mining companies and local communities. “Smaller producers are coming onto the market with a proposition to produce lithium in a more sustainable way in places like Germany,” Johnson-Poensgen explains.
‘This is the climate decade. Change and improvement must happen all the time now, and we can’t afford to wait. I’m proud to say we reduced greenhouse gas emissions per car sold by 6 per cent.’
Further fears about the materials used in EVs include the impact of extracting nickel or manganese, carbon emissions from battery manufacturers and labour practices for mining cobalt, which is a scarce and toxic material used in most lithium-ion batteries that is often linked to unethical supply chains.
Circulor’s software solution allows concerns (for example, about unethical mining practices) to be pinpointed and addressed. “Unlike other traceability solutions, we track the actual material as it flows through the supply chain, not just the transactions between participants. This means we are able to follow materials at each supply chain step, creating accurate and insightful information about the provenance or the embedded CO2,” Johnson-Poensgen explains.
To enable this, sacks or barrels of a raw material are tagged with a QR code that can be scanned, enabling a digital twin to be created. This process allows the high-tech tool to track the physical flow of the raw material as it changes state from mine to manufacture and throughout the manufacturing process, offering transparency that was previously almost impossible.
No extra paperwork is involved and the use of blockchain adds an extra layer of validity and security to the tool, because it creates immutable records of transactions that occur within a supply chain, so a material’s origin and journey cannot be tampered with and changed.
Circulor is working with Polestar, an electric performance car brand, to create a carbon-neutral car by 2030. The automaker uses Circulor’s blockchain technology to track its cobalt for Polestar 2 batteries, and to trace mica from material source to finished product. Use of the technology has enabled Polestar to publish data on full vehicle emissions, cradle to grave. The brand’s ‘Product Sustainability Declaration’ discloses carbon footprint and traced materials and makes data available on its website and showrooms.
“[Sustainability] goals set 10 or 20 years ahead in time might feel fluffy. That’s where proper reporting comes in – making us accountable for the steps taken every year towards that goal,” says Thomas Ingenlath, CEO of Polestar. ‘This is the climate decade. Change and improvement must happen all the time now, and we can’t afford to wait. I’m proud to say we reduced greenhouse-gas emissions per car sold by 6 per cent.”
Circulor is also working with Volvo Cars to enable the manufacturer to trace cobalt from source to EV. In 2019, Volvo became the first carmaker to start implementing traceability of cobalt used in the batteries for its electric and plug-in hybrid cars by applying Circulor’s blockchain technology, and it wants to do more. “We’re planning to use it to track and reduce CO2 footprints in our supply chain, which will be a fantastic step forward,” Kerstin Enochsson, head of procurement at Volvo Cars, said in a recent blockchain panel discussion in Davos, Switzerland. “We’re also working on getting lithium and nickel in the blockchain as well.”
Circulor can attribute emissions data to give a product or material a CO2 carbon footprint, also keeping track of ESG (environmental, social, and corporate governance) certifications and standards that suppliers upload to the system and assign this information to their portion of the flow of material.
Measuring the CO2 emitted when 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 see the embedded emissions that have been created 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 CO2e footprint than using generic emissions data from databases.
Of course, cars need more than batteries, and even the finishing touches can have a big environmental impact. A report by Leather Panel says 17kg of CO2 is generated for every square metre of leather produced, and that figure rises to 110kg CO2e/m2 if cattle farming is taken into account.
Jaguar Land Rover (JLR) partnered with Circulor, Bridge of Weir Leather Company and the University of Nottingham to trial the use of traceability technology in the leather supply chain. A digital twin of the raw material was created, allowing its progress to be tracked through the leather supply chain simultaneously in the real world and digitally. A combination of GPS data, biometrics and QR codes was used to digitally verify the movement of leather at every step of the process using blockchain technology. This has enabled JLR to assess the carbon footprint of its leather supply network and trace the lowest-carbon option from farm to finished article.
Defining the verification process has created a repeatable blueprint for tracing a single piece of leather, which can be used across JLR’s global supply chain and by other industries that rely on leather, such as fashion and footwear.
Traceability-as-a-service is already proving invaluable in the car industry, but it could prove transformative across many other industries too. Johnson-Poensgen believes any business with verified sustainable practices will have “a clear advantage”.
The competition between car makers to convince consumers of their eco-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 include this emerging technology.
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