From Logic Magazine, March 27:
Net zero is becoming a lucrative problem for software to solve.
....Initial Tree Offering
In 2012, Derrick Emsley cofounded Tentree, a Vancouver-based clothing company that plants ten trees for every product sold. That sounds simple enough, but managing the planting projects turned out to be a challenge. “The hardest part was monitoring and verifying the work and claims we were making,” Emsley told The Hill’s Saul Elbein. Confirming that the trees they paid to plant were actually planted required costly in-person trips and lots of managerial overhead—it meant “traveling there, auditing them, making sure those trees were in the ground having an impact,” according to Emsley.So Tentree started developing software to help streamline the process. That software became the basis of Veritree, a publicly available “planting management platform” unveiled in the fall of 2021. When a company that wants to offset their emissions signs up for Veritree, they get access to a user portal that lets them place orders for new tree plantings and displays metrics on their current tree holdings. These metrics are collected by the planters in the developing countries, who use custom-made “collect devices”—essentially modified smartphones designed to work in internet-limited environments—to take geotagged photographs of the trees. The trees get a unique digital token, and become digital inventory, hosted on the Cardano blockchain. Using a blockchain is supposed to reduce fraud by ensuring that trees are only counted once, so that the same forest can’t be claimed by multiple entities—a well-known problem in the world of carbon credits.
Veritree is in its early days, but it hopes to become “an operating system for the restoration economy,” in Emsley’s words. An “Initial Tree Offering” was used to raise money for a “First Edition Forest,” which features trees in Madagascar, Indonesia, Nepal, Kenya, Senegal, and Haiti. The appeal for corporations hoping to make good on their net-zero pledges is obvious: they can invest in a reliable carbon offset program and obtain a real-time picture of precisely how much carbon is being offset, and share that information with the public.
Veritree is far from the only platform hoping to dominate the net-zero space. A wide range of digital services is being developed by companies large and small. Established “Big Four” accounting firms like KPMG and Deloitte, as well as tech giants like Salesforce, are creating tools for Environmental, Social, and Governance (ESG) accounting that help measure the carbon footprint of firms, among other things. Some companies combine carbon measurement with a portal for purchasing offsets, such as the Atlanta-based startup Cloverly. Still others try to track negative emissions, like Veritree. Agreena, for example, is a Dutch startup that monitors changes in farmers’ fields after they switch to regenerative agriculture, and issues them e-certificates. Companies can sponsor these carbon reductions, and use Agreena’s platform to track them.
Atoms into Commodities
The creators of these new platforms believe that they can solve the knowledge problem of net zero with software. Given the proliferation of net-zero pledges, this is a profitable problem to solve. But the platforms all approach this problem in a particular way: they turn carbon into a tradable commodity. This points to a broader point: net zero, in its current configuration, is a market-based project. It requires creating a global market where offsets can be freely bought and sold. This market already exists, but it has much room to grow; Mark Carney, the former governor of the Bank of England, says it could be worth $100 billion.Creating that value, though, hinges on turning lively carbon atoms into a smooth commodity. And that task, in turn, hinges on code. The new platforms aim to improve and expand carbon markets by packaging carbon into a reliable product that can be easily bought and sold online. Their value proposition isn’t just about using digital tools to do superior carbon monitoring and accounting, but about disrupting traditional carbon markets by disintermediating them.
In traditional carbon markets, supply and demand is linked by retail traders who purchase carbon credits from suppliers and bundle them into portfolios, to be sold on to brokers or end buyers. This is an inefficient system, with too many middlemen; it is also rife with fraud. The new platforms want to cut the knot by connecting buyers and sellers—that is, the producers of positive emissions with the producers of negative emissions. Think of Veritree: corporations can purchase offsets by directly sponsoring planting projects in the developing world, without having to navigate a tangle of traders and brokers.
The platforms don’t just want to revolutionize existing carbon markets, however. They also want to create new ones. Climate Impact X is a Singapore-based carbon exchange that plans to build a “forest carbon marketplace” that uses remote sensing, artificial intelligence, and blockchain to “open participation to forests that were previously left out of the climate solution.” The idea is that a data-driven approach will lower the barriers of entry for the producers of negative emissions and enable more of them to participate. And, if given the chance, they probably will: there is a lot of money to be made. After languishing for many years, carbon offsets are trading at record highs.
Risk Factors....
....MUCH MORE
Earlier:Wall Street Firm Makes a $1.8 Billion Bet on Forest Carbon Offsets
