Celebs LeBron, Cuban and Gates Back Carbon Neutral Foods for $12M

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Neutral Foods announced its $12 million first round of Series A funding from Bill Gates and various celebrity investors like Mark Cuban and LeBron James to help dairy farmers cut carbon emissions and earn carbon credits. 

Neutral Foods is a company that tracks and buys carbon credits to neutralize greenhouse gas (GHG) emissions from dairy farms. It’s partnering with farmers to help them cut their own emissions at the source.

The firm is one of the first carbon neutral food company in the United States. It debuted nationally in 2021 and its milk products are found in 2,000 grocery stores. It also plans to expand into butter and meat. 

Carmichael Roberts from Gates’ Breakthrough Energy Ventures said that:

“It’s clear that consumers are hungry for sustainable, climate-forward options and they’re reflecting that in their buying decisions, especially when it comes to buying food and beverages…”

The food company has also got funding from different celebrity investors. They include Mark Cuban, LeBron James, Kevin Love, Tobias Harris, John Legend, and Questlove.

This round of funding will support Neutral to scale up its carbon-neutral foods and technologies that will revolutionize the food industry. 

Neutral Foods and Carbon Credits

Consumers are now looking for ways how they can make more climate-conscious purchases.

So Neutral Foods are measuring the emissions of its products’ entire lifecycle. Then the company is buying carbon credits for those measured emissions.

Carbon credits are permits that firms buy to certify GHG removal from the atmosphere. Neutral Foods are buying offsets verified by carbon certification firm Climate Action Reserve (CAR).

But apart from using offsets, the firm also plans to work with farms to cut their emissions directly.

When it comes to efforts to reduce global emissions, the transportation and electricity sectors are in the spotlight. But agriculture is also a huge emissions contributor.

According to Breakthrough Energy Ventures, agriculture is one of the largest emitters at the number 3 spot. It’s accountable for 19% of total GHG emissions. The other major emitters include:

Manufacturing (31%)
Electricity (27%)
Transportation (16%)
Buildings (7%)

Currently, Neutral Foods has 8 different projects underway at farms it partners with. And it has 30 projects under development. With these projects, the company aims to achieve two things:

To change the way farmers plant to improve the soil’s ability to absorb carbon
To change what cows eat and how cow manure is managed

Ann Radil, the Head of Carbon Reduction at Neutral Foods, said that separating and composting manure “alone can reduce manure-related GHG emissions like methane and nitrous oxide by 19% to 50%.”

Cutting emissions at the farm

The company aids farmers to make those changes happen while also providing them with the fund they need.

Neutral Foods helps the farm learn a farming practice called co-cropping or relay cropping. The process refers to planting two different crops at the same time. This reduces the amount of carbon dioxide emitted by the farm.

The firm’s milk brand is sold at stores under Whole Foods, Sprouts, Target, and many other grocers.

With the positive feedback from customers of Neutral Foods’ products, some grocers are planning to expand into other items.

The company will start selling carbon-neutral pasture-raised butter. And it is also planning to include beef eventually.

On this note, Neutral Foods is piloting a project with Carman Ranch. It’s a century farm that raises cows and hogs.

The ranch owner sought the help of the startup on emissions tracking programs for beef. The rancher has learned about cattle feed supplements that reduce the methane that cows belch out during digestion.

The pilot project is on a trial to put a seaweed supplement into the feed for 50 cattle. For this program, the firm will bring researchers, partners, and procedures to measure methane emissions.

Neutral Foods will then perform a full lifecycle analysis and produce the verified carbon credits.

It may take some time for this project to take effect. But it inspires investors to continue supporting the company’s decarbonization strategies.

For Gates’ investment fund, this kind of project sends a price signal to farmers that sustainable practices have value. And as the brand grows and expands, the same goes for scaling up outcomes at the farm level.

Other investors like Marc Cuban also think so, commenting that:

“I think consumers are becoming more concerned about the impact of the products they consume on the environment… I think Neutral is well positioned to meet that demand.”

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Carbon Insetting: The Target of Scope 3 Carbon Offset Accounting

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Carbon offsets are a well-known sustainability concept so you most likely have heard of them. But there’s a relatively new sustainable supply chain term on the block: “carbon insetting”.

Carbon insets are still undergoing their transformation. Yet, have the potential to be a significant element of the global movement of decarbonization.

This article will explain in detail what carbon insetting is and how insets differ from offsets. It will also provide some real-life examples to illustrate its application.

What is Carbon Insetting?

The critical net zero strategy suggests that companies looking to decarbonize should mitigate first then offset their unavoidable emissions. What lies between these two measures is carbon insetting.

Insets may sound or look like offsets but they also work like mitigation.

In broader terms, carbon insetting refers to the actions taken by an organization within its own value chain to fight climate change.

In a more specific sense, carbon insetting means the intentional reduction of Scope 3 emissions within a firm’s own supply chain.

So, the rub with insetting is with Scope 3 emissions, both upstream and downstream, that can count across various parties’ supply chains.

Inset emissions are directly avoided, reduced, or sequestered within the company’s value chain. They’re not sold as a credit to offset another firm’s emissions by capturing carbon somewhere else.

Carbon insetting also means investing in sustainable practices that prevent emissions from happening in the first place. They’re often nature-based projects. They don’t avoid or sequester carbon only, they also protect biodiversity and restore ecosystems.

Are carbon insets better than carbon offsets?

Both carbon measures represent ways that can help mitigate emissions. But they’re also different methods of tackling climate matters with varying impacts. So, it’s important to understand their differences.

Carbon Insets Vs. Carbon Offsets

The key difference between carbon insets and offsets is the way an entity invests to reduce its carbon footprint. Carbon insetting involves investing in projects that are related to a company’s products; carbon offsetting involves projects that are not related to a firm’s products.

In a sense, carbon insets ensure that firms take direct responsibility for the emissions in their own supply chain. They also aid in improving sustainable management practices directly at the source.

Investing in inset projects can help make a firm’s supply chain more resilient. It can also improve the quality of its raw materials.

However, carbon insets are more limited by their very nature – they only tackle Scope 3 emissions. They don’t address Scope 1 (direct emissions) nor Scope 2 (emissions from the energy that the company buys) emissions.

This means retailers selling other brand’s products or service-based businesses that don’t source raw natural materials can’t take part in carbon insets. It also means even a product-based firm can’t become carbon-neutral only by using carbon insets.

Carbon offsetting, on the other hand, is a way for entities to reduce their carbon footprint by paying money to another entity that works to reduce the total emissions emitted. Common example is planting trees.

The focus of carbon offsets is on the tonnes of carbon avoided/removed, while the focus of carbon insets is creating carbon emissions reduction capacity.

Moreover, carbon offsetting provides convenience and economic efficiency for they are from verified offset projects.

But critics claim that carbon offsets give companies “a license to pollute”. It means they allow polluters to buy offsets to pay for their footprint without actually cutting their own emissions.

Here are the other major differences between insets and offsets:

Emissions reduction generated: travels separately from the physical product with carbon offsetting while it travels with the product in carbon insetting.

As shown in the image above, farmers deliver the wheat to one party (Cargill) then deliver the quantified emissions reduction to another entity (Microsoft) under carbon offset. But under carbon inset, farmers deliver both the wheat and the emissions reduction to the same party (Cargill).

Methodology and standards: a third party like a registry (Verra, Gold Standard) or rating agency (Sylvera) set the certification standard for carbon offsets. In carbon insets, many parties involved agree on the standard used.

Intended project purpose: carbon offset projects are for the voluntary carbon market. Whereas inset projects are for specific businesses’ supply chains.

Accounting requirements: offsets are a negation of emissions already dumped into the atmosphere so they must meet rigorous standards (fungibility, additionality, durability, etc.).

On the contrary, insets don’t face the same accounting requirements as offsets do. That’s because they’re not a fungible credit like an offset.

Plus, there’s no need for addressing leakage or permanence issues as emissions through insets didn’t happen in the first place.

Overall, carbon inset represents indirect but embedded emissions reduction activities within a firm’s supply chain. Insetting activities include upstream (fuel and energy-related activities) and downstream (sold product processing).

Carbon offset represents direct but outsourced emissions reduction efforts. An entity buys an offset and outsources it to another entity that takes the project into effect.

Real-world Examples of Carbon Insetting

Carbon insets are relevant across a wide variety of industries. But they’re most significant in the food and agricultural supply chains due to these agriculture-specific conditions.

Low-carbon fruit:
Ag regenerative practices exist for decarbonizing food supply chains with nature-based, scalable climate solutions. Decarbonization in this sector has a lower cost compared to new carbon removal technologies.

Readily available financial systems:
There are existing financial mechanisms already in place that incentivize farmers to adopt ag regenerative practices. It doesn’t need to put up new payment systems.

Biggest sink:
Agricultural soils are by far the world’s largest carbon sink.

Co-benefits:
Decarbonizing food supply chains also result in other positive impacts like biodiversity, improved water and air quality, and nutritious food.

To show a concrete carbon insetting in a real-world setting, here’s an example scenario.

A farmer delivers regeneratively wheat to a downstream customer contracted by a project developer. The customer then pays a premium for the sustainable wheat and the farmer gets more revenue with an increase in price.

The illustration below shows a carbon inset value chain, from the supplier to Scope 3 reductions.

The inset suppliers are farmers that use regenerative practices to grow crops that reduce emissions and receive payment per metric tonne of carbon.

Project developers are companies that work with and support the farmers while partnering with corporations looking to deliver the insets within their supply chains.

Supplier refers to ag retailers and distributors between the farmers and downstream customers. In the example, that’s Cargill.

Customers are those who buy the raw commodities (wheat) as key ingredients in their products like AB InBev, for instance.

MRV refers to an entity that supplies data to verify carbon outcomes delivered by insetting methodology. While standards are the certification bodies that develop best practices for carbon insets.

One particular company that employs carbon insetting in its quest to net zero emissions is Burberry.

Burberry announced two years ago that it has created a “Regeneration Fund”. The aim of the fund is to support the company’s portfolio of insetting projects across its global supply chain.

The luxury fashion house partnered with PUR Project. It will put in place regenerative farming practices with Burberry’s wool producers in Australia.

The insetting project will work at farm level to improve carbon capture in soils, improve watershed and soil health, reduce dryland salinity and promote biodiversity.

Key Takeaways

For sure, insetting is not the same thing as offsetting but insets may be from offsets.

So, where do we draw the line between carbon insetting and offsetting?

Carbon offsets represent the avoidance or removal of CO2 from the atmosphere via verified projects made available on the carbon market.

While carbon insets represent the addition of nature-based projects into a company’s supply chain. Insetting doesn’t need formal verification.

Given our definition and distinction above, we can say that Scope 1 and 2 are to offsets while Scope 3 is to insets.

Without the need for additionality and permanence considerations in insets, it’s up to the producers and consumers to agree to a methodology.

Carbon insets represent indirect emission reductions. They are the execution of practices that reduce a firm’s carbon footprint outside of its direct operations but within its own supply chain.

In short, carbon insetting can be viewed as a piece of the sustainability puzzle for a company. Firms must continue to focus on their carbon emissions reduction initiatives like transitioning to renewable energy.

Lastly, carbon insets do not came into existence to replace carbon offsets. They should be used along with offsets and other emissions reduction strategies to achieve net zero emissions.

The post Carbon Insetting: The Target of Scope 3 Carbon Offset Accounting appeared first on Carbon Credits.

Planned Carbon Capture Project Pipeline Almost 1 Billion Tonnes

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The Global Carbon Capture, Usage, and Storage (CCUS) project development pipeline is now almost at 1 billion tonnes a year, with over 50 new projects revealed in just Q2 (according to Wood Mackenzie).

CCUS is a term used to describe various methods of capturing the carbon dioxide (CO₂) emitted by burning fossil fuels. A CCUS facility makes the captured carbon available for any intended use.

Woodmac also said that the US Inflation Reduction Act (IRA) will boost CCUS uptake. But more is necessary to meet net zero goals by 2050 – a 7x boost.

The author of the report, Lucy King commented:

“…much more progress is required to meet 2050 greenhouse gas targets. Currently, the CCUS capacity pipeline is close to aligning with Wood Mackenzie’s 1.5-degree pathway to 2030, but it will need to grow seven-fold by 2050 to reach the capacity required for net-zero.”

CCUS Capacity Q2 2022

CCUS capacity refers to the amount of carbon captured by a CCUS facility. The current global CCUS pipeline is 14x the amount currently being captured of 63 million tonnes per year (Mtpa).

The bulk of current CCUS capacity resides in the U.S. and Canada as shown in the chart. But by 2030, capacity in Asia and Europe will be higher as reported by Woodmac.

Currently, North America accounts for over ⅔ (67%) of global CCUS capacity. Much of its carbon capture activities are found in Alberta, the U.S. Gulf Coast, and Midwest.

The energy intelligence firm also reported that North America and Europe continue to emerge as hotspots for CCUS activity.

However, North America’s share of global capacity CCUS projects will go down to around 50% by 2030. This is due to the growing projects across Europe and Asia.

Progress during this quarter was mainly in areas such as licensing and permitting for geological CO₂ storage.

Meanwhile, Norway, Russia, and Australia experienced growth in licensing activity. Whereas the UK launched its first CO₂ storage licensing round, consisting of 13 areas across the North Sea.

Going forward into this decade and the next, China and Southeast Asia will see the largest demand for CCUS.

The biggest challenge, however, is the lack of regulatory and policy implementation for CCUS projects as Woodmac said. The author noted that the rate of CCUS pipeline demand and growth is outpacing the government’s ability to regulate.

Yet, the industry can expect 2022 to be a pivotal year for CCUS projects. Many countries are now making strategies and regulations to support its deployment.

In the US, the 45Q tax credit incentive for carbon sequestration supports the CCUS. And two weeks ago, President Biden signed the IRA into law which will further boost the 45Q tax incentive.

The IRA and CCUS

The energy industry has been pushing hard to decarbonize. The CCUS has become a vital emissions reduction technology that industry players can apply.

According to the report, the IRA will:

“further ramp up the U.S.’ planned CCUS capacity pipeline, which is currently at almost 250 mtpa… It will incentivize smaller-scale capture projects, attract more industries, and promote investment into technologies including direct air capture.”

Here are some key updates that the IRA provides to the 45Q tax credit:

Increased credit values across the board. Full value realized only if requirements are met:

From $50 to $85/tonne for storage in saline geologic formations from carbon capture on industrial and power generation facilities
From $35 to $60/tonne for usage from industrial and power generation carbon capture
From $50 to $180/tonne for storage in saline geologic formations from DAC
From $50 to $130/tonne for usage from DAC

Extended the commence-construction window for qualifying projects. IRA provides a 7 years extension to January 1, 2033. This means that projects must begin physical work by then to qualify for the credit.

Gives a direct payment option for receiving the credit.

Broadens the definition of qualified facilities. Here are the affected facilities.

The IRA marks the largest investment in clean energy in U.S. history. And the Department of Energy believes that it will help position the country to lead the global clean energy market, particularly in the CCUS pipeline.

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Convicted for Carbon Credit Scam, Checklist to Avoid Being a Victim

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If one falls prey to a carbon credit scam, they’re most likely not able to recoup their investment. So it’s crucial to know what to look for when buying carbon credits and avoid the scammers.

Carbon credits are an innovative and effective tool to help abate climate change but scammers abuse them, leaving an impression that they’re not trustworthy.

Scammers often use uncertainties in carbon markets to deceive investors into handing over their money.

In Taiwan, a couple were convicted and sentenced to prison terms for a carbon credit trading scam. They earned over NT$100 million (US$3.31 million) in profits over 2 years.

According to the filings of prosecutors who investigated the case,

“Although Hsu and Yang knew their company was not dealing in ‘carbon credit trading,’ they set up a trading platform to lure investors by promoting the company as engaging in legitimate international schemes for carbon neutralization and the sale of carbon credits… taking advantage of the worldwide trend for renewable energy sources and reducing greenhouse gas emissions.”

Convicted for Carbon Credit Scam

The Hsinchu District Court ruled that Hsu Chu-tsai (67 yrs. old) and his wife, Yang Liang-liang (60) were guilty of financial fraud in violation of the Banking Act.

The couple were the owners of an investment business called Rich Alliance Good Health Co.

The judges sentenced Hsu to 8 years and Yang to 4 years in prison. The court also confiscated their ~NT$100 million of profits and imposed a NT$25 million (US$0.8 million) fine on their firm.

The couple registered their business in 2016 in Hsinchu City to initially market equipment that generate renewable energy and control pollution.

Three years later they ventured into carbon credit trading. They said that international bodies of carbon trading schemes authorized them to do business in the market.

They then lured 78 people from various countries to invest with false promises of high rates of return from the carbon credit trading scheme.

Investors were told to earn up to 4% monthly profits and 18-48% annual profits.

The couple also promised them with carbon credits sold for US$3,000 per 300 tonnes reflected in a carbon credit voucher.

Hsu earned the trust of investors by forging his past and current business ties with a German institution and a Singaporean bank.

He also claimed to be authorized to trade on the “London Carbon Credit Exchange.” Apparently, there’s no such London carbon credit exchange that exists.

In the first year, investors received some returns but they began to suffer shortfalls in the second year.

Hsu blamed the losses to the suspension of carbon credit trading in London due to the death of the exchange’ director. But some investors were keen enough to detect a carbon credit scam. They asked help from authorities to investigate the matter.

The fraud caused many investors to suffer huge financial losses. It also tainted Taiwan’s financial system and its regulation as per the ruling.

What can be learned in this carbon credit scam?

Due diligence from the investors – they must do their homework of confirming that the carbon credit scheme is real.

A Checklist to Avoid a Scam

Here are the things to watch out for when investing in or buying carbon credits to avoid a scam.

High rates of return:

Be wary of promised returns that sound too good to be true. Do a quick research on the range of returns available in the market, which can vary a lot.

Price:

There are different types of carbon credits, depending on the kind of project that generates them. This is crucial to know as prices for carbon credits also vary per type.

Credits from nature-based projects often have higher prices, recently traded at $11.25/tonne. But the average price for a credit is below $4.0. The convicted couple sold the credits for $10/tonne.

Carbon Exchange:

The identified carbon credit exchange must be legitimate and a quick Google search can confirm that. The “London Carbon Credit Exchange” doesn’t exist. Here are the top carbon exchanges in the market.

Carbon Registry:

Though not all carbon credits are the same, they must all be registered in an established carbon standard body. If not, then they’re not validated or verified and so, may not be real.

A carbon credit voucher, or any other proof of receipt of investment, should at least name an international carbon registry that certifies the issuance of the credits.

Evaluation Criteria:

If you’re directly buying carbon credits from developers or traders, you should be aware of what to look for to ensure quality and integrity of the credits.

Here’s our guide on the evaluation criteria that carbon credit buyers can use. Each criterion is discussed to help you choose the best carbon credit to buy and avoid a scam.

On top of it all, refrain from trusting a broker right away without checking the above information. Do your homework first so that you won’t be a victim of a carbon credit scam like what the couple did.

After all, investing in carbon credits can be a lucrative venture as long as you are well-informed.

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Seabound Revolutionizing Carbon Capture for Ships with Pebbles

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The shipping industry has been looking for ways to slash emissions and a tech startup, Seabound, is gearing up to help decarbonize the big ships with its novel carbon capture technology.

Ships emit ~1 billion tonnes of greenhouse gas each year, which is more than airplanes. The new International Maritime Organization (IMO) regulations require the shipping industry to cut emissions by 40% by 2023.

London-based Seabound is prototyping its technology to capture CO2 emissions from ships. Its unique approach to carbon capture can trap up to 95% of CO2 emissions per ship.

Seabound’s Carbon Capture for Ships

Though carbon capture hasn’t yet caught on for ships, Seabound is one of the companies out to prove the tech is scalable. This climate tech startup was founded just last year.

The firm installs its carbon capture equipment on both existing and new ships to capture up to 95% of their CO2 emissions at point of source. It seeks to help the largest cargo ships meet upcoming IMO regulations that will kick off next year.

Other firms that develop carbon capture technology for ships are using the most established solvent-based approach. This has been used commonly in factories.

But such a tested method needs more space and energy when onboard the ships. That’s because the process of capturing the CO2 takes place on the shipping vessel.

In contrast, Seabound aims to capture and process the CO2 on land.

Here’s how the carbon capture process of Seabound works:

The tech firm’s reactor connects to a ship’s smokestacks to capture carbon right from the source of emissions.

The onboard device filled with porous, calcium oxide pebbles traps CO2 from a ship’s exhaust. Then the captured CO2 gets unloaded when the ship docks.

As per the company’s co-founder and CEO, Alisha Fredriksson:

“The pebbles bind to carbon dioxide to form calcium carbonate, which is essentially limestone… The reactor stores it on board temporarily until the ship gets back into port, where it’s offloaded and post processed. And then we sell that captured CO2 for use into fuels or chemicals. Or for sequestration.”

Fredriksson further added that its system is a second generation form of CO2 capture technology. The firm is working on a novel compact version of a carbon capture reactor. And they have a patent pending for that.

Seabound also says it has signed six letters of intent (LOIs) with major ship owners. It aims to trial its carbon capture tech aboard ships beginning next year.

To get there, the company has secured $4.4 million in a seed round led by Chris Sacca’s Lowercarbon Capital. Other investors that chipped in on the deal include Eastern Pacific Shipping, Emles Venture Partners, Hawktail, Rebel Fund and Soma Capital.

Decarbonizing the Shipping Industry

In general, the shipping industry is just starting to figure out how it’s going to reduce emissions.

It’s very dependent on fossil fuels and emitted about 1.2 gigatons of CO2e in 2020. That’s equal to about 3% of global GHG emissions.

While there are a lot of potential solutions that others are working on, such as the alternative fuels like hydrogen and biofuels, they are still about 10 to 20 years away from maturity. And they’re only suitable for brand new ships.

But what the industry needs is a solution that can reduce emissions today and something that works for all of the existing ships that will still sail for 30 years.

So, we need technology that can be an add on or a retrofit onto the existing ships. That’s better than having to completely replace the whole ship’s fuel supply or the whole propulsion system.

The industry has to decarbonize because it needs to comply with regulation. Plus, customers are also now asking for it.

But the shipping is so hard to abate is because of the energy requirements to transport large volumes of goods over long distances.

In a sense, if we look at the largest ships in the world traveling long distances, electrifying them is not easy. Electrification will work only for smaller ships traveling shorter distances or more coastal routes.

That’s where the “lime-based” carbon capture approach of Seabound comes in.

Capturing the CO2 on ships sailing today will address the urgent need to reduce emissions.

And in the long run, Seabound’s carbon capture tech can work with alternative fuels. This results in a carbon negative system while still allowing the large ships to use the existing types of propulsion.

In such a way, the startup’s CO2 capture enables cargo ship owners to have lower expenses than existing approaches. No need to invest in new vessels and they can even earn income from the revenue of selling captured CO2.

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Canada’s Largest Global Investment Org Buys Carbon Credits – Canada Pension Plan CPP

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The Canada Pension Plan (CPP) plans to invest in carbon credits on the pathway to net zero.

CPP Investments believes that the performance of its portfolio will be influenced by how well it adapts with the global economy’s path to net zero.

As such, it considers that stewarding its portfolio to net zero is in the best interests of the contributors and beneficiaries of the CPP and meeting its mandate.

The Canada Pension Plan Investments

CPP is one of three levels of the Canadian government’s retirement income system. Established in 1965, it’s responsible for paying retirement or disability benefits to Canadians.

The CPP Investments is a global investment management organization established to help ensure the CPP is strong and sustainable for the long term.

It is one of the largest pools of investment capital in the world with total assets amounting to $523 billion (as of June 30, 2022). By 2040 the CPP Fund’s total assets are expected to reach $1.7 trillion.

It adopts a total portfolio investment framework with diverse exposures to the broad capital markets.

CPP Investments’ Fund is structured to be resilient to wide-ranging market and economic conditions.

It covers all major asset classes, manages significant risk factors, and involves multiple distinct investment strategies.

The Fund invests in 5 major investments including:

Private equity investments
Real assets investments
Active equities investments
Capital markets investments
Holdings & relationships reports

The Fund holds investments in 64 countries and with 318 global partners.

CPP Investments is putting its significant effort and funding in attractive investment opportunities that arise as economies scale up initiatives to decarbonize in response to climate change.

One of those opportunities is the market for credible and high quality carbon credits.

Investing in Carbon Credits

Carbon credits are generated from projects around the world that pull greenhouse gasses out of the air or keep them from being released.

Entities looking to cut emissions that can’t yet be abated can balance out today’s emissions by buying carbon credits. These credits help meet the urgent need to reduce global carbon emissions, either voluntarily or for compliance.

CPP Investments supports efforts that strengthen carbon credit markets as it sees them as a mechanism for delivering strong returns while diminishing risk.

The CPP has also entered into a partnership with the non-profit organization “Conservation International”, which is focused on providing nature-based climate solutions.

These solutions conserve, restore, or improve the management of ecosystems while keeping their capacity to capture and store carbon.

The partnership will support the development of high-quality projects that reduce and remove carbon emissions. Additionally, it will also enable the private sector to buy carbon credits produced by each project, and offer a return to investors.

Carbon credits generated via the partnership will be verified to the highest quality standards which provide quality assurance to the voluntary carbon markets.

Rising demand for carbon credits

Demand for carbon credits is growing and is expected to continue for decades to come due to stricter regulatory standards and mounting corporate net zero pledges.

To reach net zero emissions, the global economy needs a growing supply of credits, upwards of 7-13 gigatons in a year.

Meanwhile, BloombergNEF estimates that unmet demand will push the price for voluntary carbon credits upwards of $120/ton by 2050.

The CPP Investments project through nature conservation will generate annual emissions reductions of 220,000 – 330,000 metric tons of CO2. This is equal to avoiding up to 72,000 new cars off the road each year.

The opportunity that CPP Investments see in investing in the potential of carbon credits is based on three emerging trends:

Credible markets will develop
Demand will outstrip supply
Prices will rise

Investing in the Path to Net Zero

CPP Investments commits its portfolio and operations to have net zero emissions across all scopes by 2050. This commitment is achievable through the following key action plans:

Invest and exert influence in the whole economy transition as active investors, rather than through blanket divestment.
Achieve carbon neutrality for internal operations by the end of FY23.
Expect that its $67 billion investment in green and transition assets will increase to at least $130 billion by 2030.
Build on a new decarbonization investment approach that seeks attractive returns from enabling emissions reduction and business transformation in high-emitting sectors.

Fulfilling those net zero actions will be according to CPP Investments’ 5 Climate Change Principles.

The choice to invest in carbon credits and net zero is part of CPP Investments’ long track record of including environmental, social and governance (ESG) considerations into its investment activities to drive better financial performance.

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The Holy Grail of Carbon Capture

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A California-based startup, Holy Grail, is taking a micro approach to tackle the outsized problem of capturing carbon dioxide through its modular direct air capture (DAC) technology.

Holy Grail is using electrons to capture CO2 from the atmosphere while generating carbon credits at the same time.

The start-up has a long development and testing phase ahead. But its DAC idea has captured the interest and capital from well-known investors and Silicon Valley founders.

The Holy Grail

Since the industrial revolution, humans have emitted ~2.4 trillion tonnes of CO2 into the atmosphere. If mankind does nothing about the rapidly rising emissions, planet Earth will be uninhabitable.

To keep the planet habitable and protect its biodiversity, the world needs solutions that make carbon removal one of the world’s largest industries. This involves developing a carbon capture technology and incentive system that scales.

That’s what Holy Grail is working on.

The startup is prototyping a DAC tech that’s modular and small. This is a departure from many similar projects that aim to capture CO2 from large emitters like power plants. This approach will cut costs and avoid the need for permits or project financing.

The company will begin by selling carbon credits, using its modular DAC devices as the carbon reducing project.

The end goal is to sell those devices to commercial customers and even individual consumers. They, too, can claim for the corresponding credits of emissions reduction they get from using the devices.

The firm’s co-founder Nuno Pereira said that:

“The carbon capture device is still in the prototype stage with many specifics (e.g. the anticipated size of the end product and how long it will likely function) still being worked out… But the company is taking a different approach to carbon capture.”

How Holy Grail’s Direct Air Capture Works

CO2 makes up only 0.04% of the atmosphere, which makes capturing it directly so hard. Some processes need high energy to pass enough air through “carbon-sticky” chemicals and unbind them with heat.

Advances in electrochemistry and material science allow simpler processes driven by electricity.

Holy Grail developed a direct air capture technology that runs on electricity at ambient temperature and pressure. The company will use electricity to control a chemical reaction that binds to CO2.

Using electrons instead of heat or pressure has good implications for what is a still nascent industry.

The company’s DAC system resembles a discharging battery cell – atmospheric air flows through a positively charged cathode, then the CO2 molecules are ionized and transported from the cathode to the anode.

In other words, no heat or water is needed along the way, just clean electricity. This allows Holy Grail to make compact cells not much bigger than a laptop that can be stacked together.

The stackable CO2 capture cells are deployable both in small and large configurations anywhere there’s a plug. This enables the DAC tech firm to still capture CO2 without needing large scale for it to work at a low cost.

It reduces the heat, water, and energy requirements typically associated with manufacturing direct air capture (DAC 1.0).

The system lends itself well to modular cells that can just as easily scrub CO2 at a household level as at an industrial site with cells piled on top of one another.

The firm calls the cells “scrubbers”. They can be stacked or configured depending on a customer’s requirements.

In a sense, Holy Grail’s DAC devices will empower everyone to join the carbon capture industry by being carbon neutral or negative.

The scrubbers will focus on raw capture of CO2 rather than conversion (converting the CO2 into fuels, for instance).

Planet Earth in 2042

To remove CO2 at the scale necessary to keep the planet habitable for all living things (billions of tonnes of carbon a year), there needs to be an improvement in the technology to capture, store, and convert CO2 into usable products.

With Holy Grail’s direct air capture system, it aims to help build the planet by 2042 with the following living conditions:

In sum, humans coexist with nature with exponential technological progress and no negative impact in 2042.

The DAC startup hopes to achieve all those living conditions in 2042 with the capacity to capture CO2 directly from the air.

Such vision is shared by a couple of investors and partners including:

Lowercarbon Capital
Goat Capital
Deep Science Ventures
Y Combinator
Starlight Ventures
35 Ventures

Thus, by taking a modular approach, Holy Grail enables faster manufacturing and easy deployment at scale of DAC solutions to climate change.

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Scottish Carbon Credits And “Carbon Capitalism”

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As pressure mounts to fight climate change, companies like Shell, Barclays, Thales, and FleetCor are turning their eyes on Scottish carbon credits to offset emissions. But critics claim this market scheme is causing “carbon capitalism” in the country.

Carbon credits are one of the major solutions that firms can resort to when tackling the climate crisis.

Proponents of this scheme argue that the credits attract private investments into nature-based restoration projects by putting value on emissions reductions. But opponents claimed that the credits are a “false solution” to the climate crisis.

Scotland is appealing to developers of carbon credits because of its large rural land area for tree planting.

The country also has a lightly regulated land market and generous government subsidies for woodland and peatland projects that produce the credits.

Scottish Carbon Credits

The previous United Nations Climate Change Conference (COP26) was held in Glasgow last October to November in 2021. Article 6 which governs the structure of carbon credits was at the top of every country’s agenda during COP26.

In the UK, the Woodland Carbon Code (WCC) – administered by the Scottish Government agency Scottish Forestry – sets out the design and management requirements for voluntary carbon sequestration. The Code allows independent registration and verification of tree planting projects.

Verified woodland carbon units are one type of credit that a firm can use to voluntarily offset emissions under UK government guidance on demonstrating carbon neutrality.

But they can’t use the credits in international carbon reduction mechanisms like the EU Emissions Trading System.

The Scottish Government has been promoting the use of Scottish land for creating carbon credits. It commits itself to tackle the ill effects of scale and concentration of land ownership.

The government also views private investments as an enabler of addressing climate change and restoring nature.

The other carbon credits scheme operating in Scotland is the Peatland Code. It covers the peatland restoration projects that generate credits.

Some experts in land reform said that demand for carbon credits contributes to rising land prices across the nation, causing an unjust land market. Land values reportedly jump by 61% in 2021 alone due to demand from forestry investors.

The chart below shows the major carbon credit producers in Scotland. Edinburgh-based Scottish Woodlands topped the list.

Source: The Ferret

Major Buyers of Carbon Credits in Scotland

About 560,000 credits produced by Scottish projects have been sold to date. Each credit represents one tonne of CO2 avoided or removed by a woodland or peatland project.

According to an analysis, the largest buyer of Scottish carbon credits is FleetCor, an American firm selling fuel cards to the haulage sector. It purchased around 390,000 credits, which are over half of credits sold so far by woodland projects.

Other major credit buyers are banks, insurance firms, and major investors. Together they bought about 30,000 credits to offset their operations in the UK.

One of them is Barclays that has invested ~£100 billion in oil and gas firms since the Paris Agreement.

Baillie Gifford, which has invested in fossil fuels and has a major stake in a big oil producer, is also on the buyer’s list.

The oil giant Shell, which has been pouring billions of dollars into carbon removal projects, has bought 635 credits only from woodland projects. That little amount is to offset a small part of its emissions from a rewards scheme for motorists.

Two weapons manufacturers are also opting for credits to offset their unavoidable emissions.

One is Thales, a manufacturer of unmanned drones, that has bought 2,735 carbon credits.

The other arms firm making it to the top 20 buyers of Scottish carbon credits is Babcock. It used the credits to offset emissions from a fleet of non-combat vehicles it runs for the UK Ministry of Defence.

Scottish carbon projects will absorb a total of about 14 million tonnes of CO2 across their lifetime.

That equates to the same amount of carbon credits, including the units that are not yet sold on the market.

The figure is too small in comparison to the country’s total emissions from the source in 2020 – 40 million tonnes.

Plus, it accounts for only 1% of Shell’s emissions alone in a year. But it requires a land area larger than 3 Scottish biggest cities combined.

The Controversy Surrounding the Credits

Environmentalists called carbon credits a false solution to the climate crisis. That’s because some projects may take decades to deliver the reductions that a carbon offset promises.

Add to this the fact to their claim that tree planting doesn’t provide permanent CO2 capture and storage. When the trees die or burn, the carbon they store gets released back into the atmosphere.

Offsets also need a huge amount of land to reduce global emissions.

If we’re to achieve net zero emissions by planting trees alone, it requires a land area 5x bigger than India.

Lastly, the changing land market with exploding prices makes it harder for small land buyers to raise enough capital. A researcher said that:

“The average price last year of a Highland estate, those being bought for carbon offsetting, rose to £8.8m, an increase of 87% on the year before. Seven sold for over £10m… This demand is driven by increased government support for environmental measures and a rise in interest from corporate buyers with large balance sheets.”

For others, buying credits can serve as an excuse for avoiding harder measures to cut emissions from a firm’s internal operations.

While for a former Scottish official, the carbon credit market highlights the wealth inequality in the country. That’s because the more Scottish carbon credits that international firms buy, the less remains for the country’s own offsetting needs.

But carbon credits are not inherently bad and the world needs them as a tool to avoid/reduce emissions. And while their real environmental benefits may appear dubious, the global market for carbon credits will balloon by 2050.

It’s expected to be worth $100 billion in the UK alone.

This projection is reflected in a massive rise in demand for Scottish land for offsetting purposes by large private investors.

As per the landowners that generate Scottish carbon credits, private investment in carbon projects led to:

“significant land use change” and were “not a short-term money making enterprise”.

For the former Scottish Environment Protection Agency chief executive, carbon sequestration was always intended to offset hard-to-tackle emissions as Scotland approaches net zero in 2045.

This summer, the Scottish Ministers will consult on a wide range of proposals for the government’s ambitious new Land Reform Bill to be introduced by the end of 2023.

Chair of the Scottish Land Commission Andrew Thin said that:

“The ways land is owned and used is central to tackling the climate emergency, contributing to a successful economy and supporting communities. It is great to see the Government launch the consultation of the upcoming Land Reform Bill. It includes a range of potential measures to ensure that the benefit of land is shared by all.”

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Xerox Fast-Tracks Its Climate Goals

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Xerox moved up its climate goals by 10 years and joined the growing club of net zero 2040 pledges.

One of the most well-known copier brand names, Xerox believes it can control its impact on the planet. And fast-tracking its net zero goals by 10 years is one way of doing that.

In its most recent Corporate Social Responsibility Report, Xerox CEO John Visentin stated that:

“Our roadmap covers our full value chain and focuses on improving processes and energy efficiency… as well as designing environmentally responsible products and clean technologies that extend beyond print.”

Why Xerox Fast-Tracks its Net Zero Goal

Since establishing its first climate targets in 2003, Xerox has achieved a significant reduction in energy consumption and carbon emissions.

The firm’s first baseline year was between 2002 and 2016. Within that period, Xerox eliminated 320,000 tonnes of carbon dioxide equivalents (CO2e).

In 2016, the copier aimed to cut 25% more greenhouse gases by 2025. But it achieved that goal much earlier by 2019.

So now Xerox wants to cut the same scope 1 (direct) and 2 (indirect) emissions by 60% by 2030 against its 2016 baseline. If it occurs on track, that will be an 85% reduction since 2002.

The following are the copier’s GHG emissions from 2016 up to 2020 involving its Scope 1 and 2 emissions.

In 2020, Xerox achieved a 50% reduction from the 2016 baseline for its Scope 1 and 2 emissions (97,456 metric tons of CO2e).

About 69% were direct emissions from the combustion of natural gas, gasoline, and diesel fuel. The remaining 31% of the emissions total were indirect emissions from purchased electricity and steam.

For Scope 3 emissions, the company has a 35% reduction goal by 2030. It has laid out a roadmap to help guide its efforts to achieve its net zero emissions goals.

Xerox Roadmap to Net Zero 2040

Xerox plans to reach its climate goals in three major pathways as shown in the figure below.

Energy Efficiency & Process Improvements

Increase remote solve to reduce service miles
Increase fleet fuel efficiency
Real estate optimization
Process and facilities energy reduction projects
Incorporate internal carbon pricing into decisions

Circular Economy & Low Carbon Design

Increase energy-efficient products
Increase post-consumer materials in products
Expand take-back and remanufacturing
Test and commercialize Cleantech innovations
Engage suppliers to lower carbon supply chain

Carbon Compensation & Neutralization

Zero-carbon electricity
Power Purchase Agreements (Solar / Wind)
Renewable Energy Credits
Renewable natural gas
CO2 capture, sequestration, and reforestation

Operational efficiency improvements

Xerox invests in solutions that conserve natural resources and reduce the energy intensity of its operations.

For instance, it has replaced chillers, boilers, and compressors at manufacturing and office sites with high-efficiency equipment to minimize energy use. Such efforts allowed the copier to decrease its energy consumption by 15.9% in 2020.

The reduction has been steady since the 2016 baseline.

Beyond energy reduction, Xerox will further cut its emissions by employing low- and no-carbon alternatives. These include alternative fuels for fleet vehicles and renewable energy for operations.

Contributions to circular economy

Xerox also strives to eliminate and reduce its waste as part of its net zero goals. To do so, it develops recyclable packaging whenever possible.

Since 2014, Xerox has launched products that gained the environmental certification known as EPEAT Silver or Gold. It stands for Electronic Products Environmental Assessment Tool reflecting several categories of environmental attributes that span the life cycle of electronic products.

For the last 20 years, the firm has been aiming to keep toner cartridges out of landfills. Its take-back and remanufacturing program contributes significantly to this mission.

In fact, over 1.5 million Xerox toner cartridges were manufactured using recovered cartridges in 2020. That represents as much as 50% of toner cartridge production.

Recycled waste toner makes up a quarter of the cartridge and does not affect print quality.

In 2021, Xerox introduced printers and multi-function devices with 10–16% post-consumer recycled plastic content. Then 21% is for the associated toner cartridges.

When it comes to compensating its emissions, Xerox plans to buy carbon credits to offset its unavoidable footprint. As to how much it will invest, the firm doesn’t specify yet.

But it will seek to invest in carbon capture and sequestration as well as supporting reforestation projects.

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