When March 2020 rolled around, Jonathan Goldberg figured his new startup, Carbon Direct, was in for a long slog. The COVID pandemic was beginning to upend the world, and it suddenly didn’t seem like a great time to launch a business.
“I thought we would have no clients,” he said.
He needn’t have worried. Microsoft, which was looking for a company to advise it on its carbon reduction plans, came knocking, and Goldberg had a team with a strong science background ready to go.
Microsoft itself has “a phenomenal team” working on decarbonization, Goldberg said. “They also have a commitment to science that is pretty awesome to see. So they really wanted to understand why carbon removal is needed from a macro perspective, and then think through applying it to their own specific company requirements.”
If Carbon Direct sounds like a carbon consultancy, that’s not far off. But Goldberg said that description doesn’t adequately reflect the totality of the business. First, he said the company doesn’t bill hourly. Second, he added, “We want to educate people; we’re not a black box. It’s not like you click on these seven buttons and there, your carbon goes away. It doesn’t work like that. We want to show people why this is important.”
To grow its client base and team, Carbon Direct tells TechCrunch that it secured $60 million last week in an equity deal led by Decarbonization Partners — a joint venture between BlackRock and Singapore’s Temasek holding company — and Quantum Energy Partners.
BlackRock in particular has a reputation for saying one thing and doing another on climate. The $100 billion asset manager says it is “committed to an inclusive, equitable and prosperous transition” to net-zero emissions, yet BlackRock’s finances remain linked to coal, and the firm expects to support fewer climate-geared shareholder proposals in 2022 than in the prior year. BlackRock called such proposals overly “prescriptive” in a May note to investors.
When asked about concerns that fossil fuel money might influence Carbon Direct’s work, Goldberg said there would be “zero change in day-to-day management” with the deal, describing Decarbonization Partners and Quantum Energy Partners as “minority investors.”
Carbon Direct’s experts hail from Columbia, UC Berkeley and elsewhere, and they’re focused on a range of approaches to carbon reduction, from nature-based solutions like forest and soil management to more technological strategies like direct air capture and green hydrogen.
Goldberg said he and his colleagues focus on “end-to-end carbon management.”
“Some companies have no carbon accounting. They need help with understanding of the problem. We help them with understanding the problem,” he said. “Other companies know what the problem is — they’ve identified decarbonization strategies, and they need help with the residuals. We can help them with the risk residuals. And we can help them with the residuals on both nature-based and engineered [approaches]. And other companies need a bit of everything.”
Carbon Direct “100% will have advisory business forever,” Goldberg said, though the company is also developing a software platform to give its clients broader access to the advisory process.
Plus, it may allow them to aggregate customer demand and present them to suppliers. In the future, Goldberg said, Carbon Direct might be able to approach a company like Delta Airlines and say, “We’ve got 100 million gallons of sustainable aviation fuel demand. It’s disaggregated. We’ve aggregated it. We’re going to give you the price signal for you to put this on your plane.”
Such an aggregation approach would allow them not only to reach more customers but have a bigger impact on carbon reduction.
“We do feel strongly that not just the biggest companies in the world should be able to benefit from that work. If you’re a small company, we want to provide people the ability to have wholesome carbon strategies,” he said. “That’s how you get to the gigaton kind of scale.”
When Goldberg founded Carbon Direct, he realized the potential market for carbon management was far larger than that of his previous business, oil and gas trading. “We invest $2 trillion a year in the energy industry. The energy industry moves about five gigatons of mass per year. [The National Academy of Science is] talking about carbon management being 10 gigatons per year of stuff,” he said.
“I’m not the first to say this, but things were not moving quickly enough. And I saw that if you could combine some sort of market expertise, scaling expertise, with this commitment to science and really understanding the different scientific verticals, you could help make this happen.”
Carbon Direct declined to share its valuation and would not disclose its total funds raised to date, but Goldberg said in a call with TechCrunch that the business is profitable.
Comment