Quality Carbon Project Dev with AI/ML
Global League (G-L.Ventures) is a platform and network for collaboration between investors to help the most impactful startups recommended by investors.
Technologies can support the scientific rigor of carbon project developments, and also enable standardization and automation, even inputting any new methodology from any regulator to adjust project evaluation and planning quickly - something it could take months to adapt in the past.
A startup building that tech infrastructure was recommended to us. They have built a team with the deepest scientific background of any company in the space. This allows them to develop novel models for assessing project outcomes and risk to bring rigor to project diligence and feasibility. The company has been able to attract key talents from competing organizations like Verra and South Pole, also McKinsey, Harvard, UC Berkeley, and Columbia.
According to them, their platform makes carbon development 3x faster and cheaper by automating many manual steps. Combined with project finance, they aim to make nature projects an investable asset class with a data-driven underwriting and diligence process, to scale reforestation and conservation globally, and even go beyond climate impact to restore and protect ecosystems and natural resources. On top of that, they have turned profitable in Q1'24, profitable growth will be the mantra moving forward.
They have successfully supported more than 50 projects across 25+ countries. The team had raised from Future Ventures, Trailhead Capital, Parameter Ventures, and Kilowatt Capital in 2021, and just recently did a first close of $5M Series A led by Acorn Pacific Ventures. We will meet the founding team to learn more about their tech infrastructure, and ask deep questions about how it works.
AI/ML Helps Tackling Climate Challenges
We've covered how AI/ML computing creates an impact on climate and also investment opportunities. On the other hand, AI/ML and technologies can be powerful tools in problem-solving for climate challenges. We've been following advancements and companies pushing frontiers in this category - AI/ML for climate sustainability. Let's talk about these topics one at a time.
Transformation of Carbon Credits and Market
Carbon credits and markets can finance and scale projects to reduce emissions, and restore nature and biodiversity. However, projects that generate carbon credits for the voluntary carbon market have come under increasing scrutiny in recent years. These criticisms are often directed at older projects created under outdated standards or relaxed approaches to verification. This criticism has helped accelerate action to improve standards, for example with the creation of the Integrity Council on the Voluntary Carbon Market (ICVCM).
From the US State Department to the Voluntary Carbon Markets (VCM) Initiative, efforts are underway to create more stringent standards and guardrails to avoid greenwashing. The biggest push for quality comes from big tech titans. As their great appetite for energy to power data centers and AI learning models explodes, companies including Microsoft, Apple, and Salesforce have been working to complement emission reductions with the purchase of carbon offsets. Aware of the controversies surrounding carbon markets – greenwashing, miscounting carbon, and the difficulty of ensuring additionality – they have been pushing to improve the integrity of the system. (Source)
Since last month, five certifiers covering 98% of the market – including Gold Standard, ACR, Climate Action Reserve, Architecture for REDD+ Transactions (ART), and Verra – have been cleared by the watchdog ICVCM. (Source) Verra is the biggest player with a 70% market share and has updated its REDD+ methodologies to reflect the current best science. There were also signals about the convergence of compliance and voluntary markets/methodologies. A new wave of projects is being developed today that are being created under this new spotlight. Experienced buyers keep purchasing REDD+ credits, but are stringent on high-quality credits.
And, Nasdaq and ValueExchange published the results of a global survey on the challenges and opportunities of VCM this March. (Source) Key takeaways:
Nearly one-third (30%) of respondents reported low confidence in the pricing of carbon assets; this rate of low confidence rises to 66% for commercial banks, an important provider of capital in the VCM ecosystem.
Manual processes are a significant issue, as is fragmentation: 63% of respondents handled project listings via phone and email, but 79% would like to manage such activities through a registry platform.
42% of carbon credits are traded locally (issued and traded in the same country of origination), creating “liquidity puddles” that are difficult to access and isolated
Almost half of survey respondents across project owners, financiers, intermediaries, and investors said they interact with four or more registries.
The importance of standardization and automation is highlighted. Standardization in credits will help improve transparency while also enabling better pricing and greater product differentiation. Automation is a clear need as reliance on phone calls and emails leads to costs and constrictions.
AI-Enabled Quality Carbon Project Development
Thousands of low-level satellites are constantly orbiting the Earth, sending back high-resolution images, plus remote sensing technologies can collect data. Some companies leverage them to quantify the historical changes to create a baseline for what's happening on landscapes. Furthermore, analytics and geospatial/ecological AI models can be built to predict future climate and ecosystem interaction and assess intervention scenarios. Then it can be used for scoping, design, development, feasibility study, due diligence, and digital monitoring-reporting-verification (MRV) of carbon projects.
Angels or VCs interested in building knowledge in this frontier can join us. Think for yourself.