The mass balance traceability powered by blockchain Supporting a circular economy in the chemical industry 

Finboot Team
August 11, 2022

With pressure from all stakeholders scrutinizing brands on sustainability and environmentalism a material revolution is required to combat the global waste crisis and climate change. 

The chemical industry has long been a contributor and responsible for carbon-neutral targets, in addition to circular society technologies due to chemical prevalence in almost all manufactured goods. 

Material procurement and traceability are becoming ever more important. Circular economies cannot be created without traceability. 

The Solution for the Chemical Industry?.... The ‘’Mass Balance’’ approach. 

The mass balance approach allows manufacturers to know what percentage of their product is sustainable. 

What are the drawbacks? 

Scepticism as to whether the mass balance approach promotes circularity due to a lack of standardization and overly complicated systems has made it complicated to ensure that renewables are being used. 

Can the blockchain help us prove sourced materials are really circular and certified sustainable? 

The mass balance approach alone promotes recycled/renewable material accountability. However, blockchain technology aids with the certification of sustainable material uses, mass balance principles and trust/visibility due to its decentralized nature and immutability. 

What is circularity and why is it so important in the chemical industry? 

Whilst climate change, waste and pollution are purely environmental issues; a circular economy aims to benefit business, society and the environment as a whole; splitting growth from the consumption of finite resources. 

How a circular economy can reduce greenhouse gas emissions: 

● Extending the lifespan of existing materials. 

● Reducing waste. 

● Boosting economic growth. 

Pressure from The UN’s Sustainable Development Goals (SDGs) has resulted in companies exploring methods of waste and carbon reduction via loop-closing

environmentally friendly materials. Chemical companies are adopting circular economy business models in collaboration with universities and startups, accelerating circularity. 

What’s the catch? 

Many chemical businesses site expense as a primary concern. A result of challenges posed from such a dramatic shift. Already tight profit margins would be squeezed further, as every aspect of production would have to be altered. 

Other factors ‘out of the hands’ of any one chemical business include a dependency on appropriate recycling/emissions-capture facilities, as well as the nature of the product itself. 

How can we ease the transition to circularity? Mass Balance 

The mass balance approach is one of five common Chain of Custody Models (COCs), developed to incentivize the adoption of recycled feedstock, while easing the strain on profit margins. 

Essentially, the Mass Balance model mixes used materials with specified characteristics with other materials without the same characteristics, resulting in output proportional to the input. 

The purpose is to allow chemical manufacturers to gradually phase out fossil materials for more environmentally friendly alternatives. 

Independent audits throughout the transition check the origin and quantity of renewable feedstock, enabling certification. 

What are the benefits? 

An estimation must firstly be made as to the amount of waste generated by any one business. The quantity calculated is based on inputs, outputs and stock levels. A key benefit is how easily the calculations can be made, so long as the data is provided in common units. 

Other benefits include: 

● Ease of implementation and the negation of new factories/plants. ● The Mass balance approach benefits from genuine CO2 emission savings. ● An assurance that the new materials are of an equal quality. 

● The data required is available through national statistics and invoices, amongst others. 

Is this all just greenwashing? 

Although one of the key features of the mass balance approach is to allow traceability, it struggles to deal with the demand for proof, due to;

Lack of standardization: 

The fact that there is no requirement for segregation machinery allows organizations flexibility in the amount of renewable feedstock reported throughout the process. 

Lack of digitalization: 

As most of the processes used for mass balance have been developed in house, they are open to errors, and are cumbersome. 

Said systems were not designed to be scaled and implemented throughout the supply chain, leading to issues with confidentiality and security 

Traceability challenges: 

The mass balance approach doesn’t track chemicals themselves, rather volumes in and volumes out. 

Can new technologies be leveraged to ensure reliability, efficiency and transparency? BLOCKCHAIN TECHNOLOGY POWERING MASS BALANCE But what is blockchain? 

Blockchain is a digital database that records all transactions. 

Blockchain uniquely links (or chains) new transactions to the previous one, making tamper and falsification impossible. 

What are the benefits of a blockchain-based COC for chemical businesses? Increased traceability with tokens: 

Tokens are a way to digitalize a physical asset. As a physical product moves the token will move along with it. Each transaction or mineral is attached to the previous, making the process completely tamper-proof, visible and traceable. 

Transparency through decentralization and distribution type: 

The decentralized nature of blockchain means that all participants have the same control, and power over the data. 

The distribution of data is shared with all participants identically, synchronized in real-time. In the case of the chemical industry members have full transparency across the entire supply chain. 

Smart contracts eradicate greenwashing:

Smart contracts are digital contracts that self-execute under specific conditions, mutually agreed upon by participants. 

Smart contracts limit the risk of double accounting. Suppliers in the chemical industry would not be able to claim a specific amount of renewable feedstock different to records previously registered. 

Learn more about implementing the mass balance approach through blockchain here! 

Be sure to follow FinbootTech on Twitter and LinkedIn for updates on new technology promoting transparent circularity in the chemical industry.