Using IT to Manage Carbon Assets

Posted January 31, 2024 | Technology |
Using IT to Manage Carbon Assets

A recent International Energy Agency (IEA) report states that existing technologies could deliver 80% of the emissions reductions necessary by 2030. The report is referring to technologies like renewables, efficiency improvements, and methane-emissions reductions, but there is a foundational technology hiding in plain sight: information technology (IT).

IT can be used to maintain a real-time inventory of carbon assets, perhaps through a digital twin model. Any carbon-inventory shortfall would be immediately noted and corrected using predefined policies. If the underlying assets are trees, they grow, and this growth could be accounted for in the offsetting ledger.

Researchers are advancing the notion that forestry assets can make a quantifiable contribution to greenhouse gas (GHG) mitigation, even when they are less than permanent. The current practice of equating forestry assets to claim net zero is insufficient because the emissions are permanent, but the offsetting asset is not. Permanency can be achieved (at least from a statutory perspective) through the assignment of backup assets or policies to bring in replacement assets to make sure the liability is covered during the statutory period.

For the California Air Resources Board (CARB) compliance market, this period has been set for 100 years. This dynamic suggests that emissions liabilities never truly go away, especially when offsetting is done with impermanent assets. The need for permanent, reliable records that live beyond the organizations that created them demonstrates the need for an advanced IT infrastructure.

IT-Based Carbon-Trading System

Let’s look at how IT could be used to create a system designed to meet specific GHG mitigation goals. Here are some relevant considerations:

  • No technological breakthroughs are assumed that would impede immediate deployment. All functional blocks and services are available in-house or can be outsourced as part of normal corporate IT practices.

  • Assembly or integration may be needed for certain capabilities, but the components are readily available.

  • The cloud service ecosystem can be architected to present a unified, consistent view to users accessing heterogeneous resources.

  • IT enables complex strategies, such as building targeted portfolios like asset swaps under Oxford University’s recommended offsetting policies or meeting permanency requirements by serially substituting impermanent assets.

[For more from the author on this topic, see: “Leveraging IT to Integrate Carbon Offsets with Financial Market Trading.”]

About The Author
Enrique Castro Leon
Enrique Castro-Leon is CTO and founding member of OptimiLabs, a start-up dedicated to systems integration and technology innovation. He currently leads a project that formally models carbon offset supply chains across multiple verticals for seamless integration into financial systems, employing service engineering principles. Dr. Castro-Leon also advises a leading US university and research institution on formulating a strategic roadmap for… Read More