On Thursday, Xpansiv, the privately held pioneer in blockchain-traded “Intelligent Commodities” and whose investors include BP Ventures, Occidental Petroleum’s Oxy Low Carbon Ventures, and global alternative investment giant Macquarie released a first-of-its-kind Digital Fuels framework for the issuance, trade, settlement and retirement of evidence-based (and blockchain-documented) ESG claims made specifically for fuels.
The framework is to provide a rules-based market for all stakeholders—including fuel producers, net-zero buyers, certification bodies, carbon-accounting initiatives, registries, independent-assurance providers, data aggregators, and investors—who share a common interest in accessing registered, tradable, intangible assets to differentiate fuels based on ESG performance.
The framework incorporates established principles for environmental and energy markets, sustainability standards, and GHG accounting by outlining an auditable process by which data is refined into an immutable, digital record of the underlying physical fuel. This digital record serves as a reference for registered, transactable ESG product claims associated with the underlying physical asset. The approach is broadly inclusive, and may be applied to natural gas, crude oil, aviation fuels, bio-based fuels, hydrogen and more.
The framework has two core attributes that could be transformational for digital, ESG-powered fuel trading: first, there is a rigorous, minimum throughout for ESG-asset integrity, so that emerging markets can move forward quickly and collectively to integrate and value ESG performance across global commodities. And second is a trademarked “Proof of State” function, subjecting fuel production data and related activities to encryption and independent validation.
The Digital Fuels Program leverages Xpansiv’s unique experience integrating environmental registries housing billions of dollars in ESG assets, portfolio management of those assets, and the operation of spot markets in voluntary carbon, renewable energy, and water—as well as the company’s experience translating fuels data into registered assets.
“Beyond voluntary carbon and renewable energy markets, the next step on the path to a low-carbon future relates to ESG performance in the fuels sector, beginning with GHG intensity,” said Cameron Prell, Head of Policy and Legal at Xpansiv. “The Digital Fuels Program is designed to support and accelerate this trend. Our intention is to do the heavy lifting to clear the way for market participants with the understanding that the program will evolve over time.”
In March, Xpansiv acquired OTX, a dual London and Milan-based company that was the first company to offer electronic brokerage for Compulsory Stockholding Obligations. The purchase of OTX, which has been expanding its operations into renewable fuels and associated certificates, marked Xpansiv’s formal entry into the U.K. and European markets.
