How IoT can create an entirely new product for an era of ESG

I love talking about how the internet of things can make the invisible visible, but it can also make the approximate actual. By which I mean that, instead of just estimating something, we can use sensors to measure the actual speed of a motor or the contents of a particular batch in a batch process.

And by turning that approximate measurement into an actual measurement, it’s possible to create highly differentiated or even entirely new products — especially when it comes to meeting the needs of Environmental, Social, and Governance (ESG) investing. With that in mind, Phillips 66 is looking at sensor tech to help it create a product called “differentiated gas.”

As Anand Pradhan, head of tech ventures at Phillips 66, told me, it wants to use IoT sensors to track leaks (including methane leaks) on natural gas pipelines. Historically, companies would measure methane leaks by getting an approximate read based on sensors attached at a given location. The readings from those sensors represent spot tests that are not representative of the actual potential for leaks.

They don’t provide exact information. Cheaper and more reliable IoT sensors, on the other hand, could be installed quickly and easily and could be used to track precise measurements that determine how much methane is leaking. And according to Pradhan, such certitude over leaks changes the type of product that the industry could sell.

Specifically, it could allow the company to offer what’s called “differentiated gas,” which is certified as being responsibly sourced and produced in a way that minimizes methane leaks. The gas goes through a third-party evaluation and, as companies try to meet their ESG goals, can be sold for a higher price than regular natural gas. So not only is smarter sensing helping track leaks more accurately, it would enable the industry to create a more profitable product.

This ability to deliver accurate information as opposed to approximations will help in other sectors as well. For example, chocolate companies are currently focused on the news that many popular chocolate bars contain high levels of cadmium or lead. The cadmium has leached into the soils of places where cacao bushes are grown and so is ending up in the beans used to make the chocolate. Lead gets into the beans as they are drying, when lead-contaminated dust and dirt settles on them.

The IoT probably can’t solve the problem at the source, but dedicated sensors installed as part of the chocolate manufacturing process could detect cadmium and lead levels in each batch of chocolate, which could be used to create a new labeling scheme that lists the amount of toxins in the sweet. From there, premium versions of chocolate bars would be those that are certified as having less cadmium or lead, or (ideally) none at all.

In an ideal world, soil sensors would be deployed on cacao farms so that trees are planted in places where soil contamination is lowest. Or farms would participate in expensive soil remediation. Either way, getting heavy metals out of cacao is likely to increase the cost of producing chocolate and by extension, its price. Here’s more information on the potential for IoT and automation to help drive ethical chocolate production, including an explantation of why ethically produced chocolate will cost more.

Efforts to account for pollutants will only increase as we become more aware of the damage done to the environment, especially as that damage shows up in ways that harm both health and the bottom line (insuring against climate change is expensive). Not only does the internet of things provide a way to account for pollutants, but it does so in a way that will drive greater adoption of monitoring options, and create new revenue streams.

Update: To clarify Phillips 66 is not currently selling differentiated gas, nor is it using Shoreline IoT for methane leak detection.