It was only a matter of time before application programming interfaces came for the carbon credit offsets — the voluntary programs that allow companies to cancel out their greenhouse gas emissions (on paper) by financing renewable energy projects or carbon sequestration projects globally.
Massive e-commerce and payments companies Shopify and Stripe are already providing emissions offsets as a service for their customers, but now a clutch of startups are looking to automate the process through software.
Among them are Cloverly, a startup launched internally by the massive southeastern utility, Southern Company; Patch*, which was launched by two alums from the apartment management and short-term rental service, Sonder; Cooler.dev and now Pachama, which operates its own international offset marketplace focusing on reforestation and forest management.
It’s part of a new movement among early-stage companies to launch services for businesses and consumers that offer ways to examine and reduce their environmental footprint.
Investors and utilities are seeding carbon markets with new startups
For Pachama, the idea of incorporating an API into the business model was baked into the business plan from the beginning, according to the company’s co-founder and chief executive, Diego Saez-Gil.
“Things got accelerated when we closed Shopify as a customer,” Gil said. “Shopify wanted to offer carbon neutral services. And they do. And we are already selling carbon credits to them, but we we were processing orders in a manual way… If you want to do this at scale, you need to automate the purchase of credits.”
Things accelerated for Pachama after the company inked another deal with the massive logistics company, Shipbob, which is offering their customers carbon-neutral fulfillment services, Gil said.
In contrast with companies like Patch and Cloverly, Gil feels Pachama has an advantage thanks to its ability to tap its own offset marketplace to provide credits.
“We have the marketplace and verification and monitoring service for everything that we bring through our platform,” Gil said.
Having this kind of background could provide greater transparency into the quality of the offsets on offer.
Carbon offsets have proven to be a useful, if fraught, mechanism for combating climate change. While most projects provide real benefits to communities in the form of renewable energy or reclaimed forestland or the preservation of existing forests and land, there can be problems with double counting or simply fraudulent projects whose value as a carbon offset is overstated.
A series of articles from Ben Elgin at Bloomberg News underscore the breadth of the problem, which even managed to include projects from well respected organizations like The Nature Conservancy.
“This comes to the question of net additionality,” said Gil. “What is the actual additional carbon sequestration or carbon avoidance of everything that’s around the project… We need to have a science based approach and very conservative assumptions when assessing the value of offsets.”
Transparency and accountability are critical to the development, monitoring and management of these kinds of offsets, especially as these offsets assume a more central role for companies looking to dramatically reduce the greenhouse gas emissions associated with their operations.
And these offsets are only a stop-gap measure. Ultimately businesses need to remove carbon emissions from their own operations as quickly as possible to reduce the risk of climate change having an even greater impact on society.
“It’s super exciting to me that there are a lot of companies that want to offer carbon-neutral services. That’s going to become the norm, and they’re going to do it because customers want that,” said Gil.
*Updated with the correct Patch website.
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