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Want to get serious on net zero? Look to the startups

Startups are helping legacy brands address their carbon emissions at scale.

Smoke Stack

Startups are flocking to help companies reduce and remove their emissions.

These days, a corporate net-zero pledge is more likely to garner a critical eyebrow raise than an emphatic round of applause. Net-zero climate targets have faced a growing backlash, due to their over-reliance on carbon offsets and their vagueness on short-term action items. As more companies jump onto the net-zero bandwagon, many ensuing commitments end up heavy on the flash and light on the substance.

There are serious plans out there, to be sure. Some companies are heeding the call for greater ambition and clarity, especially those who pride themselves on being at the vanguard. Last week, GreenBiz Group’s VERGE Net Zero conference focused on ways that corporations can improve and ultimately achieve their net zero goals.

Throughout the virtual event, it was clear startups have an important role in making net zero happen. Contrary to the narrative of scrappy startups disrupting the lumbering giants, startups are often a critical resource for big corporations. They inspire new ideas, de-risk cutting edge projects, and sell products and services that help corporate customers to solve their most pressing challenges.

One of the biggest challenges in stepping up net-zero plans is connecting companies with projects that reliably remove and store the emissions that can’t be mitigated directly. Startups are stepping in to help. For instance, the Silicon Valley startup Patch has developed a tool that can link any online transaction (such as a credit card purchase) to a carbon removal project, just by adding a few lines of code.

"We make it incredibly easy to programmatically remove any amount of CO2 from the atmosphere," said Brennan Spellacy, Patch’s CEO at a breakout on next-generation technology.

Not every aspect of reaching net zero can be done with a turnkey tech solution. For instance, supply chains are complex and unique to each company, so decarbonizing them often requires a more bespoke approach. However, carbon removal is a good opportunity for sustainability leaders to bring in an external partner.

"Removing carbon is highly outsourceable, where there is a right way to do it, and it actually lends itself fairly well to scalable models like [Patch]," Spellacy said. "We really view ourselves as complements to the corporate sustainability teams."

The "right way" that Spellacy mentioned is not a specific type of carbon project but rather a general standard of robustness. For true net zero, carbon removal projects need to deliver not just quantity but quality. If every ton of removed carbon is treated as equal, there’s a risk that offsets will become a race to the bottom, where the cheapest projects win out, without keeping the carbon out of the atmosphere in the long term or prioritizing environmental justice.

Forest tech company NCX (formerly SilviaTerra) was involved in some early forest carbon projects, and the founders observed the pitfalls those projects could entail, such as difficulty finding buyers, questionable data and 100-year commitments that weren’t feasible to uphold. That led the company to develop a dynamic year-to-year marketplace that could meet the needs of small landholders while also creating more robust carbon credits.

"We saw all the struggles that those landowners had to make those programs work and a real opportunity for innovation to increase participation and increase the quality of carbon credits at scale," said Zack Parisa, NCX’s CEO.

As a smaller company, NCX can develop relationships with small-scale forest owners that companies would have a much harder time forming on their own.

"The cool thing about this is that we connect neighbor to neighbor, the net-zero companies to the communities that they work in and around," Parisa said.

Indigo Ag is another company that brokers connections between small-scale actors and large-scale purchasers of carbon credits. The Carbon by Indigo program provides operational support and financial incentives for farmers to switch to practices that store more carbon in the soil, aiming to reduce barriers to adoption.

"Growers bear a lot of the cost of making these transitions to novel practices that are financially prohibitive to some growers," said Angelyca Jackson Hammond, Indigo’s carbon policy and scientific communications manager.

It’s hard for businesses to accept a 20-year warranty from a company that’s only been in business for 6 months.

A concern for the bottom line is something shared among corporations, landowners, farmers and startups. However, cost isn’t the only concern that might govern a decision to work with a startup. Next Energy Technologies provides buildings with a high-tech solution for lowering their footprint — a photovoltaic coating that turns windows into a zero-carbon energy source. Even though Next has been around for over 10 years, the company has seen hesitation from customers about working with new technologies from the proliferation of younger companies that have arisen in the space.

"It’s hard for them to accept a 20-year warranty from a company that’s only been in business for six months," said Jeff Horowitz, Next’s director of business development and partnerships. "That sentiment’s being echoed across the value chain."

To address this issue, Next has integrated its technology into the framing infrastructure, partnering with legacy brands that have a solid reputation and track record, which makes the purchasing decision easier for building managers.

However, some startups see their youth as a strength, an indicator that they understand the urgency of the moment and can move quickly to meet the challenge. For instance, Patch has only been around for 15 months and is already reeling in some large customers, such as travel-focused tech companies TripActions and Sonder.

"The unfortunate reality is we don’t have very much time as a species," said Spellacy. "Time really is of the essence, so we’re doubly motivated, if you will, both from a business outcome as well as an environmental outcome."

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