Sylvera and the Race to Net Zero
Let’s start with the bad news. After what seemed to be brief, lockdown-induced respite from the relentless climb in CO2 emissions, we’re now heading towards the “second-largest increase [ever] in energy-related carbon emissions,” effectively undoing 80% of the progress we had made in 2020.
For the more visual among us, the expected “carbon rebound” will look something like this:
Yikes.
I know it’s exhausting to be reminded constantly that the world is on fire and that we are fundamentally on the wrong path (indeed there’s even research suggesting that we’re becoming desensitized to bad climate news). But we have no choice but to care.
And we know what needs to be done to avoid the most catastrophic climate outcomes: fundamentally shift from fossil fuel to renewables, revolutionize how we produce and consume goods and most of all food, and make systemic changes to our habits, including how we move around and keep our food and buildings cool. Or in other words, we must significantly reduce our emission levels, at both the individual and societal level.
Yet many of these actions take time and a hell of a lot of coordinated effort. And in the meantime, while scientists, entrepreneurs, and policymakers give it their all, the climate clock ticks on. Against this background, the key question is how we can immediately and aggressively bend the curve back down. What we can do, right now, to make a significant difference.
And now — drumroll please — on to the good news! There’s actually a major lever already available to slow the pace of global warming: nature-based solutions (NBS), also known as the conserving, restoring, and managing of good, old-fashioned trees, vegetation, landscapes, and seascapes.
In a world of carbon-sucking vacuums and cell-based bacon, it’s easy to forget about the OG of carbon capture technology: trees, vegetation, and soil, which collectively keep about a quarter(!!) of all emissions out of the atmosphere. And while we very clearly cannot rely only on NBS to hit the 1.5°C Paris target, they are and will continue to be a key part of our effort to restore our environment.
Importantly, NBS also plays a critical role in the voluntary carbon market, the mechanism used by businesses and individuals to purchase offsets for the emissions they cannot (yet) eliminate. As a quick primer on how offsets actually work, each voluntary credit (or “offset”) that an individual or business purchases represents a quantity of greenhouse gas that has been removed from the air or kept out of it in the first place. These credits are generated by a number of sources (including carbon removal technologies), but NBS are an absolutely essential part of the supply. Of the carbon credits currently generated and voluntarily traded, NBS account for roughly 40% and are expected to represent about 2/3rds of this market by 2030. As such, nature-based carbon sinks are and will continue to be central to the carbon markets and to the world as it accelerates toward net zero.
The thing is, how do we know that these nature-based carbon offsets are any good?
The lack of visibility into the projects behind these offsets is one of the key challenges keeping the carbon market from scaling. From reforestation projects that don’t actually exist, to ones that have burned in a wildfire, to ones that simply don’t have the intended effect on biodiversity or whose carbon benefits are much smaller than expected, nature-based offsets have come under a lot of scrutiny for not always delivering the promised carbon result. As one particularly critical investigative report explained,
IF THE WORLD were graded on the historic reliability of carbon offsets, the result would be a solid F.
To be sure, there have been many attempts to verify these projects. But the way this has traditionally been done has been both inefficient and insufficient, relying on opaque, manual processes, and (at times) strikingly inaccurate data. Moreover, it’s often the people selling the offset credits who are also doing the verification — an obvious conflict of interest that has led, understandably, to a large deficit of trust by offset buyers.
“Voluntary offsets are the dietary supplements of the climate world — no federal agency regulates them to make sure they deliver the benefits they promise. You have to do your own research to make sure you get what you pay for.” — Washington Post
Enter Sylvera.
Having seen firsthand how this lack of transparency fundamentally constrains the carbon markets and therefore the race to net zero, Allister and Sam wondered why there wasn’t yet a precise, independent, and scalable way to assess and verify the nature-based projects behind carbon offsets. If the voluntary market is to scale at the breakneck pace necessary to keep up with demand, it was clear to them that the sophistication and, above all, trustworthiness of traded credits also needs to increase exponentially. Sam had felt this pain point firsthand whilst structuring offset issuances as a lawyer; Allister knew it from years of building other businesses in the climate space.
And so in early 2020, they started Sylvera, the world’s first carbon offset rating provider to use advanced machine learning and geospatial satellite data to generate reliable and transparent assessments of offset projects. With a global team of kickass data scientists, engineers, and environmental experts, Sylvera is building products that deliver accurate and standardised data about the development and quality of nature-based projects. Their technology gives the buyer the full picture behind the carbon offset, helping her to understand exactly what benefits a project provides and why, with information about the change over time. This gives buyers the necessary assurances they need to transact with confidence, unlocking the full potential of carbon markets.
Sylvera’s technology is arriving just in the nick of time, as the demand for these voluntary offsets is set to explode over the next decade. It’s estimated that the demand for carbon credits will grow by a factor of 15x in the next nine years, leading to a $100 billion voluntary market by 2030. And those who enter the carbon markets now will have a huge advantage in the future, as the pressures on companies to hit net zero will drive significant price increase in these credits as well as competition for access to high-quality projects.
When Otto and I first spoke to Sam and Allister last year, we were blown away by the clarity of their vision and the sheer size of the challenge and opportunity to build the trust layer underpinning a rapidly scaling market.
These guys knew exactly what they wanted to build and how they would get there, and wasted no time in on-boarding top talent from the environmental science, engineering, and financial product world. Sylvera’s partnerships with top research organizations including UCLA, UCL, and NASA (yes, NASA — we were a bit starstruck too, pun perhaps intended) and the strong inbound interest from new users shows that they’re building a product the world really needs.
Against this backdrop, it was a no-brainer for us to invest in Sam and Allister and the rest of the Sylvera team last year. True to form, they were able to quickly demonstrate early product-market fit, starting partnerships with some of the world’s largest purchasers of carbon offsets and beginning partnerships with current and soon-to-launch carbon credit exchanges.
We are completely convinced by Sam and Allister’s vision of a well-functioning carbon marketplace that funnels demand toward higher-quality projects and enables a significant increase in the pace of NBS project development. And while these carbon credits are only one part of the larger fight against climate change, they are a significant, immediate lever and can be an essential part of the solution — if, that is, the credits are high-quality and verified. With Sylvera, we have a chance to achieve exactly that.
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