I firmly believe in the dictum that to manage something, one must be able to measure it, and Xpansiv’s Digital Feedstock allows producers to directly measure the environmental impact of products, allowing investors to determine a market price for what sustainability is worth. This month, Xpansiv announced that it has published a written framework to govern the issuance, transaction, settlement, and retirement of evidenced-based ESG performance claims associated with fuels. This framework will set rules that will enable stakeholders in the fuels business – including producers, industrial and commercial consumers, carbon registries, carbon credit buyers, and independent data verifiers and publishers – to do two important things:

  1. Gain confidence that the measurement of environmental impact related to fuel production meets a minimum reliability threshold and
  2. Gain access to a mechanism by which operational data related to fuel production are encrypted and subject to automatic independent validation (what Xpansiv calls “Proof of State”)

What this means is that market participants will be able to readily understand the environmental impact of the mining, production, refining, and transport of all types of fuels – natural gas, crude oil, aviation fuel, bio-based fuels and “green” and “blue” hydrogen. Understanding that, markets will be able to set the value of low-impact production methods. Producers will be able to sell two commodities – the fuels themselves and the record of the ESG attributes of those fuels. They will be incentivized to produce cleanly and producers that fail to do so will go the way of buggy whip manufacturers.