Automating ESG: A Blockchain Enabled Framework for Transparent Carbon Emission Tracking in Indigenous Oil Production

Abstract

Abstract Indigenous Nigerian oil and gas companies face growing pressure to report environmental social and governance performance as funding for new oil and gas projects dwindles. Present day manual reporting systems are subject to errors and do not provide the transparency needed by global lenders. Therefore, this research explores a transparent automated software tool that will enable indigenous Nigerian oil and gas companies to track scope 1 and scope 2 greenhouse gases using blockchain technology to build credibility with lenders and regulatory bodies. The proposed solution uses permissioned hyper ledger fabric blockchain ledger to create an immutable and timestamped log of all data collected from the facilities’ digital flow meter readings and fuel consumption records. Additionally, the proposed solution will include an automated reporting module for the company's ESG performance compliant with the IFRS S2 Climate-Related Disclosure Standard. The results show that the automated system was able to reduce the time required to manually report emissions by 75%, eliminated errors in manual spreadsheet-based reports and provided verifiable and tamper-proof data on carbon intensity. The proposed solution enables indigenous Nigerian oil and gas companies to obtain green transition finance and sustainability linked loans; thus enabling them to demonstrate that true decarbonization in the upstream oil and gas sector requires true data transparency.