What is Your Carbon Footprint and How to Reduce It?

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Are you wondering how much carbon dioxide you release into the air? Then you may want to know what is your carbon footprint.

Every time you do something that burns fossil fuels, you emit carbon into the atmosphere. If you’re driving a car, flying in a plane, eating something, or only watching TV, you’re emitting carbon.

Your home or the building you’re living in also factors into your personal emissions.

Some people emit more carbon dioxide than others. But your individual carbon footprint is a part of the total emissions released into the air. It all adds up.

So, it’s crucial that we know our individual carbon footprints and how we can reduce them. It will help the world’s quest to reverse the disastrous climate change effects.

This guide will help you know how much CO2 you’re emitting and what are the ways you can do to reduce it.

What’s Your Individual Carbon Footprint?

According to WHO, a carbon footprint is a measure of the impact your activities have on the amount of carbon dioxide released into the air.

These CO2 emissions are through the burning of fossil fuels and are expressed in tons. They also include emissions including other GHGs like methane and chlorofluorocarbons (CFCs).

But since CO2 is the major GHG that causes warming, it’s used most often in getting carbon footprint.

Globally, the average individual generates about 4 tons of CO2 each year. But each person in the U.S. produces about 16 tons of carbon in a year. In other countries, averages vary a lot with higher emissions found in developed nations.

Yet, the average global CO2 footprint a year has to drop to 2 tons by 2050 for the world to have the best chance of avoiding a critical 1.5℃ rise in temperature.

And cutting the individual carbon footprint to only 2 tons won’t happen overnight.

But it’s possible through small changes in daily actions such as eating less meat or line drying clothes.

Transportation and household energy use are the biggest parts of an individual’s carbon footprint.

For example in the U.S., about 40% of total emissions during the 1st decade of the 21st century were from those sources. They’re the primary carbon footprint of individuals over which they have direct control over it.

Secondary carbon emissions usually refer to the consumption of goods and services. Food production includes this, for instance.

Take for example the case of producing a bottle of water a person drinks. Its carbon footprint includes the emissions released during its manufacture. Add to this the emissions of shipping the product.

Likewise, foods shipped over long distances and those with more meat need a higher amount of energy to produce.

Hence, your own carbon footprint is a vital means to understand the impact of your actions on global warming. This is why it’s important to measure and keep track of your emissions if you want to help fight the climate crisis, at least on an individual level.

So, how do you know what’s your personal carbon footprint?

How to Measure Your Own Carbon Footprint

You can figure out how much your actions generate GHG by using a carbon footprint calculator.

There are plenty of various tools created for calculating carbon footprints for individuals. But they’re different from the ones used to calculate carbon emissions by businesses and other entities.

Emissions by companies are often measured using a more complicated, scientific approach. And most businesses need to follow certain regulations to offset their emissions.

Calculating the offset they need to reduce or avoid footprint usually involves buying carbon credits. They’re permits given to companies in relation to their emissions.

Carbon offset credits have been on the rise due to the urgent need to mitigate climate issues. Large businesses are using them to address their big carbon footprint.

Here’s our complete guide to understanding how the emissions offset scheme with carbon credits works.

A carbon footprint calculator for an individual considers the GHG you emit at home. It may also include the emissions you contributed when traveling.

This calculator allows you to compare your footprint with national and global averages. There are a couple of online CO2 footprint calculators you can use.

In the U.S., there’s the Environmental Protection Agency. For those in the UK, as well as for others from different nations, the WWF calculator is helpful. While the one from the United Nations is useful for people from all parts of the globe to use.

Not all online calculators are the same. But they’re asking for similar pieces of information from you to calculate your individual carbon footprint.

Example questions are:

What is the size of your household,
What your diet is,
How often you dine out,
How much do you drive using different transport vehicles,
The frequency of your flight,
What kind of energy you’re using at home,
How much energy you’re consuming,
Your recycling practices, etc.

In essence, they’re asking for details about your household, travel, and lifestyle. The images below show some samples of the personal carbon footprint results generated by the calculators.

UN footprint calculator results
WWF footprint calculator results

The result you’ll get after providing the information may not be 100% accurate.

That’s understandable though as there are a lot of factors affecting the standard values the calculators are using. Plus, the numbers you may provide are only estimations and not the exact amount you actually used.

Take the emissions of eating meat, for instance. While eating meat emits higher carbon than vegetables, it still depends on where you buy the meat. If you buy it locally, then it has fewer emissions.

Not to mention that the estimations you give and calculated don’t account for goods and services that come with them. So, what matters is to get your average individual carbon footprint.

Using those online calculators is a good way to start understanding your personal emissions. And from there, you can work on how to improve and reduce your carbon footprint.

How to Reduce Carbon Footprint?

As we can suggest from the situation above, it’s not easy to get your exact emissions. But you need to make estimations to have something to base your reduction efforts on.

Your car may pollute less than the average value used. Or perhaps the meat you buy is less polluting as it’s sourced from your locality. Yet, the fact remains that they’re major emission sources.

Hence, it’s still possible to reduce your footprint in a more accurate way by using numbers that reflect your local reality.

Organizations tackling climate issues recommend ways on how people can cut their footprint.

The WHO, in particular, suggests some areas where you can reduce your individual carbon footprint. They tell on what behaviors are sustainable in cutting down emissions. Here are some examples you may consider.

Areas for Reducing Carbon Footprint

Transportation: Suggested Actions/Behaviors

Avoid polluting car journeys – each liter of fuel burnt emits over 2.5 kg of CO2
Favor walking, cycling or using public transport, especially trains
If you are driving, share the ride with others and don’t speed as it uses more fuel and thus releases more carbon
Avoid flying – aviation is the world’s fastest-growing source of emissions
If you fly, think about offsetting your emissions
You can offset your flight footprint by paying extra for offset credits, or partaking in digital carbon exchanges

Energy Use: Suggested Actions/Behaviors

Pay attention to the temperature of your house – a 1ºC less lowers your footprint (and your bill) by up to 10%
Set your devices so that they’re turned on only when you’re home, and mind their settings to be in the right temperature level
Use energy-efficient lights like LED and turn them off when not needed
Unplug cellphone chargers even if not connected to phones as they still drain electricity
Enhance home insulation to get rid of using more devices
Opt for a greener electricity supplier (uses renewable energy) to help promote low carbon sources

Food: Suggested Actions/Behaviors

Lessen your consumption of animal products
Eat locally-produced foods – they generate less pollution
Recycle or compost organic waste to avoid methane emissions by decaying this waste in landfills – in the EU, this kind of emission accounts for ~3% of GHG emissions.

Waste Management: Suggested Actions/Behaviors

Reject what you don’t need and reduce what you need
Reuse or repurpose wastes as many times as possible
Avoid buying new bags to bring your shopping items home by bringing your own shopping bag
Pick products with little or no packaging – it will cut down production emissions

Personal choices that can significantly help mitigate climate pollution. such as:

Eating a plant-based diet
Avoiding air travel
Living car-free
Choosing to have smaller families

The image below illustrates some ways to cut down a personal CO2 footprint.

Why do Individual Efforts to Fight Climate Change Matter?

Many people want to know what they can do individually to help tackle climate issues. In such a case, they need to know how their actions can have the biggest possible impact.

Climate change is a problem for the entire planet. In essence, climate science tells us that having a good future on Earth depends on reducing the total carbon footprint by about 90% by 2050.

The best time to act would have been years ago. Yet the next best time is now. And the sooner we take action to cut footprint, the more options we have to win the fight.

Hence, the actions you make today to cut your personal carbon footprint will make a huge difference in the future. It will add up to other individuals’ efforts of reducing their own emissions.

You can also check out how you can use carbon credits to offset your emissions here.

The post What is Your Carbon Footprint and How to Reduce It? appeared first on Carbon Credits.

$21 Billion expected from EU Market Stability Reserve Sales

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The European Union plan to tap its carbon market for €20 billion ($21.4 billion) by selling 250 million Market Stability Reserve (MSR) credits. The funds will go towards helping ease the transition to phase out Russian fossil fuels while respecting the emissions cap.

The 20 billion-euro plan won’t compromise the EU’s long-term green goals, as per the emissions trading system’s (ETS) architect.

The revelation of the plan caused carbon prices to fall as investors criticized the EU for such a move. They said that it shows a lack of political predictability from the bloc and may weaken its Market Stability Reserve (MSR).

MSR is a supply-control mechanism that helps drive emissions costs to record levels.

But for Jos Delbeke, a former European Commission (EC) climate official and ETS architect, the EU’s proposal to sell around 10% of carbon credits held by MSR is justifiable.

EU’s Plan to Sell 250M Carbon Credits from MSR

The EU’s plan is a defendable way to raise climate funds according to Delbeke.

He said that the release of the MSR shows that the EU is willing and able to deal with the issues and trade-offs that the energy transition calls for. He further said:

“It’s a “wholly defendable way” of raising funds amid exceptional circumstances while respecting a cap on pollution.”

The 10% percent translates to about 250 million carbon credits or permits that allow a certain amount of carbon emissions.

Carbon credits are used by companies to offset their emissions. For every carbon credit bought, one metric ton of carbon is offset through an environmental project like reforestation.

The attack on Ukraine by Russia, Europe’s major gas supplier, drove the EU to rethink its energy policies amid grave concerns of supply shocks.

Hence, the bloc decided to ditch its dependency on Russian fossil fuels via its REPowerEU plan. And that will cost the region some €20 billion or $21.4 billion in carbon credits auctions.

The proposed REPowerEU plan is three-pronged:

a shift to importing more non-Russian gas,
a faster rollout of renewable energy, and
more effort to save energy.

These measures need a mix of EU laws and recommendations to the EU’s 27 member states.

This bold climate policy requires 210 billion euros in extra investments by 2027 and 300 billion euros by 2030 to meet the EU’s 2030 climate target.

The investments will also slash Europe’s fossil fuel import bill and include the following components:

86 billion euros for renewable energy,
27 billion for hydrogen infrastructure,
29 billion euros for power grids, and
56 billion for energy savings and heat pump

Opposing Views on REPowerEU Plan

At the end of last year, the EU’s MSR held 2.6 billion carbon credits. The proposal won’t affect the reserve’s purpose to reduce surplus carbon permits and boost market resilience, as per the EC.

Under the proposal, there’ll be amendments to the regulation on the MSR. In particular, it will release carbon permits until the end of 2026 when auction sales hit €20 billion.

The European Investment Bank will perform the sales.

But others are uncertain about the plan’s impact on the market.

The head of carbon markets at a financial service company noted that:

“The key of the whole MSR system is raising trust and credibility in the system; without MSR we would have notional floor prices.”

Likewise, the director of carbon research from Refinitiv stated that:

“The issue now is that people believe that the auction revenues are used for other things than for what it was supposed to do… And the market is triggered by this.”

The price of EU carbon credits was down about 10 euros compared with levels before revealing the plan to sell the permits.

Yet, prices quadrupled over the past two years on expectations that the EU will tighten its climate policies.

Meanwhile, other commentators said that tapping MRS reserved carbon credits will risk the EU’s climate architecture and plunder its ETS.

But then again Delbeke defended that such language is not helpful and is based on a misunderstanding of the purpose of the MSR. He added that,

“The spike in EU ETS prices is boosting costs for EU companies… And “a moderate increase” in the supply of allowances [carbon credits] in the shorter term would be a relief.”

The EC president, Ursula von der Leyen, also justified the EU’s plan to sell MSR carbon credits reserves. She said that RePowerEU will help the bloc save more energy and speed up the phasing out of Russian fossil fuels. And most importantly, it will kickstart investments on a new scale.

While for Mette Quin, EC’s deputy director of carbon markets,

“We have done the assessment and we know that we need 250 million allowances [carbon credits] to be auctioned to meet the REPowerEU goals. The raise of energy prices has a much bigger impact, and the carbon price is only a small fraction of it.”

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ESG 101: Definition and Why Invest Using ESG Criteria

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What does ESG mean? What is the definition of ESG and why invest using its criteria?

Investors have been asking these questions wondering if ESG is the same as CSR. Or how it compares with socially responsible investing and impact investing.

If you also want to know what ESG means, this guide provides a comprehensive definition of the concept. It will also help you understand why using ESG criteria in making investments is all worth it.

ESG Definition and Meaning

ESG is an acronym for Environmental, Social, and Governance. It refers to the three major criteria used to measure the sustainability of an investment in a business or project.

ESG is a generic term used by investors to assess the behavior of companies and predict their future financial performance. Most socially responsible investors check companies out using ESG criteria to screen investments.

For instance, it’s used to ensure accountability and management of a firm’s carbon footprint. And the number of funds invested using the ESG criteria has been growing so much since the start of this decade.

With the carbon offsetting and credit industry expanding, there is more opportunity to track non-financial metrics for investors like greenhouse gas (GHG) emissions.

It’s expected to rise even more as the world shifts to a low carbon economy in response to climate change.

ESG vs. CSR: What’s the difference?

Most often the definition of ESG is taken the same as the concept of CSR – corporate social responsibility. While both terms are quite similar, they’re two different concepts.

CSR is a way of managing a company that accounts for the impact its business activity has on various stakeholders. These include its clients, employees, suppliers, investors, society, and other affected groups.

CSR is all about integrating ecological and social concerns into a firm’s business activities. At the same time, adopting a long-term vision over short-term values.

ESG is more about capital markets where investors opt for companies that disclose their ESG strategies. While CSR focuses more on engaging stakeholders.

Yet both concepts care not only about profits, finances, and governance. They also consider the people and the planet to promote sustainability.

Most companies are including their CSR in their ESG reports. Reporting their ESG each year has been the practice for all large businesses, especially for the major airlines.

Those who don’t report their ESG metrics may find it hard to attract investors’ attention.

Responsible investors assess firms using the definition of ESG criteria to screen investments. They can also use it to assess risks in making their investing decisions.

So, let’s find out how companies act on the three ESG criteria: environmental, social, and governance by breaking down each one of them.

ESG Criteria: The Environmental Factors

In essence, environmental factors are about a company’s impact on the environment. They’re based on the idea that business activities can pose risks to the environment.

This criterion looks into how a business acts as a steward of the natural environment. Examples of a firm’s environmental factors can include:

Waste and pollution management
Efficient use of energy
Value chain practices
Greenhouse gas emissions
Climate change

To fulfill this ESG factor, it’s not enough for businesses to only deal with the adverse impact of their activities.

Instead, they need to have a proactive approach that promotes the sustainability of natural resources.

The most pressing environmental concern right now for all businesses is climate change. And so, the common elements of ESG environmental definition include these key actions:

The fight against deforestation
Use of clean renewable energy
Reducing GHG emissions

Almost all large businesses today include climate change in their annual ESG reports. In particular, this environmental component often details the company’s strategies for reducing its carbon footprint.

Common climate change strategies include nature-based solutions like avoiding deforestation. While other measures involve offsetting GHG emissions using carbon credits.

The major goal of this ESG factor is to improve profitability without harming the environment. Thus, investment decisions consider any environmental risks a business has. And investors favor projects that show care for the planet.

ESG Criteria: The Social Factors

A firm that follows this part of the ESG definition respects the rights of its employees and of other people affected by its activities. These include clients, business partners, and the local community people.

In other words, social factors have to do with how the company treats and values people as well as meeting the social inclusion criteria. This ESG criterion also involves concerns about employment conditions to protect workers’ welfare.

Overall, it’s all about the impact that a company has on its employees and on society as shown by these practices:

Diversity and social inclusion policies that avoid discrimination
Healthy and safe working conditions
Labor standards across supply chains: fair wages and human rights protection
Conflict resolution
Good relations with local communities

As a result, firms that integrate social factors into their programs and projects tend to witness better outcomes. For instance, they’ll have high workers’ morale, increased productivity, and lower turnover.

Businesses with socially-responsible ESG practices also find it easier to do their activities. That’s because they don’t face social pressure from people who give them social license to operate.

ESG Criteria: The Governance Factors

This final ESG criterion focuses on corporate culture, policies, and governance. It is about making the responsibilities, rights, and expectations of stakeholders clear so that interests are met.

Values like managers showing commitment to fighting unethical or unfair practices are a strong part of the culture, for instance.

To assess this ESG factor needs clear governance policies and rules. Common examples under which this can be assessed include:

Tax strategy/Fiscal and procedural transparency
Corporate risk management
Executive compensation
Donations and political lobbying
Corruption and bribery
Board structure and brand independence
Protecting shareholder interests

The great benefits of having these governance policies can cover a lot of things. And the biggest one is marrying shareholders’ interests with management to avoid financial pitfalls.

Overall, here are the three ESG criteria combined together.

ESG Criteria: Why use it when investing?

ESG definition and standards are becoming a notable consideration in today’s investment world.

This is because the ESG criteria deal with issues that are vital when measuring the impacts of investment other than financials. Plus, they also have a huge bearing on the rate of return and long-term risk of investment portfolios.

In fact, studies found that investors who choose ESG-screened investments enjoy a ‘double dividend’. This refers to having a lower risk plus a better rate of return or the ratio of income from an investment over cost.

Moreover, ESG investing may end up helping investors build a better investment allocation. It means integrating ESG sustainability factors results in lower risks.

For ESG-focused investing, this means that even if returns are similar, the same return the investor can have in taking less risk. The charts below support this point.

Source: Bloomberg

The graph above reveals that investments with ESG equities offer better returns for the level of risk taken in most cases.

The chart below shows that the top 20 ESG funds enjoyed rising return contributions due to better ESG performance (ESG factor return).

Source: MSCI

Different reasons explain why is that so. Others say that businesses that embrace ESG standards tend to face lower costs of capital and have greater transparency.

While some believe that ESG reduces the risk as investors put their money in projects with a higher chance of success in the long run.

So traditional investors are now becoming more interested in ESG investing framework, too. And many had started using the ESG criterion on environmental aspects to favor investments that reduce carbon emissions.

Using ESG Funds to Reduce Carbon Emissions

ESG factors are a subset of non-financial performance indicators like managing carbon footprint. And this has been the case for many years since the bad effects of climate change were felt.

In fact, a manager of a global investment company wrote that:

“The big picture is that in the next few decades the global economy is going to transform to a low-carbon economy… And it will be one of the biggest investment events of our lifetime.”

A survey of hundreds of investors with over $700,000 confirmed such a claim. Most investors revealed interest in pumping their money into climate-related investments.

Indeed, projects that produce carbon credits are growing globally to cut down emissions. In fact, it’s now valued at over $850 billion and will grow to $22 trillion by 2050.

ESG investing and carbon credits both aim to align climate goals with sustainable investments. Carbon credits are tradeable permits given to companies to offset their GHG emissions. They’re a market-based mechanism for companies to cut their emissions.

In general, one credit equals one metric ton of allowed carbon dioxide emission. 

Investing in carbon credits is a popular option for businesses to collectively fight climate change by slashing emissions.

As noted earlier, climate change and GHG emissions are ESG themes under the environmental aspect. But why use ESG funds to invest in carbon credits?

Here are some compelling reasons why:

Empower businesses and investors to address their climate impact
Put a price on carbon emitted into the air, which incentivizes firms and people alike to further reduce emissions
Enable companies to manage their carbon impact cost-effectively
Bring environmental and economic benefits to local communities where projects take place
Provide income stream for project developers by making emission reduction projects more viable

All these reasons are valid under the definition of ESG and its criteria. So no wonder why ESG-focused investors are lining up in climate-related projects that produce carbon credits.

To learn all about ESG investing, this site is so useful. To know more about how to invest in carbon credits, read our complete guide here.

And if you need help in deciding what type of carbon credits to choose, here’s our full guide for that.

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Alphabet, Microsoft, and Salesforce Commit $500 Million to Carbon Removal

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Alphabet, Microsoft, and Salesforce collectively committed $500 million to a carbon removal program as members of the First Movers Coalition.

The three tech giants are a part of the First Movers Coalition, a technology coalition that aims to decarbonize industry and transport.

During the World Economic Forum in Davos, the coalition added carbon dioxide removal (CDR) to their programs.

The WEF partnered with the US Special Presidential Envoy for Climate John Kerry and over 50 global firms. These companies pledge to invest in innovative green technologies.

In particular, Alphabet, Microsoft, and Salesforce pledged to buy $500 million in carbon removal by 2030. Whereas Boston Consulting Group has promised to remove 100,000 tonnes of carbon by 2030.

Meanwhile, AES, Mitsui O.S.K. Lines, and Swiss Re have each committed to 50,000 tons (worth $25 million) of carbon removal.

The governments of India, Japan, Sweden, Denmark, Italy, Norway, Singapore, and Britain have also joined the group.

The First Movers Coalition Carbon Removal Program

Since its formation at COP26, First Movers brought together firms across carbon-intensive sectors. They range from big businesses that transport goods to renewable energy firms that use steel to build structures.

The coalition seeks to commercialize clean technologies using advanced purchase commitments for commodities. It provides a platform for various companies to make such commitments in this decade.

This then sends the strongest demand signal in history for technologies needed for reaching net zero emissions by 2050.

The coalition has committed to delivering impact in six major sectors by 2030:

Carbon dioxide removal
Aluminum
Aviation
Shipping
Trucking
Steel

These hard-to-abate sectors are responsible for about 30% of global emissions. And this figure can even rise to 50% of emissions by 2050 if the world won’t do anything about it.

This is where the First Movers Coalition comes in to do something about it.

Børge Brende, President of the World Economic Forum said:

“The coalition’s members are truly the ‘First Movers’ who are focused on scaling disruptive innovations that pave the way for long-term transformation… rather than the lower-hanging fruit of short-term process efficiency gains.”

The Coalition now has more than 50 members with a total market cap of $8.5 trillion (10% of the value of the Fortune 500). So far, it has committed around $10 billion already, or about 1% of its members’ value.

Under the First Movers’ carbon removal program, firms are making pledges to buy carbon removal, either by the ton or putting up certain sums of money.

The carbon removed must be verified and members must show that it can be stored for over 1,000 years.

Scaling Up Carbon Removal Technologies

According to the group’s press release:

“If enough global companies commit a certain percentage of their future purchasing to clean technologies in this decade, this will create a market tipping point that will speed up their affordability… It will also drive long-term, net-zero transformation across industrial value chains.”

John Kerry echoed the coalition’s point saying:

“The purchasing commitments made by the First Movers Coalition represent the highest-leverage climate action that companies can take… This is because creating the early markets to scale advanced technologies materially reduces the whole world’s emissions, not just any company’s own footprint.”

He further said that the addition of the First Movers carbon removal program will tackle the biggest challenge of the climate crisis.

That’s cutting the emissions from sectors where there’s no toolkit available yet to replace fossil fuels.

The latest IPCC report says that with very slow progress on emissions efforts, limiting warming to 1.5⁰C will now depend on carbon removal schemes.

First Movers CDR program is an effort to help abate rising temperature.

Through the Coalition, the tech giants work with many other private sector members. These include Mærsk, Amazon, Apple, Bank of America, FedEx, Ford Motor, Trafigura, Vattenfall, Volvo Group, Western Digital, and a lot more.

Other supporting partners include Breakthrough Catalyst, Carbon Direct, Frontier, and the South Pole.

Right now, a handful of startups are removing carbon from the atmosphere using various techniques. Paying these firms to do the job is currently quite pricey, costing hundreds of dollars per ton.

And that adds up fast when talking about a company that emits millions of tons of carbon each year into the air.

But Alphabet, Salesforce, and Microsoft’s early investments could help bring prices down by signaling there’s going to be a market for CDR.

Last April, the Frontier Group also made a similar but bigger commitment that Alphabet is also a part of. The scheme will be buying $925 million of carbon removal. Frontier includes other tech giants like Meta and Shopify as well as McKinsey.

Meanwhile, President Biden has pledged $3.5 billion to carbon removal hubs while Elon Musk sponsored a carbon removal Xprize.

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Flowcarbon Raises $70M for Blockchain Carbon Credits

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Flowcarbon, a blockchain-enabled carbon credits trading firm, has raised $70 million.

Flowcarbon is an NYC-based climate tech company that operates at the intersection of carbon and crypto. Its main goal is to help speed up climate change solutions by tokenizing carbon credits. And by leveraging Web3, it aims to protect the earth’s natural carbon sinks.

The former WeWork CEO Adam Neumann co-founded the blockchain startup. Its first major funding round is for building market infrastructure in the voluntary carbon market (VCM).

The $70M funding consists of two parts.

The $32 million is from the funding round led by venture capital giant Andreessen Horowitz (a16z) – Other major contributors are Samsung Next and Invesco.
The other $38 million is from the firm’s sale of its “Goddess Nature Token” (GNT).

Flowcarbon’s Blockchain Technology for Carbon Credits

The climate tech firms will tap into the growing VCM to help companies offset their GHG emissions to fight against climate change.

In particular, the funding is for developing a protocol that tokenizes carbon credits. The aim is to drive investment in projects that remove carbon from the air.

Flowcarbon’s blockchain technology seeks to bring carbon credits on-chain. It will democratize access to offsets and incentivize high-impact climate change projects.

The current VCM is criticized for a couple of things. It’s fragmented, not transparent, hard to access, and there are doubts over the quality of some carbon credits.

Critics said that traders are converting older, lower-quality carbon credits into virtual assets.

But the trend toward carbon-linked tokens persists to rise as demand for carbon credits surges.

And to help address the issues, Flowcarbon tokenized carbon credits through its two-way bridge, allowing credits to be on and off-chain.

By tokenizing credits, developers will gain cheaper financing earlier in their project’s life. It allows them to sell their credits forward to buyers who’ll enjoy more transparency.

Also, buyers from all backgrounds can join the Flowcarbon blockchain-backed market of carbon credits. The firm’s CEO, Dana Gibber said:

“Our mission is to provide the financing necessary to scale projects that reduce or remove carbon from the atmosphere… In particular nature-based projects.”

Nature-based projects may include reforestation, conservation, or nature restoration efforts.

Flowcarbon’s Goddess Nature Token

The firm’s flagship token GNT is a bundle token. This means it’s fungible and can be retired, redeemed, or unwrapped. Each carbon credit in Flowcarbon’s GNT is:

Bundling credits can help in liquidity and will allow for greater trading volumes than in a traditional carbon trading platform. This reduces the trading risks.

Also, renowned registries pre-certify all carbon credits before they become tokens. They include Verra, Gold Standard, Climate Action Reserve, and the American Carbon Registry.

The bundling process of GNT also enables token holders to unwrap and remove a credit from the bundle. They can then choose to sell the unwrapped credit off-chain for physical delivery.

Plus, nature-based carbon credits are seen to have the biggest market share according to Sylvera’s 2022 Carbon Credit Crunch Report.

The analysts said that the more expensive nature-based credits will soon be all that is left. And they trade between 2 and 4 times the price of energy credits.

Lastly, a little 2% fee for Flowcarbon’s blockchain tech for carbon credits will help developers save money. The cost of selling credits via the traditional offtake agreement is around 30%.

Blockchain-enabled carbon credits by Flowcarbon are a part of a wider movement where other companies are also active. It joins other players in the carbon-to-crypto world.

IBM also worked with Veridium Labs four years ago on a carbon credit-related token.

Toucan, Regen, and Moss also aim to improve transparency and accessibility to the carbon credit market.

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Bloomberg Net Zero Carbon Emissions Pledge

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Bloomberg, the global information and news company, had pledged to reduce its carbon emissions and become net zero by 2025.

While it focuses on emissions reductions, it also plans to make more investments in projects that produce carbon credits on the road to net zero.

In 2021, Bloomberg began buying and retiring carbon credits to offset its business travel emissions. But starting in 2025, it will expand this effort to cover all remaining carbon emissions.

Bloomberg Net Zero Carbon Emissions Targets

Bloomberg’s target emissions reductions follow the science-based approach by SBTi (Science-Based Targets initiative).

Its short-term targets aim for an 80% reduction in its Scope 1 and 2 emissions. At the same time, it targets to reach a 20% reduction in its Scope 3 emissions by 2030 from a 2018 baseline.

Here’s Bloomberg’s progress toward its net zero carbon emissions goals as seen in its 2021 Impact Report.

Bloomberg’s science-based targets aim to reduce:

Scope 1: Direct GHG emissions from direct use of fuel, including natural gas, generator oil, refrigerants, and aircraft fuel.

Scope 2: Indirect GHG emissions associated with consumption of purchased electricity and steam.

Bloomberg’s Scope 3 emissions refer to all other indirect GHG emissions. These include:
business travel, publishing operations, global logistics, paper usage, and landfill waste generation.

Bloomberg emissions by activity

Energy consumption generates most of Bloomberg’s emissions (72.5%) as shown in the chart.

In 2021, energy consumption accounted for an even greater share of the firm’s total emissions. While emissions from publishing operations fell and business travel remained lower.

Bloomberg Carbon Emissions by Activity

With that, Bloomberg’s top priority with its net zero emissions is reducing its energy use. It keeps track of the kWh consumption per employee as a measure of its energy efficiency.

Bloomberg is a member of RE100. It’s a global initiative of influential businesses committed to using 100% renewable electricity.

The media company pledged to get 100% of its electricity from renewable sources by 2025.

In 2021, Bloomberg secured 176 million kWh of renewable energy, an increase of 10 percent from 2020. This amount is from its 9 on-and off-site solar, wind, and hydropower projects.

This sourced renewable energy represents 51.2% of the firm’s purchased energy.

To date, Bloomberg’s renewable projects have generated 592 million kWh of energy.

Moreover, part of Bloomberg’s path to net zero emissions is to cut the environmental impact of its facilities. In particular, it includes its buildings and data centers.

The company invests in green-certified office spaces. 80% of its employees work in offices certified by Leadership in Energy and Environmental Design (LEED) or BREEAM standards.

In 2021, Bloomberg had 36 certified projects on six continents, with 5 more in progress.

When it comes to its data centers, the firm has a goal to have a 5% improvement in energy efficiency across its data centers versus a 2018 baseline.

In 2021, it managed to achieve a 2% improvement in energy efficiency based on Power Usage Effectiveness (PUE). It’s a measure of how efficiently a data center uses energy.

PUE is the ratio of the energy used by the facility to the energy delivered to the computer equipment. And a lower PUE value is better.

Carbon credits: A means toward net zero emissions

Business travel has represented a significant part of Bloomberg’s total emissions. But the pandemic restrictions lowered business travel.

In 2021, Bloomberg traveled 31% fewer miles than in 2020 and its associated emissions fell by about 20%. The firm’s 2021 travel activity was 86% lower than its pre-pandemic level in 2019.

But as the pandemic diminishes and regular business dynamics resume, business travel will be up. And so, it will be a key area of focus as Bloomberg work to reach its 2030 net zero emissions reduction targets.

In relation to this, Bloomberg is now buying and retiring carbon credits to offset its travel emissions.

The firm worked with climate solutions company the South Pole to buy carbon credits. These credits will support climate action projects in Brazil, Cambodia, and the Democratic Republic of Congo.

The number of credits will cover all of Bloomberg’s travel emissions for the next 3 years. The selected projects have co-benefits that align with the UN Sustainable Development Goals.

Plus, it offers the following carbon credits benefits:

Water filters in Cambodia:

This project supports locally-made Ceramic Water Purifiers that provide clean water to communities. With a filter in their home, families no longer need to boil their water to make it safe to drink.

Forest conservation in Brazil:

This refers to the Envira Amazonia Tropical Forest Conservation project in Brazil’s Amazon basin. It protects 39,300 hectares of tropical forest from logging and cattle ranches.

Forest conservation in the Democratic Republic of Congo:

This one is the Isangi Forest Conservation project in the Democratic Republic of Congo. It protects over 187,000 hectares of one of the Earth’s most biodiverse rainforests from deforestation.

Finally, Bloomberg’s publishing operations are one of its major carbon emitters. It accounted for 13% of total company emissions.

In 2021, it published three magazines that consumed 5 million pounds of paper. This generated 8,647 metric tons of CO2e. This represents a 33% reduction versus 2020 due to reducing the total number of print magazines by 46%.

To mitigate this emission, Bloomberg is employing these strategies:

Recycled paper: printing on 100% recycled-content paper
FSC certification: Forest Stewardship Council or FSC-certified paper for all magazines
Efficient printing: improve processes to limit paper waste during production
Regional printing and distribution: to reduce emissions
Digital publishing: most impactful to reduce publishing activities emissions.

Bloomberg aims to reach net zero both via emissions reductions and business efficiencies.

Emissions reductions are a priority for the company. But it will also invest in projects that create carbon credits to offset emissions.

So along with over 800 companies, Bloomberg committed to reaching its net zero emissions goals through various means.

The post Bloomberg Net Zero Carbon Emissions Pledge appeared first on Carbon Credits.

The Top 4 Carbon Exchanges for 2022

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Carbon trading has become extremely popular today among individuals and organizations and carbon exchanges are starting to emerge.

It’s all happening for a simple reason: Reducing carbon emissions is a global initiative and the carbon market offers great options for entities looking to cut emissions.

A polluter can purchase credits to cover the emissions they release into the air. Each credit equals one ton of CO2 equivalent (CO2e).

So, when an entity buys a carbon credit, it can now offset one ton of its own CO2 emissions.

On the other hand, companies with negative emissions that actively reduce the amount of carbon in the atmosphere (like reforestation projects) instead create carbon credits and sell them.

Individuals and companies alike on both sides of the market are looking for the top carbon exchanges to trade carbon credits. And if you’re wondering which exchanges those are, we’re going to identify the top 4 carbon credit exchanges for 2022.

But before that, we’ll first define what carbon trading is, and then explain the two different carbon markets in place.

What is Carbon Trading?

Carbon trading is the process of buying and selling carbon credits. Some of these credits are permits that allow a company or other entity to emit CO2, and some of these credits represent one ton of CO2 emissions that’s already been offset. Together, they form a market-based system aimed at reducing CO2 emissions that cause global warming.

Carbon exchanges are the vehicle of this task.

Carbon trading is also called carbon emissions trading. The first were based on the cap-and-trade regulations that introduced market-based incentives to reduce pollution.

So, instead of imposing certain laws and hard limits, cap-and-trade programs rewards entities that cut their emissions, while charging penalties to those that can’t. This is done through the issuance of carbon allowances – the type of carbon credit that permits its holders to emit one ton of CO2.

The idea behind this framework for CO2 emissions came from the Kyoto Protocol in 2005. In particular, it aimed to reduce CO2 emissions by about 5% below 1990 levels by 2012. The Paris Agreement continued the work in 2015.

Emitters can buy these allowance credits from others in the same program to offset their emissions. But it’s important to note here that allowances don’t actually reduce emissions, but merely limit them.

Carbon Offset Credits

Carbon offset credits, on the other hand, are a type of credit that represent one ton of CO2 actually removed from the atmosphere. This removal can be achieved in a number of ways – the planting of trees, direct capture from a source of emission or the atmosphere, and so on.

Those with projects that can remove some of this carbon that would otherwise end up in the atmosphere can sell these CO2 reductions as carbon credits.

Many claim that carbon trading is a cost-effective solution to the climate crisis. While others say that it’s just a distraction and can’t help resolve global warming.

But despite criticisms, carbon trading remains a central idea in many proposals to combat the effects of climate change.

There’s no unified global marketplace for carbon trading that exists yet. But there are several regional markets created where cap-and-trade programs exist, as well as various trading platforms. Trading carbon credits in the former is usually regulated, while the latter is for the voluntary market.

Compliance vs. Voluntary Carbon Market

The compliance or regulated carbon market is born out of the laws mandating emissions reductions. Examples of these include the E.U.’s Emissions Trading System (EU ETS), or California’s cap-and-trade program.

Governments assign maximum emission limits for each company, sometimes known as “allowances” or “credits”. Emitters can then buy or sell carbon credits based on emissions they’ve generated in relation to their allowance limits.

Conversely, the voluntary carbon market (VCM) operates without government regulation. However, it has grown explosively in recent years due to the Paris Agreement calling for drastic corporate net zero goals.

Entities can buy carbon credits to offset the amount of CO2 emissions they’re releasing. Some of them buy directly from developers who sell credits granted to their carbon projects.

But now, many buyers and sellers of carbon credits are transacting their trades via digital carbon exchanges. Many of them even prefer to do it using carbon tokens enabled by blockchain technology.

As the crypto world matures, developers have begun to apply blockchain to one of the other hot markets today: carbon credits.

Tokenization of Carbon Credits

Carbon credits can also be traded as tokens on a digital exchange just like how they can be traded on traditional trading platforms.

A pool of carbon credits from a project can be tokenized. And like each carbon credit, a token also represents one ton of carbon offset.

The tokenization of carbon credits helps the transparency and liquidity of the market. Blockchain technology can create secure, standardized, and real-time carbon credit exchanges.

This is because the token stores all the information related to the carbon credit. These include third-party certification details, auditing, transaction records, and project monitoring.

Carbon tokens minted to the same blockchain will follow the same standard. This allows for their integration into the Decentralized Finance (DeFi) markets.

DeFi markets, such as Decentralized Exchanges (DEXs), offer financial instruments without relying on intermediaries by using smart contracts on a blockchain.

In essence, cryptographic tokens are a set of information and regulations encoded into a smart contract. This contract is a program that’s executed after meeting certain criteria and kept on a blockchain.

After taking possession of the contract, a third-party body can easily verify it due to the nature of blockchain networks. Verification is crucial to confirm ownership of the carbon credits in a contract.

The automatic execution of the agreement gets rid of any intermediaries. This eliminates the time-consuming processes involved in traditional exchanges.

Also, tokenization promotes transparency of the transactions in digital carbon exchanges. This is vital for the growth of the voluntary carbon market.

With all that said, here are the top carbon exchanges that are helping to scale up carbon markets right now.

The Top 4 Carbon Exchanges

Among the different carbon credit exchanges available, we’ve identified the top four that are worthy to consider. Let’s discuss each one of them in detail to inform you better.

AirCarbon Exchange (ACX): The easiest and most streamlined platform

AirCarbon Exchange was launched in Singapore in 2019 as a digital exchange platform for airlines to trade carbon credits.

The firm has raised a total of $3.6M in funding over 3 rounds. This carbon exchange is funded by Deutsche Borse.

ACX has a client base of more than 130 organizations. They consist of corporate entities, financial traders, carbon project developers, and other stakeholders.

This carbon exchange uses distributed ledger technology (DLT) in a traditional commodities trading architecture. It also leverages recent blockchain technology to create securitized carbon credits.

It takes advantage of the speed and efficiency of blockchain technology. One of the goals of using it is to have instantaneous T-0 trade execution, clearing, and settlement.

ACX initially based its DLT exchange on the aviation industry through CORSIA, the global Carbon Offsetting and Reduction Scheme for International Aviation.

Moreover, ACX seeks to securitize carbon credits around market demand, enabling more traders to gain exposure to this asset class. This is contrary to the traditional carbon market’s organization around credits sourced from individual projects.

The bid/offer exchange functions like a commodities trading exchange, creating price transparency. Moreover, it allows market participants to Mark-to-Market the value of carbon in their portfolios.

It uses a digital warehouse that lets investors easily manage assets within their portfolios.

Among the top carbon exchanges, ACX bagged a prestigious award in the market. It won the Best Carbon Exchange in Environmental Finance’s 2021 VCM Rankings.

Over 62% of ACX’s client volume comes from Singapore/SEA, while >55% of projects originate from Australia.

ACX currently has six different tradable carbon asset classes. These include the following:

The table below shows the recent price for each carbon asset.

The platform’s token is currently the easiest and most streamlined instrument for carbon credits trading.

Carbon Trade Exchange (CTX): The most cost-effective spot trading exchange

Carbon Trade Exchange (CTX) is one of the earliest players in the global carbon market, dating back to 2009.

Unlike other carbon exchanges, CTX is a member-based spot exchange with various participants. They range from individual brokers and project developers to big corporations.

They can list their credits directly to CTX from their Registry account and then trading digitally from anywhere.

CTX allows for trading credits from several different industry standards including Gold Standard, Verra’s Verified Carbon Standard, and the United Nations’ Clean Development Mechanism (UNFCCC). The BioCarbon Registry is a very recent addition, as of April 2022.

The credits that are tradable on CTX include these five major ones:

Voluntary Emission Reduction (VER)
Certified Emission Reduction (CER)
Verified Carbon Units (VCU)
EUA (EU Allowance)
EUAA (EU Aviation Allowance)

Apart from facilitating carbon exchanges, CTX also offers other services. These are carbon footprint calculation, carbon offsetting, and carbon project development.

Carbon credit exchanges in CTX credits are available in four currencies: GBP, AUD, USD, and EUR.

Buyers can buy and retire credits in lots of 100 tons of CO2e, which is CTX’s minimum trading volume. Other carbon exchanges have minimums of at least 1,000 tons equivalent, or 1,000 credits.

CTX has traded hundreds of millions of tons of C02e offsets since its first trading activity in 2017. The top two most traded credits are Verra certified credits and CTX CERs. The chart below illustrates CTX’s trading volume for October and November 2021.

CTX is expanding fast with current locations in the UK, Australia, Europe, and Asia. It covers projects in Africa, Asia, Europe, and North and South America.

Toucan Protocol: Creator of the most liquid carbon-to-crypto market

Toucan Protocol builds infrastructure for carbon markets to finance climate crisis solutions. It’s raised a total of $7.5 million in funding over 2 rounds.

Its mission is to make DeFi (decentralized finance) work by introducing a new currency: programmable carbon.

In essence, it turns Verified Carbon Units or VCUs into crypto via its own proprietary Toucan Bridge. It’s the first generalized bridge to tokenize carbon credits. It allows anybody to tokenize their carbon offsets and make them available in the world of DeFi.

Each Toucan tokenized CO2 or TCO2 represents one verified, real-world carbon credit.

TCO2s are semi-fungible, with unique information about each project encoded on-chain.

The Toucan Carbon Bridge can connect to any source of offsets, starting from renowned registries like Verra and Gold Standard. But not all carbon offsets are equal as they come from different projects.

So Toucan created its own so-called Carbon Pool or liquidity pool. It turns carbon offsets into more liquid carbon index tokens. This allows buyers to discover prices for different classes of carbon assets and creates a useful Web3 building block.

Once bridged, the TCO2 tokens can be deposited in a Carbon Pool. Each offset in the Carbon Pool creates a carbon reference token. TCO2 is backed by one of the carbon offsets with the necessary attributes.

And as the offsets are on public blockchains in smart contracts, each TCO2 is verifiable. Verification is straightforward all the way down to the offset’s source registry.

And “retiring” an on-chain credit on the parent registry prevents double-counting of the offset. It means this is done by “burning”, locking it away in a blockchain address that no one has access to.

Toucan’s first carbon pool was the BCT or the Base Carbon Tonnes. It’s a reference token created by the KlimaDAO organization that represents one ton of carbon. These tokens are back by credits from the Verra Verified Carbon Unit (VCU) registry dating from 2008 or later.

Carbon pools are gated. This means each TCO2 token must have specific attributes to pass the gating criteria. Toucan and members can set the parameters for gating.

The pool’s BCT token is highly liquid. It trades around the average price of BCT-qualifying carbon credits sold off-chain.

The price of Toucan’s BCT was initially at an average of $8 but has now fallen to $3. This is around the average of $3 for off-chain carbon credits.

To date, here are what Toucan had achieved so far:

Xpansiv: The most intelligent exchange for ESG-inclusive commodities

U.S.-based Xpansiv was born out of wedlock between itself and Aussie platform CBL in 2019. This firm had proven wildly popular with investors, having raised $178.5M in total funding over 7 rounds.

Xpansiv is the global marketplace to trade various data-driven, ESG-inclusive commodities. The exchange prices carbon, energy, and water-based transactions. And the company does this in an intuitive, user-friendly environment based on deeper data.

One of its main business units is the CBL, the largest spot exchange for ESG commodities. These include carbon, renewable energy certificates, and Digital Natural Gas.

On Xpansiv’s CBL platform, clients can trade a broad range of carbon offset projects from major registries around the world. The long list of customers includes big organizations like airlines and major financial institutions.

By hosting around 90% of all voluntary carbon credit transactions worldwide, Xpansiv is currently the dominant player in the market.

Xpansiv’s flagship offset contracts are all designed to provide high-quality carbon credits. With their partner, Chicago Mercantile Exchange (CME Group), they’ve launched these three offset contracts:

The CBL GEO: Global Emissions Offset,
CBL N-GEO: Nature-Based Global Emissions Offset, and
CBL C-GEO: Core Global Emissions Offset

The total carbon offset volume traded on Xpansiv’s CBL exchange platform was over 121.5M tons of CO2e in 2021. This was a 288% increase from 2020 and represented about 35% total market share.

There are over 400 market participants that are active in CBL’s carbon market. Its transparent order book enables these participants to see live pricing. They can also gain full market depth for individual carbon offset projects.

In fact, project-level information is available via Xpansiv’s order book. This is integrated with leading registries such as the American Carbon Registry, Climate Action Reserve, Gold Standard, and Verra.

The below chart shows the Xpansiv CBL’s carbon exchange’s volume, value, and trading firms from 2019 to 2021. There is a strong trend of very rapid growth across all three metrics.

Here’s the annual transactional volume via CBL for voluntary carbon credits from 2018 to 2021.

Moreover, Xpansiv also pioneered the CBL GEO and CBL N-GEO futures contracts, with the CME Group.  These futures contracts saw total trading volume of over 47.1M tons in December last year.

Another thing that makes Xpansiv the leading exchange is its centralized and intelligent trading platform.

Conclusion: What’s the verdict?

Overall, all the carbon exchanges have the same goal of enabling the trade of carbon credits.

But not all carbon exchanges are equal and there are certain things that you may want or not want from each platform. Here’s what we can say about what we like and don’t like about each of them.

Carbon Exchanges: What We Like:

Carbon Exchanges: What We Don’t Like:

So, we’ve given an assessment of the top 4 carbon exchanges for 2022 based on the currently available information.

You can also check out our news page to stay on top of relevant events involving these carbon credit exchanges.

The post The Top 4 Carbon Exchanges for 2022 appeared first on Carbon Credits.

Ripple Pledges $100M to Scale Carbon Markets With Blockchain, Crypto

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Ripple announced its commitment to help ramp up carbon markets for $100 million using blockchain and crypto.

Ripple is a technology company that acts as both a digital payment network for financial transactions and a cryptocurrency.

Its $100 million pledge to carbon markets is to help speed up carbon removal and ramp up carbon markets. In particular, the funding will be for investing in innovative carbon removal companies and climate fintech.

Brad Garlinghouse, CEO of Ripple, said:

“Our $100 million commitment is a direct response to the global call to action for companies to help address climate change… While reducing emissions are paramount, carbon markets are also an important tool for meeting climate goals.”

He further said that blockchain and crypto can play a catalytic role in allowing carbon markets to reach their full potential. They’ll bring more liquidity and traceability to a fragmented, complex market.

Moreover, Ripple will also build a portfolio of carbon credits to meet its own commitment to reach net zero emissions by 2030. This commitment will help promote global climate goals to limit temperature rise to 1.5℃.

Ripple’s $100M Commitment to Carbon Markets

In 2020, Ripple declared its target to be carbon neutral by 2030 and is on track to do so by 2028. It works with other organizations to achieve its climate goals and helped XRP Ledger (XRPL) decarbonize in 2020.

To further its commitment to making carbon markets sustainable, Ripple’s $100M will fund these efforts:

Build a portfolio of high-quality carbon credits:
This is to help capitalize on the most impactful and scalable carbon removal methods and projects.
Invest in innovative carbon removal technologies:
By using blockchain and crypto, Ripple will speed up the supply in carbon markets and unlock value for buyers and sellers.
Support new functionality and developer tools:
This initiative will help creators and developers that focus on carbon market solutions. It will also enable carbon credit tokenization as core non-fungible tokens or NFTs on XRPL.
Partner with the world’s leading climate and conservation organizations:
This is to develop new methodologies for carbon removal and distributed governance models. The results would be greater fairness, revenue, and equity for suppliers.

The Role of Blockchain and Crypto in Carbon Markets

Carbon markets are toiling to keep up with soaring demand and a lack of high-quality, verifiable products. Add to this the problems with supply bottlenecks and slow time to market.

But the pressing climate goals need the market to scale up. And this entails improved mechanisms for project verification and certification. It also recalls for more transparency in pricing, market data, and infrastructure for buyers and sellers.

This is where blockchain and crypto come in to fill in the gap.

These digital technologies can help fix the market’s key barriers to growth and efficacy. They have innate qualities of transparency, verification, and scalability.

And so, tokenizing carbon credits will have a crucial role in scaling up carbon markets and meeting rising demand. In fact, plenty of carbon removal projects are betting on the XRPL to offer new climate solutions.

As per the General Manager of RippleX, Monica Long:

“By bringing blockchain to global climate initiatives, the industry can more quickly verify and certify NFT carbon credits… It will also rid the potential for fraud and even guarantee the offset is actually removing carbon for the long term.”

Carbon Market Makers and Partners of Ripple

Ripple partners with leading carbon removal companies and carbon market makers. These include the following:

CarbonCure Technologies:

Offers technologies that store captured CO2 in concrete through carbon mineralization.

Robert Niven, Chair and CEO of CarbonCure Technologies said:

“To address the climate crisis, we need all hands on deck. Growing the market for high-quality carbon removal and reductions is a key part of the solution.”

He added that Ripple’s commitment to carbon markets will have a big impact on advancing carbon removal innovations. The $100 million will also improve carbon credit delivery and its tools and solutions.

Xange.com:

A climate-focused fintech (backed by the UN) offering solutions that help the development of projects. It also helps in the measurement of ecological benefits and the registration of carbon credits. It’s building its carbon credit verification, tokenization, and exchange functionality on XRPL.

Steven Witte, COO & Co-Founder at Xange.com said:

“As efforts to decarbonize the global economy increase, demand for carbon credits will only increase… The industry needs to evolve its infrastructure and verification methods to address our climate needs.”

Invert:

A carbon-offsetting firm that invests in high-quality carbon credit generation projects.

As carbon markets continue to evolve and grow, blockchain and crypto solutions as a key part of Ripple’s commitment will have a big role to play.

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Perennial Raises $18M Soil Carbon Investment from Bloomberg and Microsoft

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Soil carbon platform Perennial secured an $18M investment from investors including, Bloomberg, Microsoft Climate Innovation Fund, Temasek and SineWave Ventures.

Perennial is a soil carbon platform that focuses on measurement, reporting, and verification (MRV). The firm’s previous name is Cloud Agronomics with the vision to make the soil the world’s biggest carbon sink.

The firm can detect carbon and other nutrients in soil via its machine learning, ground observation, and remote sensing tech. Thus, its system can bypass the need for the lengthy and costly process of physical soil sampling.

The $18 million soil carbon investment will be for Perennial’s MRV platform ramp-up. In particular, it will help companies meet their net zero emissions plans with better insetting and offsetting.

Co-founder and CEO of Perennial stated that:

“What’s needed is an accurate and cost-effective way to measure and report carbon stored in soil everywhere, all the time. That’s the key to unlocking the huge market potential for trusted soil carbon offset credits.”

Perennial’s MRV Platform

Today, the voluntary carbon market is supply constrained. There’s more demand for carbon credits to offset emissions than the supply of verified credits.

Agricultural soils can remove and store billions of tons of CO2. And with the right incentives in place like carbon credits, agriculture can be a key solution to fight climate change. The image shows how soil carbon sequestration works.

In 2021, the firm created the highest-ever resolution map of soil organic carbon for the USA.

Perennial’s chief scientist, James Kellner, said:

“Our technology reduces or eliminates the need for physical soil sampling… Reducing the sampling burden will drive down the cost of generating carbon offsets in agricultural land.”

The Perennial team has made great progress in developing its soil carbon MRV platform. It had done several market validation projects in the U.S. and Australia.

Its technology brings accuracy, detail, and scalability to soil carbon measurement. In fact, each measurement contains hundreds to thousands of individual predictions. Thus, it captures the unique carbon fingerprint of each field.

Agricultural companies can use Perennial’s technology to measure and reduce their emissions in the food supply chain. While project developers can work with the firm to verify the carbon credits they’re selling to corporate emitters.

Both of these are crucial to meeting net zero emissions goals.

The company partners with top registries to help landowners create carbon offset credits much easier.

The investment will help speed up Perennial’s soil carbon platform and build its team.

As a result, buyers of those credits will be able to measure and track their investments in carbon offsets. This is critical for their ESG quantification and reporting requirements.

Better yet, farmers will receive a steady stream of income via carbon credits that managing their lands generate.

This new investment into Perennial’s soil carbon technology comes right on time.

According to a report by Sylvera, nature-based carbon credits will be soon all that’s left. And the chart below shows that. VCUs refer to verified carbon unit credits.

Source: Sylvera 2022 carbon credit crunch report

And so, buyers will rely on carbon credits from agriculture, forestry, and other land use (AFOLU) projects. They’re the so-called nature-based carbon credits, which is Perennial’s domain.

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