Interview by Tom Lyons
We don’t usually associate companies like Shell with blockchain. How long has Shell been in this space?
Shell has had a blockchain team since 2016. We are one of the earlier energy companies involved in the space. We were a founding member of the Energy Web Foundation as well as conveners of various blockchain initiatives in the energy sector. Shell has been involved in exploring how blockchain and Web3 can be applied as a solution to various problems, particularly in the context of the energy transition to a lower-carbon and sustainable energy system.
What was your original focus, and how have you evolved?
Our focus initially started off very much around improving existing processes. How can we do what we are doing better, cheaper, and faster by using blockchain? After that, we started looking at ways to use blockchain to enter new markets. And the third piece is where we are now.
In the age of Web3, NFTs, the Metaverse, and DeFi, this third space is about looking at new business models. Brand new ways of doing things, new sources of customers, exploring and tapping into business opportunities from avenues that weren’t on the table before.
Can you give examples of the new business models you are discussing?
Take the energy transition. We are seeing a shift from centralized to much more decentralized energy production. When producing oil and gas, economies of scale have typically been very important. There are large oil and gas fields that require heavy capital investment. In the energy transition, we are moving towards solar panels on everybody’s roof. We are also looking at electric vehicles that might become energy storage devices, so used both for consumption as well as storage and dispatching.
This transition means a potentially significant scope for decentralization on the energy production side. Another example is large national grid structures, where power transmission has been primarily in one direction from power producers to power consumers. Now, societies are building two-way systems where “prosumers” can produce power as well and sell it to the grid.
Whilst this decentralization is taking place in the energy system, we have a similar decentralization occurring on the web. So, Web3 and Blockchain technologies can offer unique advantages in managing decentralized systems. We see these two shifts marrying very closely.
Then comes the sustainability piece. When a company makes sustainability claims, they are saying something to the market, regulators, and customers about, for example, the origin or carbon intensity of its energy products (chemicals, fuels, or electrons). These claims need to be substantiated with transparent verification.
Blockchain can bring a layer of certainty to customers that the products they purchase are from, say, renewable sources or that the carbon credit scheme they signed up for represents the removal of carbon from the atmosphere and is not double-counted. As blockchain can track renewable energy from source to consumption, it can give customers additional insight into its low-carbon attributes.
Are you working on any specific projects in terms of sustainability?
Yes. Avelia, a platform to accelerate the adoption of sustainable aviation fuel (SAF), is one of our flagship projects and is about just this type of use case. Avelia tracks when SAF is injected into the complex, global jet fuel network and when it is consumed by an airline or corporate flier. It allows these buyers to claim the use of SAF that they have paid for, even though it may not be physically available at a specific airport but is burned elsewhere in the sky.
Avelia uses Energy Web Chain, which is an EVM-compatible public blockchain. Using public blockchain is an important aspect because the philosophy we have within our team is to focus on public verifiability in order to really enable transparency and traceability.
We have other projects and PoCs as well in the space. We strongly believe that leveraging emerging digital technologies such as blockchain will help accelerate the energy transition whilst ensuring trust in our sustainability claims and those of our customers.
What other projects are you working on?
Another major project that has recently gone live is Falcon, which we co-developed with Wipro and piloted in our operations. Falcon is a platform for industrial supply chain management, which was built with Wipro and launched on the Polygon chain.
Falcon essentially eliminates the need for a physical paper trail for heavy industrial equipment, which makes traceability and auditability difficult. Instead, Falcon uses digital product passports to make data more accessible and trustworthy.
In addition, we’ve also worked on the traceability of sustainable chemical products. We ran a couple of PoCs with two different players to show if plastic is produced from a bio-based source or a circular source (recycled), differentiating it from virgin plastic. Here, we are using blockchain to provide traceability through every point in the supply chain, from material source to end-customer.
You recently announced a collaboration with Gitcoin. What was the aim there?
This initiative is focused on regenerative finance or ReFi. ReFi is explicitly exploring how Web3 infrastructure and governance models can support sustainable or regenerative economies. This space is really quite nascent, and we were asking ourselves how we can work with and support startups that are building the enabling solutions.
The collaboration with Gitcoin came about because we love what Gitcoin is doing; it’s a novel way of funding using the wisdom of the crowd to support projects in many areas, including climate action. We felt their approach was most appropriate given the early stage of maturity of ReFi.
Shell provided grant funding to Gitcoin for four of their climate rounds, and projects can opt-in if they want to receive a share of these funds. It’s the community that is deciding which projects to fund and by how much.
This, by the way, is the first time that Shell has worked with a DAO.
Turning to Ethereum, what are the most important developments you see in the business Ethereum ecosystem today?
Key Ethereum developments are the switch to a proof-of-stake consensus mechanism, moving away from proof-of-work, and the increasing enterprise shift from private to public blockchains.
Initially, we did a lot of work with private chains. Naturally, we are focused on data security and privacy, and therefore, initial efforts consisted of de-risking the technology and proving compliance. But our key pillars are traceability, trust, and transparency. And it’s very clear that that can only be delivered at scale by public blockchains. With solutions such as zero-knowledge proofs, we can see a greater ability to use public blockchains while maintaining the security and privacy of data where needed.
Another advantage to using a public blockchain is the ability to gather a larger ecosystem of players. These ecosystems are far more likely to form around a public, permissionless setup than in a private chain with a walled garden.
And when talking about public blockchains, one factor that really speaks for Ethereum is the number of EVM-compatible chains. That makes for a larger ecosystem but also, by definition, provides some level of interoperability. That is also something key for us to consider. Because we want to ensure that as we apply Web3 to the decentralized energy system of the future, our different solutions can talk to each other if we want them to.
Vikram Seth serves as Head of Blockchain & Web3 at Shell, where he plays a pivotal role in integrating blockchain and Web3 technologies into the energy sector. With over a decade of experience in this industry, Vikram is deeply committed to leveraging these technologies for global sustainable development. He has a particular focus on using DeFi, cryptocurrency, and NFTs in projects aimed at sustainable and regenerative development.