🔎 What’s going on?
Last month, carbon offset ratings provider, Sylvera raised $5.8 million in seed funding from investors including Index Ventures. Sylvera uses a combination of machine learning and remote sensing technologies to bring accountability and transparency to carbon offsets projects.
🌲 Cool, tell me more!
Sylvera has positioned itself as the world’s first carbon offset rating provider, similar to the likes of S&P Global and Moody’s who rate bonds and credits. They aim to provide transparent, independent, reliable, and continuous ratings for carbon offset projects.
Their web platform and API showcases ratings that are based on two critical areas of a carbon project - it’s carbon performance and the quality of the project. Carbon performance is assessed by gathering multiple layers of data, mainly from satellite sources such as multispectral images, radar, and LiDAR data. This is used to understand how the project is performing on the ground. For example, simple things like a fire wiping out part of the forest project will be clearly visible through the satellite data, which may be missed on the ground if the forest is vast. The quality of the project is assessed via a multitude of factors by answering questions such as: ‘are the stated project aims sound to start with?’, ‘how long will the project’s impact last?’, ‘does the project have the co-benefits of hitting Sustainable Development Goals?’, and ‘has the project taken human and natural risks into consideration?’.
Machine learning is then used to combine geospatial data with proprietary climate data (from academic partners such as University College London and UCLA) to analyse and visualise the data. All the additional project quality data is also incorporated for robustness. Together it creates a standardised rating for a project that helps those buying carbon offsets to be assured of the quality.
❓ Why should I care?
Carbon offsetting has had a bad reputation, especially for the last 5 years or so. However, they are necessary and an integral part of establishing an effective carbon market and driving emissions reduction. They do this through capital reallocation i.e. money is being moved from carbon-intensive projects (such as fossil fuel power plants) and towards decarbonisation projects (such as renewables, forest afforestation, clean cookstoves, and direct air capture to name a few). According to the Economist, last year the value of global carbon markets hit a record €229bn. With every company now setting net-zero targets, the carbon market is poised for exponential growth this decade.
The lack of transparency into carbon offsets and their effectiveness at carbon sequestration (or storage) in the short and long term, measurement, and communication of the true impact of the projects all contribute to the negative reputation towards carbon offsetting. Sylvera is aiming to provide a benchmark that allows for carbon offsets to be compared according to their effectiveness, amongst a myriad of factors mentioned above.
🚦 Where do we need to be?
Firstly, we need to build more trust in the carbon offset market. Currently, good quality carbon credits are verified by third-party assurance providers such as DNV and SCS Global. However, this is an arduous and expensive process that is still prone to human error. Leveraging new cutting-edge digital technologies to access more reliable carbon offset project data (such as satellite, LiDAR data) can help broker this trust. This is exactly what Sylvera is trying to do.
With more trust, one of the first benefits will be the automatic reflection on offset prices. The price of offset projects usually reflects the quality of the projects. This means that a high-quality project will cost more, and in the future, those projects will get more and more expensive (which should hopefully disincentive companies from buying them in the first place and force them to focus on reduction instead). With better and more continuous real-time data becoming available, assessing the quality of offset projects should become easier. In theory, high-quality carbon credits should remove more carbon from the atmosphere.
👤 What can I do about it?
As a business, here are a few things to think about:
- Measure your carbon footprint at company and product level (if applicable). This is the first and most important step. Organisations such as the Carbon Trust, Ecochain, Emitwise, and Climate Partner can help here.
- Align your company with science and set a Science Based Target.
- Disclose your results and targets publicly, no matter how good or bad they are! Almost every company is in the same position but public disclosure allows for accountability which can be very helpful.
- Focus company efforts on reducing your operational carbon footprint first (i.e. scope 1 and scope 2 emissions) before moving onto your supply chain (i.e. scope 3 emissions).
- For unavoidable emissions that can’t be reduced in the short term, consider buying high-quality carbon offsets that are verified by a third party such as SCS Global, DNV, Bureau Veritas. Ensure these projects are certified to avoid, reduce or remove greenhouse gas emissions.
- Consider and plan for carbon removal that enables both short-term and long-term carbon storage.
Related: Net-zero aligned carbon offsetting principles launched
Photo by ImaginEarth La Terre En Images on Unsplash