Current market trends show that “decarbonization” is finally evolving from a slogan into a genuine business behavior.
Last year, the U.S. Securities and Exchange Commission (SEC) passed a new proposal requiring publicly traded companies to disclose information on greenhouse gas emissions and climate risks. In May of this year, Warren Buffett increased his stake in Occidental Petroleum, a company that produces “carbon-neutral oil,” with the goal of transforming it into a carbon management company within 20 years. And in Taiwan, a government-supported carbon exchange is set to go live as early as July this year. It will join the ranks of national carbon trading markets such as those in the European Union, Singapore, and South Korea.
Though decarbonization is clearly gaining traction as a global movement, we still have a long way to go before it starts paying real dividends with regard to achieving net-zero emissions. Statistics indicate that at the current rate of progress, the world is estimated to reduce carbon emissions by a mere 7% by 2030, a number far below the original UN target of 43%.
As a means to bridge the gap, countries around the globe are reaching a consensus on the importance of carbon trading. That’s because the practice uses market mechanisms to encourage people to invest in and implement innovative decarbonization technologies to achieve our carbon control goals.
The carbon market is poised for a year of high growth. This past February, the price of EU carbon permits exceeded 100 euros per ton for the first time, a record high. With an eye for the market demand, a wide host of startups are proposing solutions to help businesses reduce their “carbon anxiety”.
For example, Partanna, a Bahamas-based startup backed by Cherubic Ventures, has developed technology that converts desalination waste into carbon-absorbing cement. The product is currently being used in a resort center in Maryland, USA. Partanna is also supporting the world’s first carbon-negative housing development project with the Bahamian government, which aims to complete the first group of 30 houses by the second quarter of 2024.
Originating from the above projects, two types of carbon credits – “Avoidance” and “Removal” – were listed on carbon credit trading platform Patch last month. They are already attracting negotiations for carbon credit purchases from the world’s top ten companies by market value. Partanna’s building materials will also be used in the Red Sea Global tourism development project in Saudi Arabia, allowing for a more scalable provision of carbon credits.
Beyond building materials, startups are coming out with “greening” solutions in a variety of sectors ranging from lifestyle to enterprise. For example, organizations such as Singapore’s Temasek Foundation and Bill Gates’ climate-tech VC Breakthrough Energy Ventures have launched the Rize program, which focuses on decarbonizing one of the largest carbon-emitting agricultural crop, rice.
Or look at startups like Undo, which processes rocks with carbon sequestration capabilities into a fine powder that is then implemented on farms to enhance soil quality while simultaneously speeding up carbon sequestration. Helion, meanwhile, is taking on the carbon emissions problem at the source via nuclear fusion power generation technology. The startup recently signed an energy purchase agreement with Microsoft and aims to commission its first power plant in 2028, which will assist the tech giant in achieving its negative carbon goals.
Although new forms of carbon credits continue to emerge, companies on the purchasing side face the pain points of a lack of information transparency, fragmentation, and uncertainty surrounding carbon credit mortgages.
The aforementioned Patch was launched in 2020 for the specific purpose of addressing these issues with the aim of making carbon credit purchases easier for businesses. In addition to tracking internal carbon emissions through software, companies can find various cross-technology and cross-regional carbon reduction projects available for procurement on the platform. These projects include detailed information such as technology adoption, location, pricing, and project progress, providing a clear overview. Currently, Patch has facilitated transactions between over 160 carbon credit suppliers and 400 companies.
For perspective, carbon trading is just one step in the long road to achieving net-zero. From enterprises and startups to individuals, everyone is a participant in this global movement. And we need to remember that there are no shortcuts. Success will rely on the collective efforts of every participant to work together for a future in which our planet’s climate balance is restored to pre-industrial levels.
