GreenToken by SAP in blockchain recycling pilot with Japan’s DIC Group – Ledger Insights

GreenToken by SAP is a blockchain solution aiming to provide traceability for raw materials for recycling purposes. Major Japanese chemicals manufacturer DIC has announced plans to conduct a pilot with the SAP blockchain solution involving recycled plastic inputs. However, the use cases for GreenToken are not limited to plastics.

“Consumer awareness of the circular economy is high. This has increased demand for sustainable packaging,” says Yuji Morinaga, Executive Officer and General Manager of DIC’s Packaging Material Products Division. “Our work with the GreenToken helps substantiate environmental claims, and supports our mission to advance the recycling of plastics and build a closed-loop recycling system that employs chemical recycling.”

What is GreenToken by SAP?

Something you may not realize is when you buy a product that says it’s recycled, it may only be semi-recycled. Suppose a company manufactures 1,000 items and 30% of the inputs of the raw material are recycled. In that case, it labels 300 of the 1,000 items produced as recycled if it’s using the mass balance accounting methodology.

Some consider the mass balance methodology controversial if implemented in certain ways.

New plastics are often made with a mix of sustainable pyrolysis oil, which is recycled, and crude oil. Chemically the two inputs are similar, which is why pyrolysis oil is usable. But it makes it very tricky after the fact to figure out the proportion that comes from recycled raw materials. A manufacturer will know that it needs three tons of that raw material to produce 4 tons of the final product.

Hence during the production process, the idea is to use GreenTokens as a digital twin for the raw materials to enable accountability and transparency. Although perhaps auditability is just as valuable. 

GreenTokens might have parameters specific to a company’s production process, such as conversion factors from raw material to the next output stage. Those sorts of details can be kept private. But when the outputs are passed to the next company in the supply chain, it might carry information about the origin, carbon footprint and proportion of recycled material.

Previously GreenToken was used in a plastics recycling Proof of Concept that included BASF, Mitsubishi Chemical and SCG Chemical. 

The solution uses the Quorum enterprise blockchain.

DIC project

DIC produces polystyrene for food packaging and has an existing recycling system that converts used polystyrene containers back into styrene monomer, polystyrene’s precursor. GreenTokens will be used to track the product across the entire recycling process and supply chain.

Meanwhile, plastics recycling is a popular use case for blockchain. Many of the solutions use chemical markers to create digital twins with startups such as Circularise, Security Matters and Circulor.