Green Hydrogen Organisation backs blockchain, announces partnership with Trovio

The Green Hydrogen Organisation (GH2) and Trovio have announced a strategic partnership to develop a global registry for “Green Hydrogen and Green Hydrogen Derivative Certification”. Production projects that meet GH2’s Green Hydrogen Standard will be licensed to use the label “GH2 Green Hydrogen” and will be eligible to obtain and trade GH2 certificates of origin using the registry.

The partnership will leverage CorTenX, Trovio’s blockchain-powered environmental asset registry that also underpins several other partnerships with public and private sector organisations. Trovio and GH2 are aiming to be operational by Q1 2025 and believe this technology will promote transparency, traceability, and compliance in the certification space. Blockchain has shortcomings, however, and it remains to be seen how these will be navigated.

Registries: an essential building block of certification systems

The GH2 and Trovio partnership is driven by a foundational need for any certification scheme: a reliable, secure, central registry. An independent central record of each certificate in a certification ecosystem is vital for tracing “green” hydrogen and its derivatives through complex supply chains, while maintaining transparency and integrity. This becomes all the more important as trading sophistication increases. Book and claim schemes, such as the maritime system being trialled by the Maersk Mc-Kinney Møller Center for Zero Carbon Shipping, cannot function without a central registry.

To maximise efficiency, these registries are digital. However, this poses risks. Digital registries can be vulnerable to deliberate manipulation and system errors, which can impede trust. Trust is essential in global supply chains spanning many individual nodes, and particularly for nascent supply chains like hydrogen and ammonia. For this reason, many in the certification space are turning to blockchain as a potential de-risker for digital registries.

The promise of blockchain

Trovio and the Green Hydrogen Organisation are not alone in recognising blockchain’s potential in the certification space. As noted by an H2Global report last year, SAP and Siemens Energy have each developed their own blockchain-based certification systems.

There are a few key distinctions between these blockchain-based certificate registries and a conventional digital registry.

First, a blockchain-based registry is immutable. Once a new block is added to the chain (i.e., a certificate is created), it cannot be edited. This means that it should be structurally impossible for information to be lost or manipulated as a certificate moves through a supply chain.

Second, blockchain ordinarily enables a higher degree of automation than conventional digital registries. The creation and transfer of certificates is governed by rules encoded into the software architecture itself, rather than by the discretion of central administrators. This typically means that actions in blockchain-based registries are instantaneous and irreversible.

Finally, registries built on blockchain will be highly transparent. Though participation in registries can be gatekept, once a participant is included they will have access to the same immutable information in the chain as the scheme administrators.

Trovio promotes its registry as having additional features on top of these basic differentiators. One such feature is its customisability. Trovio pitches its registry as a foundation that entities like the Green Hydrogen Organisation can build on, adding requirements (e.g., Know Your Client) and extra interfaces as required.

Another key offering is asset bonding. Two digital assets can be bonded into one while retaining all information embedded in the two original assets. In practical terms, this could increase the trustworthiness of offset usage; a unit of ammonia could be bonded with a certified emissions reduction, such as an Internationally Transferred Mitigation Outcome. This bonding could also have a role to play in facilitating the mass balance approach to chain of custody.

Potential blockchain downsides

While blockchain technology could promote the integrity, transparency, and efficiency of certificate registries, it has inherent downsides. Trovio and GH2’s approach to these issues will be vital to the registry’s success.

While a blockchain’s immutability is a signature feature, it is also a key challenge. If incorrect (or fraudulent) data is added to the chain, it cannot be removed. This increases the importance of auditing and verification as preconditions to participation in the scheme; a crucial design decision for Trovio and GH2.

Additionally, while blockchain offers efficiency gains in terms of automation and speed, that does not mean it is highly efficient across all metrics. Indeed, the proof-of-stake procedures usually embedded in blockchain technology to enable its decentralised operation can be highly energy-intensive. Trovio claims to have removed ‘the overhead of inefficient consensus mechanisms’, but the effectiveness of this remains to be seen.

Finally, and most importantly, blockchain will only be an effective contributor to the certification landscape if it is sufficiently interoperable with the regulatory frameworks that certification schemes seek to serve. GH2 and Trovio, for their part, believe this is possible:

[The GH2 & Trovio partnership] will also enable producers, traders and customers to ensure alignment with national and regional schemes such as the EU’s Renewable Fuels of Non-Biological Origin (RFNBO) requirements under the Renewable Energy Directive and forthcoming tax credit provisions under the US Inflation Reduction Act 2022.

From Green Hydrogen Organisation and Trovio announce Partnership to Establish a Global Registry for Green Hydrogen and Green Hydrogen Derivative Certification (Green Hydrogen Organisation, May 2024)

Whether this holds true will be determined by whether GH2 and Trovio can build flexibility into blockchain structures that, in a decentralised, rules-based ecosystem, ordinarily rely on rigidity.

To learn more, see Trovio’s summary of their CorTenX technology here and the full announcement of the partnership with GH2 here.