The blockchain and crypto domains have extended their roots into various unexpected sectors. One such field is biofuel as the digital currency space is set to serve this industry. Blockchain and biofuel are two completely poles apart sectors, which is why this integration has left many stunned. However, it is not always how it seems. This revolutionary change indeed is very promising.
Blockchain And Biofuel Overview
If you have little knowledge of the matter and are wondering “what is biofuel” and “what’s blockchain,” we have provided the answer right here. Biofuel is any fuel that is obtained through biomass (plant, animal waste, or even algae produce). It is a renewable source of energy as these biomass constituents can be replenished or restocked in relatively less time as compared to conventional sources of energy like petroleum or fossil fuels. On the other hand, blockchain is a decentralized system that is a kind of Distributed Ledger Technology (DLT), which is designed to contain an expanding list of individual records known as blocks.
Blockchain and virtual currencies are capable of transforming the entire commodity market. This is why these technologies have been garnering attention for their potential and even bringing in investments from participants in the natural gas, crude oil, metal, power, and agriculture sectors. In addition, several biofuel market players also keep an eye on the developments in this technology.
Blockchain technology is used in different supply chains to track product deliveries. This is something that even the biofuel industry has been accepting recently. Due to its transparent nature, blockchain eliminates almost all errors that would be caused if a manual track record of supply was maintained. Therefore, there have been various modifications in the energy industry, especially biofuel, which allow a smooth introduction of this technology.
The aforementioned tracking method involves the use of a complex system that requires third-party verification and authentication. This is very risky as a third-party audit might lead to some discrepancies in the report and might influence wrong decision-making. Therefore, blockchain technology must be incorporated wisely keeping in mind all the possible pros and cons. Also, in the case of the biofuel industry, its compatibility with the existing technology is also important.
Blockchain’s Role In Biofuel Traceability
Biofuel is one of the major topics that the energy industry is currently researching. In contrast, the data that defines the production and utilization of biofuel around the world has not been given much importance. But this can be solved with the integration of blockchain technology, which is a decentralized system that aids data management. It also helps by tracking the supply records to ascertain the actual amounts of production and usage of this eco-friendly fuel.
Biofuels have been considered to reduce the pressure on non-renewable energy resources like petroleum and fossil fuels. However, if this fuel itself is wasted and we do not have proper records for it, all efforts made in the development of the environment-friendly fuel alternative would be completely futile.
Now, let’s know what is biofuel domain’s biggest concern regarding biomass usage. The extraction of biomass that is required for biofuel production might lead to deforestation if a large number of trees are cut for wood. This is why industry experts have recommended the combination of blockchain and biofuel. While the latter connects us with nature, the former is known for its digital excellence. It would lead to a perfect blend of traditional and modern elements in today’s world.
Since the application of the above-mentioned combination has been increasing, we need to address concerns such as efficiency, privacy, and security in the biofuel domain. Therefore, experts have suggested the use of an efficient blockchain module that is developed on post-quantum cryptography. This is necessary to prevent quantum computer attacks in the biofuel system, which can be done through a post-quantum cryptographic system that is based on multivariate signatures.
On the other hand, if privacy protection issues arise, they can be resolved with a blind signature system that would be operated on a post-quantum cryptographic scheme. For better efficiency in the blockchain and biofuel model, there should be improved payment mechanisms. Moreover, when blockchain and biofuel production data are interlinked, we can get the exact records of supply.
If you want a detailed yet brief idea of what’s blockchain providing biofuel with. Here is a joint study by the Roundtable on Sustainable Biomaterials (RSB) and Bioledger named ‘Blockchain Database for Sustainable Biofuels: A Case Study’ highlights the following points where the combination of blockchain and biofuel shows that the latter is highly benefitted.
- A full blockchain database solution ensures true decentralization and transparent governance of trades with blockchain nodes hosted by trusted regulators and stakeholders.
- The system should be designed to enable stakeholders to easily integrate data using new digital interfaces or existing data systems, while these interfaces need to be carefully managed to control data quality.
- This solution had business rules developed in line with the specific use case (biofuel markets using the EU RED Voluntary Scheme), but a scalable solution should include the development of a configurable business logic layer to account for different markets.
- To increase the strength of evidence and minimize the risk of errors and fraud at the data point of entry, the blockchain solution should include the use of biometric authentication, photos, signatures, and geolocation.
- A full blockchain solution should record all mandatory data points from EU RED requirements within its data architecture, in order to replace the currently ubiquitous paper-based chain of custody documents.
- Existing legal agreements between supply chain companies and their auditors, certification bodies, and voluntary schemes already provide the necessary protections to allow private disclosure of sensitive commercial data within the blockchain database.
Other Blockchain Applications In The Energy Sector
Blockchain potential applications are not limited to just the biofuel industry. It has found its way into the majority of the energy sector, which is one of the most important fields today. Some of these potential uses of this digital space forerunner are listed below.
- P2P Trading: Blockchain helps in the selling of surplus renewable energy to other participants in the network via automated smart contracts. Numerous peer-to-peer (P2P) trading systems like Greeneum, Rowan Energy, and Power Ledger, have been developed in the past and many more are still underway.
- Renewable Energy Certificates Management: It also aids in the real-time and automated recording, and awarding of the renewable energy certificates in order to deter double counting.
- Grid Management: It enables one to automatically control all power and storage flows that operate through a grid. This would indeed be beneficial for balanced supply and demand as renewable energy integration is growing at an unprecedented speed.
- Electric Vehicle Charging And Sharing: Blockchain technology can be implemented in Peer-to-peer electric vehicle charging stations or applications and grid services that encompass this domain.
Some of the above-mentioned points are also applicable to the biofuel domain as well. Since the biofuel industry is relatively new, it does need the support of different mechanisms and technology for smooth and improved performance.
A Digital Yet Natural Wind Up!
So far, the integration of blockchain and biofuel together is considered to be a good idea. This is because of the unharnessed blockchain potential that would surely aid biofuel production and consumption around the world. Also, for sustainability development, these renewable fuel sources are to be utilized in an optimum manner as wastage would again be detrimental to us. This is where blockchain intervenes and aids in tracking the supply chain of this industry.