1 Ton of Carbon ≠ 1 Ton of Carbon
Startups are giving meaning back to carbon offsets through remote sensing.
Just about every time I check the news I read about yet another company committing to sustainability. There has been a slew of public emissions-related announcements in the last couple of years by CEOs of some of the biggest multinationals. Terms like “climate neutral” and “carbon zero” indicating a transition to a zero-carbon economy. The world’s largest investor, BlackRock, now expects portfolio companies to disclose their direct and power-related emissions; Microsoft aims to be carbon negative by 2030; Starbucks commits to be resource positive by 2030; Amazon pledges to be carbon neutral by 2040.
These science-based targets are made possible with 1) carbon offsets, a way to compensate for emissions by funding an equivalent carbon dioxide (CO2) reduction elsewhere (like a reforestation project), and 2) carbon credits, the tradable certificates that represent offsets. The credits are voluntarily traded by individuals and companies in the voluntary carbon market.
On the surface, it all seems great — because 1-1 = 0
Except a quick search reveals that offsets get a ton of bad press, mainly for their murky deals. Last December, Bloomberg published an article investigating big carbon credit transactions involving JP Morgan, BlackRock, and Disney. They discussed the poor environmental efficacy of the transactions and the lack of stakeholder consensus for what a carbon credit even was.
Like any market, some projects are effective and others are, well, less effective. But the case mentioned above isn’t isolated at all, it’s commonplace in the voluntary carbon market. Explained by a mix of lax regulation and outdated methods for carbon accounting, the measuring and quantifying of carbon historically done manually by boots on the ground.
The carbon accounting process needs to see some innovation.
Startups are working hard to fix carbon offsets with space tech
In 2020, over 1,000 satellites were launched into orbit. That makes for roughly 6,000 satellites orbiting the earth.
Many of them are being used for remote sensing. The term remote sensing deals with space-borne and aerial imaging systems used to collect data on everything from the weather to seismic activity to gold mining. The technology has been around since World War II. Its most recently discovered use case is carbon maintenance. The extra-terrestrial tech can collect accurate, consistent, and reliable carbon storage data.
To understand why remote sensing is a powerful tool for carbon accounting, we’ll go over what to look for in an effective carbon offset project and how remote sensing can validate.
The UN says that offsets must be real, additional, and permanent. These are the universally accepted criteria.
Real — The project and the offsets it provides must exist. You may be wondering why the UN feels the need to say this. Believe it or not, fake offsets are transacted all the time. A project developer may claim they have a project in a remote corner of the Amazon rainforest and there would be limited ways to verify this.
Remote sensing is completely autonomous. It can cross-reference the location a developer provides with remote sensing data practically anywhere in the world to ensure that the project does indeed exist.
Additional — The project must have additional carbon benefits had it not existed. The concept of additionality is confusing to many, including myself when I first heard of it. It’s best understood by learning how it’s measured.
Here’s how — historical remote sensing data and project-specific reference data (tree species type, area, …) are plugged into a biomass model to generate carbon storage estimates. From there, we can compare the carbon storage of the project versus the carbon storage of areas nearby (the baseline). If the carbon benefits from the project exceed that of the area nearby, it is above the baseline and considered “additional”.
Permanent — Every year billions of trees are destroyed. Just like any forest, offsets projects are not permanent. They are vulnerable to threats like pests, fires, and human activity.
Remote sensing is capable of assessing these risks by providing the data required for making deforestation predictions, pest analysis (overlaying data from tree species identification and local pests), and measurements of fire risk.
All this to say — remote sensing has its limitations, but it can still distinguish between low quality and high-quality offsets and the voluntary market needs that kind of transparency.
In the past three or four years, the space has become a hotbed for startups looking to fill various roles, and many are now able to deliver transparency through remote sensing. Several remote sensing-based services were launched in 2020 that monitor and verify carbon.
They are accompanied by a clutch of offsetting startups pulling in APIs for automation. Among them are Cloverly, a startup launched internally by Southern Utility, providing a “Sustainability-as-a-Service platform” that calculates a company’s carbon footprint and purchases offsets; and Pachama, a San Francisco based startup backed by Bill Gates’s Breakthrough Energy Ventures and Chris Sacca’s LowerCarbon Capital, that monitors and verifies offsets projects and operates their very own carbon credit marketplace — essentially internalizing half the carbon credit value chain!
Just by looking at the volume of transacted offsets flowing through remote sensing-supported startups, we find they account for only a small (very small) portion of the voluntary carbon market. But volume doesn’t matter. We need folks raising the quality bar, and startups like Pachama are doing exactly that.
The impact remote sensing will have on quality standards once it scales will be huge. Especially in corporate offsetting with shareholders being more eco-conscious.
If your employer is already offsetting itself (which it should be), make sure to check if the credits are coming from quality offsets projects!