Transactability refers to the ability of actors in the differentiated gas or voluntary carbon market to trade products based on their environmental attributes.

Stakeholders, ratings agencies, registries, and standards bodies are increasingly establishing criteria or best practices for differentiated gas markets —enabling contracting standards.

To promote transactability of products based on emissions data, regulations should support–or at least not harm–the development of data that is interoperable across multiple systems and the development of standard, secure certification processes for differentiated gas and related products.

Established Transactability

The Role of Blockchain Technology

Distributed ledger technology (blockchain technology) and digital registries like EarnDLT  are poised to become a major enabler of transactability in differentiated gas, as they prevent fraud, ensure data harmonization, and increase access to the market.

Currently, emissions accounting through the Paris Agreement’s decentralized, bottom-up approach to climate accounting systems do not adequately avoid information asymmetry, double-counting, and fragmentation. This creates risks of greenwashing—fraud in climate accounting data.

Distributed ledger technology enables globally integrated accounting architecture. This technology starts with the use of nested accounting. Data is reported at the smallest unit of analysis, like a sensor at the project site. The information is accounted for at the company level, the city level, and national level. Then, the data is submitted to a virtual platform, where source-specific data and historical data is merged into a shared decentralized platform hub. The blockchain structure of the platform allows joint and open distribution of data ownership and access, reducing information asymmetry.

Blockchain technology means there is a digital identity for each climate actor and project that can be tracked along the value chain across different jurisdictions. Each identity is unique and encrypted. This feature improves trust among actors but also preserves privacy throughout the platform—eliminating the possibility of data tampering.

Through existing transactability mechanisms, several differentiated gas transactions have taken place. In December 2022, Williams reached an agreement with Coterra Energy Inc. and Dominion Energy Inc. to provide differentiated gas from the shale patch in Northeast Pennsylvania to consumers in Virginia and North Carolina. In the previous month, PureWest Energy signed a deal to provide a large west coast buyer with 30,000 million British thermal units per day (MMBtu/d) for one year. Bilateral transactions are rapidly scaling in the market, bringing about the need for increased trust, transparency, and transactability.

Growth of Bilateral Transactions

Who enables transactability?

Besides blockchain technology providers, there are many other players that enable transactability.

Standards Bodies create common processes, rules, requirements, safeguards, and methodologies for differentiated gas projects. These standards are upheld not only by market players but also by certifiers. Organizations like the North American Energy Standards Board (NAESB) and S&P Global Methane Performance Benchmark currently serve as standards bodies.

Registries. Registries are secure ledgers where differentiated gas certificates are accounted for from issuance to retirement. A common platform for all differentiated gas transactions provides buyers and sellers with transparency and prevents double-counting, allowing users to claim environmental credentials for emissions reporting. An example of a registry is MiQ Registry, a secure, digital ledger where all MiQ Certificates are held throughout their lifecycle. Xpanisiv also has a registry, XRegistries, which is an interoperable platform to transform commodity-production information into standardized digital assets products.