Investments

Removing carbon

October 31, 2019

It is time to look ahead. We know that even if we optimise all our economic processes for minimal carbon emissions, we still have too much CO2 in the atmosphere already. So we need to reach the point of effective drawdown. In order to get there, we need scalable solutions that absorb more carbon than they emit.  

At Red Rocks we have been looking for such opportunities and have reviewed a good list of them. Car tire recycling, algae-based water treatment, climate-smart forestry, regenerative agriculture, the list is long and all worth pursuing. But the recent report by RethinkX on the imminent disruption of the food industry brings it to a new level. Instead of using a microorganism(the cow) and its inefficient fermentation process (the stomach) to get to the desired microorganism (the protein), we can use precision fermentation (the microbes)to arrive at the same result with radically lower cost and higher quality. The potential is enormous and warrants a separate effort as an investment focus. But the disruption of the cow also eliminates the need for massive amounts of farmland. This land must be used as a carbon sink, either by reforestation or regenerative agriculture. Regulators must provide the right framework, but equally there must be an efficient marketplace for the new product: Carbon Removal Certificates(CRCs). 

And this is why we have invested in NORI recently. NORI provides a blockchain-based marketplace for removing carbon dioxide from the atmosphere.It allows farmers (individually, as part of cooperatives or even large-scale farming players such as Cargill) to project CRC income, create verified certificates (COMET-Farm) and sell them in auction on the platform. So who would buy it? More interesting than the concerned citizen offsetting her family footprint will be large buyers in the voluntary offset market. For example, as part of CORSIA (the Carbon Offsetting and Reduction Scheme for International Aviation), airlines are committed to improve operations for carbon efficiency, but also to buy offsets. Equally, utility companies that cannot achieve the required grid mix need to complement their efforts by offsets. That’s the type of numbers I am talking about. And this will only happen if there is an efficient, transparent and trusted marketplace. Hence our investment in NORI.  

Now…why blockchain? We don’t have ‘fomo’ on this, in fact I have a pretty strong allergy when it comes to blockchain. The reason is simple: most projects just don’t need it (would be better served with other technology) or don’t use it for the right reasons or in the right way. But talking to Paul Gambill, NORI’sCEO, he convinced me that they are an exception. Ethereum-based NORI tokens are used to play out the contracts between seller and buyers. One of the key advantages of crypto currencies over dollars is that they can have additional properties (like what they can be spent on or even if they devalue over time to encourage circulation). In NORI’s case, this can be used to release tokens to the CRC seller only over time as the effect of carbon storage is verified, all without a central trust agency. Also, CRCs are typically resold multiple times in today’s markets, which can be eliminated by retiring each cert on the blockchain for good. Lastly, a new market requires careful price creation for the traded goods and slowly increasing the number of tokens can manage this process so a worthwhile price for CO2 is generated. Makes sense to me.

Now what about the enormous CO2 footprint of running the blockchain process? While more efficient ways of generating consensus might lie ahead, Paul assured me that NORI will offset their own operational CO2 emissions as part of their DNA.

We are excited to see this CO2 marketplace unfold in the coming years and full scale.If all tokens are cycled once, 250 million tons of CO2 will have been removed from the atmosphere. Now that’s a scalable contribution!

       

Ralf Schroeder

Looking for ways to align my portfolio with my values and beliefs.