ClimateTech Updates for March 2021
Exciting news from the ARM world — climate change Adaptation, climate Restoration, and climate change Mitigation
In ClimateTech Update articles, I pass along the latest news about companies and topics I have featured in previous columns.
Spring is here and the ClimateTech world is springing to life! This month’s update covers announcements from:
- Abundance Investment
- Carbon Engineering & 1PointFive
In addition, I also update readers about my article related to Bill Nordhaus’s DICE model
The good folks at Bluesource, North America’s largest carbon credit developer and retailer, were a terrific resource for me when I wrote my series about carbon credits (Article 1, Article 2, Article 3).
There is a lot going on in the carbon credit world right now — the “voluntary” credit market is experiencing an enormous surge of demand from corporate buyers. Among Bluesource’s news for this month are these three items:
Soil-Based Carbon Sequestration
Bluesource just announced a new partnership with Locus for the creation and sale of soil carbon offsets. Locus AG is an Ohio-based start-up recognized by Fast Company for its CarbonNOW program that helps farmers use regenerative agriculture techniques to farm carbon while farming food crops. Bluesource’s VP of Business Development, Dr. Lizzie Aldrich, tells me that soil-based sequestration has garnered a great deal of interest from high tech companies lately.
I’ll be writing about soil-based sequestration technologies in my upcoming in-depth article about carbon sequestration and climate restoration.
Utility Customers Offset Their Own Heating Gas Usage
Bluesource worked with DTE Energy, a Detroit-based energy company that owns several utilities in Michigan to allow home and business owners to use forestry and renewable natural gas-based carbon credits to offset the carbon footprint associated with the natural gas burned to heat their homes during the winter.
For about $16 per month — less than the amount most people spend on lattes — DTE will buy enough carbon credits to offset the footprint associated with heating the average Michigan home during the winter.
I wish that my own utility had this kind of a program — it seems like a good way for climate-conscious consumers to put their money where their mouths are!
Renewable Natural Gas (RNG) Credits
Bluesource has been working to create a new type of voluntary carbon credit associated with the environmental advantages of burning RNG (e.g., gas created by decaying organic matter) versus mined natural gas (e.g., the fossil fuel released from the earth’s crust).
The new credit, known as an RTC, spurs liquidity in the RNG market by keeping a better, more reliable accounting of how the RNG was produced and assures that the credits cannot be double counted.
This month, Bluesource sold the first RTCs to ACT, an environmental commodities broker, who retired the credits on behalf of a corporate client.
Continuing with the carbon credits theme, Pachama, the company that I featured in my article Applying AI To Mitigate The Effects Of Climate Change, had two exciting announcements this month.
First, the company announced that it was selected as the strategic technology partner for Mercado Libre — South America’s largest online retailer — for its ‘Regenera America’ ecosystem restoration project. Mercado Libre is kicking Regenera America off by investing $8 million in two reforestation projects.
Pachama will support and monitor the work of the Nature Conservancy and the Institute for Ecological Research (IPE) on the reforestation projects by providing remote sensing and analysis using its machine learning algorithms.
The other bit of excellent news is that Pachama was selected by Fast Company as the number 1 most innovative company in artificial intelligence! Considering the competition in the AI field right now, this accolade is truly an outstanding accomplishment. Kudos to founder and CEO Diego Saez-Gil and his colleagues at Pachama!
I mentioned the British company Storegga and its subsidiary, Pale Blue Dot Energy, in my article Carbon Engineering’s Licenses To Print Money after it purchased a license to use Carbon Engineering’s Direct Air Capture (DAC) technology. Storegga announced several bits of exciting news this month.
The first bit of exciting news is that Storegga completed its second funding round, and its line-up of investors reads like a who’s who of global investors.
Macquarie’s Commodities and Global Markets group — one of Storegga’s original investors — participated in the second round after witnessing Storegga’s operations and potential since the first round of funding in 2020. Macquarie is also a funder of a company I mentioned in last month’s ClimateTech Update, Xpansiv. As I said in last month’s article, when a very smart investor sees what you’re doing and decides to up its bet, that’s a good sign!
Additional funding came in from GIC — the Government of Singapore’s sovereign wealth fund and reportedly the sixth largest sovereign fund in the world by assets under management. Another Asian investor, Mitsui & Co. of Japan, also invested in Storegga’s B-round. Mitsui might not be a household name to many Americans, but to someone like your correspondent, who has spent a good part of his professional life in Japan, the name Mitsui is synonymous with “smart infrastructure investing.”
The second bit of related exciting news is that Storegga and Mitsui have also entered into a non-exclusive agreement to evaluate additional Carbon Capture and Storage (“CCS”) opportunities in Europe and the Asia-Pacific region. Considering all the coal-fired power plants running day and night in Asia, this seems like a great opportunity for both companies!
I spoke with Storegga’s CEO, Nick Cooper, at the end of last year and am looking forward to writing more about Storegga in my upcoming series on carbon sequestration.
Heliogen is an innovative start-up company that applies Moore’s Law to the quandary of how to provide industrial heat (1,000°C and above) using renewable energy. The discussions with Gross gave me real hope for some discontinuous change that would result in what I am calling “Post-Carbon Industry” and which I take as one of my three main focus areas of research.
March 14, 2021 (Pi Day for all you fans of irrational numbers) is the 25th anniversary of Gross’s startup studio, Idealab. In honor of the anniversary, Gross plans to release one important lesson regarding startups and entrepreneurship every day for 25 days.
Your correspondent got a sneak peak at the list and let’s just say that I’m smiling as I write this — it is a terrific list! Anyone who is interested in entrepreneurship, innovation, startups, and thinking big would do well by stopping by the Idealab site starting the Sunday after next to get the first installment.
Gross told me that one of the lessons he’ll talk about cost him several million dollars early in his career. As he was bemoaning the loss to an advisor, the advisor stopped him in his tracks: “Bill, you just spent X million dollars on this lesson. Are you going to get something for that tuition or are you going to skip class for the day?”
Don’t skip Gross’s class, kids.
I wrote about the amazing work that Louise Wilson, founder and joint managing director of Abundance Investment, was doing with her colleagues in my 2020 article Abundance Investment: A Model For A New Era Of Investing.
The big news for Wilson and Abundance that the UK government has committed to sell green bonds directly to the general public in 2021 — the first government to do so worldwide. Abundance and fellow travelers at the Green Finance Institute and the London Stock Exchange have been making the point that sovereign green bond issuance is a way to help public finances, boost employment by funding green infrastructure projects, and repair the environment.
“We made the case that investing in these bonds offer the potential of investment to bridge the engagement gap between policy and the public in this area of widespread concern — the climate emergency,” says Wilson.
Wilson points out that 40% of people surveyed say the Covid-19 pandemic has made them more aware of the impact of climate emergency (Edelman’s 2021 Trust Barometer), and 66% say tackling climate emergency is more urgent now than it ever has been.
Hey, Uncle Joe! You listening? Take a page from Boris’s playbook!
Carbon Engineering and 1PointFive
In September of last year, I coined the term Carbon-Sequestration-as-a-Service (CSaaS) in my article entitled The Future Is Now. The CSaaS client was Canadian online retailing giant Shopify, and the provider was — of course — Direct Air Capture (DAC) pioneer, Carbon Engineering. Shopify had agreed to pay CE to sequester atmospheric CO2 at CE’s beautiful test and R&D facility in Squamish, BC.
This month, Shopify announced a major expansion of its sequestration program by contracting to reserve 10,000 tons of permanent CO2 removal and sequestration capacity at 1PointFive’s large-scale DAC facility in the Permian basin.
Shopify’s announcement is historically significant as it represents the largest publicly announced corporate purchase of DAC-based carbon removal.
Bravo, Shopify and congratulations to Carbon Engineering and 1PointFive!
Building on the success of the GEO contract, about which I wrote in my article The GEO Carbon Offset Contract, yesterday Xpansiv announced the launch of a related contract for Nature Based Solution offsets called the Nature-based Global Emissions Offset or N-GEO.
The N-GEO is designed similarly to the GEO to serve as a benchmark for Agriculture, Forestry, and Other Land Use (AFOLU) projects with additional Climate, Community, and Biodiversity (CCB) accreditation. It allows participants to meet their net-zero commitments while promoting biodiversity and supporting developing communities and will begin trading in April on Xpansiv’s CBL market.
Over the past few weeks, I have been talking with leaders in the field of regenerative agriculture (see this month’s Climate Catalysts article) and have become very interested in the potential for soil-based sequestration, both from an environmental perspective and from a farm family economics perspective, so I am anxious to see the increased liquidity in this market that the development of a benchmark contract promises.
Bill Nordhaus’s DICE Model
In a July 2020 article entitled The Stakes Of Losing This DICE Game Are Enormous, I made a bold challenge to (fake) Nobel prize winning economist, Yale’s William Nordhaus, that suggested his DICE Model for estimating the economic effect of climate change was completely wrong. (Professor Nordhaus did not seem bothered in the least by my critique…)
I am not an economist, but I do know enough to forecast that GDP is likely to do more than mildly dip if global average temperatures rise by 3.5–4.0 degrees Celsius (a “reasonable” increase according to Nordhaus), causing a few billion people to starve to death.
I bemoaned the fact that the IPCC used Nordhaus’s model as a base for the calculations it uses to estimate economic effects of a warming planet.
Aleksandra Malova, a PhD economics student in Lausanne, Switzerland wrote me a note politely suggesting that I had mischaracterized the importance of Nordhaus’s work. After a few email exchanges with Ms. Malova, I learned that the IPCC’s Assessment Report 5 (AR5), published in 2014, discarded DICE in its analysis of transformation pathways, but that it was still in place for AR4, published in 2007.
I will overcome my embarrassment regarding my flub by waving my hands a bit and recommending that everyone read what I believe to be a much more important work on the economics of climate change, the Dasgupta Report, which I featured in this month’s Climate Catalysts article.
As you can see, the ClimateTech space is gaining momentum daily. Time to skate to where the puck is going to be as the great Wayne Gretzky famously said!
Intelligent investors take note.