Ixo.world to expand the “internet of impacts”, one cookstove NFT at a time
Grant-funding phase is over for ReFi frontrunner Ixo. It’s now looking to build out commercial use cases for its digital MRV and Web3 platform — co-founder Hannah Oh shares more.
About 3.2 million people died in 2020 from disease caused by household air pollution, according to the World Health Organization. To put that number in perspective, that’s about 40% of Singapore’s population.
Household air pollution is largely caused by cooking on open fires or stoves which use kerosene, biomass or coal. And if you don’t die from heart disease or lower respiratory infections, you still risk injury from simply being in close proximity to open fire.
Enter the clean cookstove. Some are solar powered, others by electricity. Some still burn carbon-intensive fuel sources like charcoal or wood but do it more efficiently.
Clean cookstoves aren’t a new phenomenon, neither are the clean cookstove carbon credits that are generated from the use of these products. But public interest in them has spiked due to the controversy around whether REDD+ carbon credits are beneficial to the climate.
It is, after all, easier to prove the climate and social benefits of clean cookstoves, as opposed to making claims that carbon financing has actually stopped deforestation. Nonetheless, some clean cookstove projects have also been hit with allegations that they are exaggerating their carbon removal benefits by 1000%.
In this podcast, I speak to Hannah Oh, former head of water strategy at Bayer and since last year, co-founder of Ixo.
Founded by Dr Shaun Conway in 2017, Ixo is an impact-focused blockchain company that does two things. First, it provides digital measurement, reporting, and verification (dMRV) infrastructure for companies to track their corporate social responsibility (CSR) investments. Second, it’s building out what it calls an “internet of impacts” on Web3.
In our conversation, Oh chats about how Ixo’s dMRV infrastructure is being used to accurately track the usage of clean cookstoves, while providing more granular data on the social and health benefits derived from the use of these cookstoves in real-time.
The ability to monitor the usage of the devices digitally is critical in addressing concerns that the climate benefits of cookstoves have been exaggerated.
As a frontrunner in the ReFi space, Ixo has been experimenting with different models for impact investing. One of them is crowdfunding via NFT sales.
You (that’s you, dear reader) can sponsor a Supamoto clean cookstove for a family in Africa by buying a Supamoto NFT. As each Supamoto cookstove is connected to the internet, you can monitor the usage of the cookstove even if you’re located halfway around the planet.
Another interesting financing model is the Alpha Bond, which adjusts the price of the bond based on the changing risk profile of the bond’s assets. It can also trigger payouts to investors when milestones and targets have been reached.
We recorded the podcast in March this year and since then, Ixo has revamped its website. If you’re interested in knowing more about what Ixo and Conway have been tinkering with, there are wonderful nuggets of information in there, as well as on Conway’s Medium page. Grab a large mug of coffee and be prepared to read for a while.
The interview transcript has been edited for flow. There’s an especially interesting part about impact bonds and how tokenising them for retail buyers on Web3 may (or may not) work out. It’s not in this transcript but you can listen to the discussion in the full recording on Spotify or Apple Podcasts.
Han: Thanks for coming on the show. I want to probe you a bit more about your history at Bayer. Often there’s a big disconnect between what the corporate stakeholders want, and what is needed on the ground. So how did you bridge or even balance these distinctive needs?
Oh: I really come from the agriculture division rather than the pharmaceutical division. And I spent about 70% of my career in the field, in the most rural part of Lampung in Indonesia, in Sumatra, in Sulawesi, in places where many people don’t go. That’s where the real changes happen.
So I’ve seen firsthand through the technology and the products that we serve to farmers have changed their lives. For example, through high-yielding seeds.
Those living in the developed world have criticised these seeds for being genetically engineered or have certain harmful chemicals.
(Read this report by Greenpeace for a taste of what you’ll find if you Google “Bayer” and “GMO”)
But there is no simple right or wrong answer. I think it’s important to see both sides of the story and not just follow the media about what bad these corporations are doing.
Because of the higher yield that the farmers are now deriving in their one-hectare farm, they’re able to send their kids to school, they’re able to get their daughters married, they’re able to build a house. These are real things that are happening on the ground when they adopt technology in the right way, and not overusing pesticides or leaning in any extreme direction.
For me, that was my reason for staying at Bayer. And now I feel like scalability is something that I want to tackle. That’s why I decided to move on to Ixo.
Han: What are the challenges you experience in the course of convincing people on the ground to use the digital tools from Ixo?
Oh: The proliferation of digital technology in emerging markets is higher than anything that we’ve seen. Of course there may be connectivity issues in the rural areas but most farmers are equipped with smartphones.
If it’s not the 70 -year-old farmer, it’s their children who are actually constantly on the web and sharing information with their parents.
This is kind of the world that I’ve seen evolve in Africa and in Asia, where the rural communities are leapfrogging to the latest kind of technology. So even if they’re not able to get a bank account open, they have access to mobile payments.
The real beauty is we can now measure some of the impact that they’re producing. For example, when they adopt regenerative agriculture in a hectare of land. If we’re able to measure the soil carbon sequestered, we’re able to create a tradable unit with economic value. Today many people know it as a carbon credit.
Carbon credits can be an additional revenue source for farmers or for women in the rural communities.
When they avoid boiling water because there is water purification they can now obtain clean water through UV disinfection and auto chlorination, they’re entitled to benefit from carbon credit schemes. And now they’re able to receive the value of those carbon credits through their mobile phones.
They don’t have bank accounts. But they can convert those carbon credits into something that is meaningful for them to use such as crop insurance, energy purchases, or purchasing cookstoves or microfinance loans.
Han: Do you have any specific stories to share? So I’m just very cognizant that we’re talking very theoretical at the moment. But you have experience on the ground. So do you have an example of someone whose life was changed?
Oh: I’ll give you an example of cookstoves. The pollution coming out of the cooking sector is actually bigger than the airline industries combined.
We have a project in rural Zambia that’s live and commercialised. We provide iotized (i.e. equipped with internet-of-things sensors and connected to the internet), high quality modern cooking devices for about 10,000 users.
These cookstoves are provided for free, as oftentimes the users have no upfront capital to pay for them. As they are using these cookstoves, we track the consumption data of fuel, the cooking sessions, and cooking hours by minutes,
It’s all real time because these are all iotized and sensors. We also bring in other sources of verification data such as proof of delivery for the pellets that are burnt in the cookstove, payments of those pellets and delivery data of those pellets.
What’s produced is a really robust set of data to verify that the clean transition has happened in that household. Through this, the households are entitled to get carbon emission avoidance credits. And they have the right to decide what to do with it.
They can decide to sell those credits. We create a digital twin of those cookstoves so that the rights to the credits can be transferred to whoever the producer of the credit decides to pass it down to. Or they can use the value of the credit to buy crop insurance. We have a partner in the insurance sector who provides access to crop insurance, paramedic insurance, as well as buying water or necessary household goods.
Besides the additional revenue source, the users also save time. Previously they would have to forage for wood in the forest next door, or head to the market to buy a big, heavy, and expensive bag of charcoal. So there’s CO2 abated, additional revenue unlocked for the users, and also social benefits provided with this scheme.
These are real, live systems that we piloted and launched last year. Now we’re scaling this to the other parts of Africa. In a few months, we’re going to be replicating the exact same kind of mechanism for water projects in India.
So as women are receiving clean water at a village level, there is a calculation, baselining and proper accounting to account for how much of CO2 has been avoided because it requires no boiling of water and chopping down of wood.
And we redistribute back the value of the credits generated back to the communities, whether it is water benefit credits or carbon credits.
Han: Who pays for the manufacturing of the cookstoves?
Oh: The project financiers are usually project developers that are seeking investments from both the private and public sectors. Besides financing the initial manufacturing cost of the cookstoves, there are other operational costs that need to be financed as well.
These project developers can pre-sell the carbon credits that will be generated from the use of the cookstoves. Because we measure the outcomes on a real-time basis, the risk level gets adjusted, and these credits become very tradable.
These cookstoves generate about four high quality credits a year. It’s considered high quality because each credit comes with a really robust data set that quantifies the health benefits and social impact benefits to the users. We had a buyer at US$25 per credit, which is almost unheard of in the cookstove sector.
But besides pre-selling the carbon credits, there are other financing mechanisms too. Whether it is through bonds, or actual investors that are looking for solid returns as an investment class, or development banks that are looking for really solid projects that can measure the outcome in real time.
Han: Could you give me a sense of timeline? How long does it take to issue one tranche of cookstove carbon credits?
Oh: We have the ability to issue credits when the impact happens. Typically, we issue on a monthly basis. So that allows even faster deployment of profits and return from the project, to be deployed back into the project.
There’s velocity of capital being redistributed and it has this compounding effect.
We’ve adapted our methodologies (for the origination of carbon credits) from Gold Standard and Verra. But we often go beyond and above what’s required in terms of the quality of the data that we collect.
For example, we look for data sources with the least amount of human input. Because as soon as you ask a farmer or householder to enter a manual data, or if you send a third party auditor for spot checking, that creates room for human error in the dataset.
In addition, the auditor checks a sample of the entire batch of cookstoves. It’s usually 400 out of 100,000 devices. We don’t believe that that’s good enough.
Each and every one of our cookstoves are producing real data without any human intervention and that allows for real-time monitoring of every single device.
Because there has been a lack of data, a lack of a proper accounting system, and a very long lead time for carbon credit issuance, that’s led to a lot of scam credits being originated.
That’s exactly what our AI verification and data-driven approach can solve.
Han: Besides cookstoves, can the Ixo platform be used for other types of impact projects?
Oh: We are sector agnostic. We can apply the digital infrastructure of measuring, reporting and verifying to any sector.
Let’s say in cases where we need to quantify the climate outcome for the energy transition. It could be the shipping sector, it could be aviation, where there is now more purchase of sustainable aviation fuel, and same goes for shipping where you have to buy biofuels and retrofit devices, or use sustainable paint coats to make ships sail faster and more energy efficiently.
It could be in the real estate sector, where there’s now more sustainable buildings and materials that go into solar panel installation.
Anywhere we know real transition happens, and if we can actually procure the data, we can create all the different kinds of data linkages. We also have our proprietary AI model that helps predict the likelihood of certain outcomes being achieved and determining the cause and effect.
Han: What’s the ideal partner for Ixo?
Oh: Getting to net zero is seen as a cost to many companies and we want to shift that paradigm by being able to quantify their initiatives and decarbonization efforts and quantify them. We also want to be able to create monetary value for companies through their sustainable transition.
So this is where we look for B2B partnerships, particularly with the companies that are involved in the infrastructure across the sectors that I mentioned earlier.
We’ve also gotten a lot of requests from foundations and NGOs. We’re working with Hong Kong’s IDCC (Impact Data Consortium Chain), to provide the 80 NGOs in their network with a transparent database and dMRV infrastructure to measure, record, and verify their impact for their donors.
Han: What are your plans in Asia moving forward?
Oh: Our team is located in Lichtenstein and our deep tech professionals in South Africa. The Singapore entity was established to focus on commercialization of Ixo into different business use cases. For example, in shipping, aviation, clean water, utilities, and so on.
As companies get into their net zero commitment, we help them measure their own decarbonization efforts and we can help create a digital carbon credit as they go through their net zero transition.
We were grant-funded most of the time for the last several years to build the Ixo protocol. Now we are building commercial awareness about what Ixo can do.
