Blockchain-enabled carbon tracking in the oil Industry: A simulation-based study supporting ESG integration

Abstract

The oil industry is increasingly being compelled to reconcile the complexity of its carbon-intensive business with Environmental, Social, and Governance (ESG) aims. ESG compliance is being handicapped by existing carbon reporting frameworks that are commonly fragmented, audit-driven, and subject to data falsification. This study explores how the use of blockchain technology can improve data integrity, traceability, and compliance costs and, as a result, transform oil supply chain carbon emissions monitoring. Through simulation-based evaluation, we are comparing systems supported by blockchain to conventional emission reporting systems through performance metrics such as cost of verification, audit lag, and traceability accuracy. To record carbon data at all locations, the simulation is combining smart contracts and decentralized ledger nodes to replicate a regional upstream midstream oil supply chain. In accordance with the study, blockchain integration enhances audit effectiveness by 91%, traceability by 36%, and lowers verification costs up to 70%. The study recognizes blockchain as a key digital infrastructure for sustainable business functioning and gives insightful recommendations to make ESG reporting easier for heavy industries.