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Investment Dollars Sucking Carbon from the Atmosphere

Image provided by Jason Leem, Unsplash

Markets for carbon credits are springing up left and right; in step with their increase has been an increasing number of influential corporations and executives investing in them. Most recently, the NCX and Puro.earth marketplaces have accumulated financial backing from some big names. 

NCX, based in San Francisco, operates a forest offset market called Natural Capital Exchange, where companies that want to offset their carbon emissions – like Microsoft and South Pole – purchase carbon credits by paying tree owners not to cut them down, so they will sequester more carbon for more time. Microsoft helped the company to create Basemap, “the first high-resolution inventory of every forest acre in the US,” mapping forest data and calculating the amount of carbon trappable. As CEO Zaok Parisa explained in a press release for the May launch, the result was a “data-driven marketplace for landowners of all sizes,” ranging from Molpus Woodlands Group LLC with thousands of acres to small farmers with less than 150 acres, with the latter further enticed by short-term, annual agreements. Parisa elaborates that “NCX identifies forested acres that are likely to be harvested and rewards landowners that keep them growing” by checking if the trees are still there after a year, and paying $17 per offset if they are. 

Basemap. Image provided by NCX. 

Seeing the potential in NCX, the Microsoft Climate Innovation Fund and the CEO of Salesforce.com, Marc Benioff, recently participated in the Series A round of financing, raising $20 million. Benioff’s venture capital firm TIME Ventures led the round, as part of their pivot from investing in technology companies to investing in sustainable businesses. He is also set to join the Board of Directors, telling the Wall Street Journal that “this isn’t philanthropy. This is an actual use of capitalism to create greater sustainability.” With the new investment under their belt, NCX is expanding into different breeds of trees, beyond southern pines into southeastern hardwood forests and forests surrounding the Great Lakes, and into new geographies, expecting expansion into all 48 conterminous states by this fall. 

Microsoft CEO Satya Nadella speaks onstage at MWC Barcelona. Image provided by Microsoft.

Nasdaq, too, has thrown its cards into the ring by becoming a majority stakeholder in the Finnish carbon market Puro.earth. Like NCX, Puro.earth connects companies who need to offset – including Microsoft, again, and Shopify – with companies that are removing carbon on an industrial scale. Instead of trading carbon credits, their CO2 Removal Certificates (CORCs) are “a new kind of carbon offset based on the carbon removed from the atmosphere for the long term” – 50 years or more – in measurable carbon net-negative products. “A carbon net-negative product absorbs more CO2 than it emits in its manufacturing, with the net effect of removing carbon from the atmosphere,” their website explains. To remove a metric ton of carbon, companies pay around $23.55, based on the time projected for removal to last, which depends on the method used. CORCs are issued for a variety of removal methods, including: producing biochar, solidified carbon that can be sequestered in soil; manufacturing carbonated building elements using ‘steel slag’ instead of cement; manufacturing wooden building elements that will keep carbon trapped for as long as they stay standing; and geologically storing carbon by injecting it into rock formations or stores of gas and oil. The market is home to 12 companies engaged in such forms of removal, but 145 more are waiting eagerly to join. 

Nasdaq announced its status as majority investor on June 1, as the company’s first venture into this space; former owner, energy company Fortum, will continue to be a minority owner and partner in its startup. Bjørn Sibbern, Nasdaq’s Executive Vice President and President of European Markets, said in the press release that the partnership “will provide our global network of corporate clients access to a unique marketplace for carbon removal and will allow Puro.earth to scale its platform through the Nasdaq network and technology platform.” Although Puro.earth will remain an independent entity, Nasdaq’s ownership will contribute to faster buildup and enhanced liquidity of the market, and more visibility for more accessible carbon removal suppliers. 

Image provided by sergeitokmakov, Unsplash. 

With big investors from Microsoft, Salesforce, and Nasdaq turning their attention to carbon markets, other big names are sure to follow.

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