Commitments to carbon neutrality keep coming from all corners of the business world — over the past few weeks, companies ranging from the fast-casual restaurant chain Sweetgreen to the security-focused networking IT company Palo Alto Networks to the online craft retailer Etsy committed to net-zero carbon emission plans.
As the companies look for ways to reduce their energy consumption, they’re turning to carbon offset programs as a stopgap measure until the energy grid decarbonizes, they implement technologies to reduce their energy consumption, or both.
This push toward corporate sustainability is creating all kinds of strange bedfellows and startup opportunities, with major corporate offset programs and the establishment of new startups focused on offsets creating channels for sustainable technologies to get to market.
The latest example of a company leveraging a sustainability angle to tie a corporate partner even closer to their business is the agreement between Delta and Deloitte, which involves the accounting and consulting firm paying Delta for renewable jet fuel to offset the emissions of its corporate travel.
To be clear, a better policy for Deloitte would be to cut back on non-essential travel significantly and focus on doing as much remote work as possible to reduce the need for flights. But in some cases business travel is unavoidable, and most folks want to get back to a pre-pandemic normal, which — at least in the U.S. and other countries — will include significantly ramping up air travel for a percentage of the population.
As the BBC noted, air travel accounts for roughly 5 percent of the emissions that contribute to global climate change, but only a small percentage of the world actually uses air transport. According to one analysis from the International Council on Clean Transport, just 3 percent of the world’s population flies regularly. And if everyone in the world did fly, aircraft emissions would top the CO2 emissions of the entire U.S.
Which brings us back to Deloitte and Delta and startups.
Delta’s deal to buy sustainable aviation fuel that would offset a portion of the carbon emissions associated with Deloitte’s business travel is one small step toward greening the airline industry, but the question is whether it’s a significant first step or just an attempt to greenwash the unsustainable travel habits of a consulting industry that prides itself on such perks.
The initial agreement will reduce lifecycle emissions reductions of approximately 1,000 metric tons of carbon dioxide, equivalent to the carbon sequestered by 1,306 acres of U.S. forests, according to a statement from the two companies.
Setting aside the significance or insignificance of the emissions reductions that will come from this initial agreement between Delta and Deloitte, the model is one that startups could potentially try to emulate.
Pilot programs to electrify fleets or deploy hydrogen fuel cell transportation systems could benefit from these types of programs. As could programs that roll out electric vehicle charging networks. Alongside those initiatives are some of the more outré direct air capture and sequestration projects or new markets for carbon capture — like the nascent soil sequestration projects sponsored by folks like the U.S. Department of Agriculture.
For venture investors, the clearest opportunity is in tools and marketplaces designed to link carbon credit buyers with sellers.
We first noticed the trend last year, but it’s only picked up steam in the interim, with major players making big bets throughout the first months of 2021. On the same day that Andreessen Horowitz announced its investment in the carbon offset API provider Patch, legendary investors from Sequoia Capital and Kleiner Perkins, Mike Moritz and John Doerr, reunited on their first deal since Google to back Watershed, another offset provider.
Meanwhile, some offset marketplaces like Pachama and SilviaTerra focus on making existing projects like reforestation and forest preservation more traceable and accountable while offering direct access for offset purchasers.
Investors and utilities are seeding carbon markets with new startups
All of these projects will create new demand for an ecosystem of monitoring, managing and accounting tools that can provide insights into the carbon footprints of business operations and bolster the claims of the offset projects that these investments are actually working as intended.
For that, investors may look to companies like Persefoni, CarbonChain, or SINAI Technologies, all of which are working on accounting software for monitoring and managing the emissions profiles of corporate clients. Then there are the companies that are trying to independently monitor and map various sources of emissions. Satellite-based technology startups like Bluefield and GHGSat are both focused on the problem.
Terrestrial companies are getting into the act as well. Chiefly, there’s the Bill Gates-backed startup Aclima, which tracks emissions and pollutions at the local level so cities and neighborhoods can get an accurate sense of their exposure to chemicals and climate risk.
“You’re seeing a lot of large companies … are now investing significant amounts into really trying to understand their emissions profile and prioritize emission reductions in a data-driven way,” Aclima founder Davida Herzl said.
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