Transcriber: Mia Tran Reviewer: Sebastian Betti
Hi, my name is Tony Ricketts. I’m the CEO and co-founder of BeZero Carbon.
Two years ago, my friend and I were in Japan
watching the Rugby World Cup.
I was taking a welcome break from being a banker in New York
and had just finished an international music tour.
Talking about climate change, my friend was very concerned
about the environmental impact of touring.
He wanted to know how to become a carbon neutral artist
and asked me about these things with offsets,
whether useful or whether they really just greenwashing.
And just like that, BeZero Carbon was born.
By the time I left Japan, my co-founder and I had agreed to resign.
And I even went so far as tattooing ‘zero’ in Japanese on my arm
just to make sure I wouldn’t get cold feet.
There was no turning back.
We knew we wanted to work in the emerging climate industry.
We were also sick of the doom and gloom that surrounds climate change.
Negative visions rarely lead to positive change.
We wanted to show that prosperity and climate action can go hand-in-hand,
something that hasn’t been the case for the past 250 years.
To explain why, I want to refer to it as Ireland’s fable,
‘The Hedgehog and The Fox’
Berlin saw two types of thinkers.
Hedgehogs, you have one big idea, and foxes that have lots of little ones.
Now, for the past 250 years, we’ve been hedgehogs.
We’ve known one big thing.
And that big thing is that burning fossilized carbon makes life simpler
and makes society more prosperous.
Population levels have soared alongside living standards. This is a big idea.
The problem we forgot is that humans exist within a global ecology,
on natural resources and not an everlasting gobstopper.
Burning ever more fossilized carbon
has permanent and irrevocable consequences.
Avoiding these consequences is a global imperative.
How do we start replacing perhaps the greatest idea in human history?
And there are many answers to this.
Many small ideas, and I’ll talk about one today.
It goes back to that question that my friend asked me in Japan.
How do we know if carbon offsetting is useful or really just greenwashing?
There are carbon projects around the world
set up to avoid carbon emissions,
such as conservation of carbon-rich wildlife in forests or mangroves
and new forms of technologies that have permanent carbon removal,
such as direct air capture.
After being certified as legitimate by accreditation bodies like Viera,
these projects can issue credits based on a range of methodologies.
Each carbon credit is supposed to equal one tonne of carbon avoided or removed.
Since 2002, nearly 19,000 registered projects have come into existence,
issuing credits equivalent to 4.3 billion tonnes of CO2.
And prices range wildly from as low as 10 cents per credit
to as high as a staggering thousand dollars.
This story of carbon projects and offsets
is the description of what’s called the voluntary carbon market.
As an extremely bullish market,
transactive volumes are set to rise one to two billion today
to 100 billion by 2030.
However, there was a problem with the offset market,
a problem that goes back to the Kyoto Protocol
and also back to the very beginning of this talk.
How do we know that one carbon credit is really worth a ton of carbon?
How do we know which projects are truly doing what they claim
and how do we know which ones we should invest in
to be sure that they’re taking effective climate action?
The short answer is we don’t.
BeZero’s team of carbon credit scientists conducted research
to see if we could actually assess these questions.
We regress the transactions of 110 carbon projects
against the BeZero carbon rating to see if price is correlated to quality.
This is a basic hallmark of a scalable market.
For those that haven’t encountered this R-Square test before,
a score of one would suggest
there was a perfect relationship between price and quality.
A score of zero when applied, there is not.
Our study found an R-Square of just 0.077
In other words, buying a carbon credit for 5 dollars
or 400 dollars doesn’t necessarily mean
that it’s achieving its core function,
to avoid or remove a tonne of carbon.
Project prices may reflect other things called co-benefits,
such as Sustainable Development Goals.
But they aren’t called SDG credits.
Co-benefits or additional, carbon returns a core.
Prices should reflect carbon quality.
Certification bodies do a fantastic job of creating
the methodologies used to generate credits.
But our research calls into question
the idea that all tonnes are created equal.
Like financial assets, assessing carbon projects
is about a spectrum of risks.
Like financial assets,
there are lots of factors which can make a carbon project effective,
or put that efficacy at risk.
Unlike financial assets, however,
many of the inputs and outputs are based on scientific modelling.
We see the unobservable all rely on samples.
This is why we created the BeZero Carbon rating methodology.
It blends traditional financial
and ecological modelling frameworks to assess
the extent to which any given carbon project truly delivers
a tonne of CO2 avoidance or reduction.
First, we define key risk factors common to all types of carbon projects,
whatever the sector.
Our six-factor model assesses additionality, over crediting,
permanence, leakage, political environments, and perverse incentives.
Second, we assess each individual risk factor
based on a blend of qualitative and quantitative
top down and bottom up analysis.
Third, we calculate the carbon project rating
based on a weighted average of each individual risk score.
Finally, we monitor and track performance dynamically via satellite imagery tools
for nature based solutions,
as well as up-to-date secondary news and research.
We apply this methodology for projects around the world
on our intelligence platform.
These are carbon markets.
Our platform offers an additional and universal layer of analysis
for anyone operating in the voluntary carbon market
who wants to make a project, invest in a project or buy and sell credits.
When we talked about the big idea of the past 250 years,
it was all based on burning fossilized fuels.
If you are to avert the worst of its effects,
we will need many small ideas,
Small ideas, accountants of the best carbon projects
get the funding they need to deliver climate action.
We believe our approach is quietly radical.
It allows people to compare projects
and assess the associated risks in a truly fungible way.
It helps get us closer to answering
the very first question we began this talk with.
A question many of you listening would have no doubt asked yourselves,
What are carbon credits?
Are they useful or are they really just greenwashing?
If BeZero can help answer this question,
we believe the carbon market can become
a source of climate action and wealth creation.
So off the 250 years of being a hedgehog,
I think it’s time we rediscover our inner fox.