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Blockchain meets natural gas : a case study of the University of British Columbia and Xpansiv from an operations research perspective

University of British Columbia

The University of British Columbia (UBC) has set itself aggressive sustainability targets. In order to reduce the greenhouse gas (GHG) emissions in its Vancouver campus, UBC has been consuming natural gas (both renewable and non-renewable) due to its relatively lower emissions compared to other fossil fuels. This practice has resulted in most of UBC’s campus wide GHG emissions coming from natural gas consumption. UBC is considering various alternatives to reduce its GHG emissions to achieve the 2020 sustainability commitment. Using more renewable natural gas may be a viable solution, but it is scarce and expensive. Xpansiv, a software start-up company, uses blockchain technology to capture and store data about the production and distribution attributes of natural gas. This can allow for differentiated natural gas units based on their environmental impact. In this way, the sustainability features such as GHG emissions, production techniques, or leak rates can be commercialized as environmental attributes. This study aims to understand the potential benefits that Xpansiv’s blockchain technology platform can create for UBC’s natural gas procurement in its Vancouver campus. Can this technology have an impact on total GHG emissions, total costs, and UBC’s success in achieving its sustainability goals? To answer these questions, a fit-gap analysis is performed, and a simulation optimization model is built by using operations research (OR) tools. The fit-gap analysis has shown that the decommoditization of natural gas through the differentiated gas units can increase UBC’s procurement options and the usage of environmental attributes as a market instrument can help UBC potentially save costs. To quantify the impact, a simulation optimization model is created. According to the simulation optimization model results, the average total net GHG emissions are estimated as 258 tonnes, the average total cost of procurement and GHG emissions is calculated as $1,304,737, and UBC can achieve its 2020 sustainability commitment. Comparing these results with the status quo demonstrates that the unit cost savings is approximately $72.4 per tonne of emissions reduction. This implies that Xpansiv’s platform is useful in reducing GHG emissions, achieving the 2020 sustainability commitment, and saving costs.

Text

2020-03-27

Attribution-NonCommercial-NoDerivatives 4.0 International

http://hdl.handle.net/2429/73812

Business Administration - Transportation and Logistics

University of British Columbia

UBCV

http://creativecommons.org/licenses/by-nc-nd/4.0/