Why We Invested in WattCarbon — Achieving True Net Zero

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To get to net zero carbon, we need a next generation carbon accounting platform, expert and reliable measurement and verification, and a comprehensive marketplace to monetize the beneficial carbon impacts of projects in the Built Environment. That is the challenge WattCarbon is addressing and that is exactly why Greensoil Proptech Ventures (GSPV) has invested in them.

The Problem, and Promise, of Carbon Offsets

In the race to reduce greenhouse gas (GHG) concentrations in the atmosphere, society will need all the tools at its disposal, plus ones not yet invented. Because emissions reductions can be extremely hard and expensive for many emitters, businesses have traditionally leaned on carbon offsets, emissions reductions provided by someone, or something, else, to help them achieve their goals. Of these, a very high proportion of purchased offsets have been derived from land-based carbon reserves — particularly forests. These types of offsets have come under fire recently, with skeptics questioning their legitimacy, and whether they actually help to meet global climate goals. Further, climate activists have long argued that these carbon offsets give large corporations a license to pollute while they boast about their green credentials. ‘This (fill-in-the-blank: t-shirt, beer, taxi, diesel delivery truck, Netflix binge, or other shiny object) is carbon neutral’, is an increasingly common marketing tactic. But what if the forest that helps make that claim burns down? What if it’s going to be clear cut in 5 years? Gets attacked by insects? Has anything actually been done to reverse the steady increase in atmospheric concentrations of CO2 or is it just greenwashing?

A recent article by The Guardian, claimed that 90% of rainforest offsets minted by a leading carbon standard organization are likely to be “phantom credits”, and largely worthless. Natural ecosystems are complex and evolving and unless an offset is permanent and additional (i.e. the decarbonization project would not have gone forward without the financial incentive of selling the carbon offset), why should it count?

We believe there is a more than viable alternative. Technological offsets: offsets that can be generated or facilitated and measured by technology. Perhaps buildings, which are hardware and technological ecosystems that also contribute roughly 40% of global GHG emissions, can offer more readily available, and better quality, carbon offsets. The carbon reduction of putting in a heat pump or building renewables is, in theory, much easier to accurately predict and measure than a nature-based decarbonization project. More importantly, ~$10T needs to be invested in the Built Environment to meet climate goals, meaning that we will need every incentive we can get to deploy sustainable hardware. As WattCarbon’s CEO McGee Young espouses, “Save a tree, plant a heat pump”.

There is no doubt that reducing energy consumption, electrifying buildings, and cleaning up the grid are top climate and economic priorities. At Greensoil PropTech Ventures (GSPV), we believe that technical carbon offsetting, capture and storage are all possible in the Built Environment and will play an important role in quickening the pace of decarbonization and helping companies bridge the gap to carbon net zero. While ecosystems in their own right, buildings are also products of human civilization and ultimately we control how we finance, build, occupy and operate them. Yes, we need to align all the relevant historical variables of a successful property; CapEx/OpEx budgeting, equipment replacement, tenant health and comfort, tenant disruption, etc., but the time has come for carbon management to be given the full treatment as one of those variables — including as one that can be leveraged to achieve a target ROI.

Enter WattCarbon and their Novel Approach to Verifying, Financing and Trading Carbon Offsets.

WattCarbon’s platform starts with granular carbon accounting. The incumbent approach to carbon accounting and offsetting involves analysing annual energy consumption and applying an emission factor based on the grid, and the fuel mix being consumed. This gives an average calculation of carbon emissions which can be offset to claim net zero. For example, let’s say you’ve calculated your emissions at 100 tonnes of CO2 in 2022, your next step is to purchase 100 tonnes worth of carbon offsets. A leading carbon accounting platform currently has offsets for sale that range in price from $5.75 to $1,000/ tonne (yes, you are reading that right). Naturally, you go for the cheapest because a tonne of carbon is a tonne of carbon, right? So, you buy 100 credits from a hydro dam in Brazil and BAM!, you have achieved Carbon Net Zero! ESG report gets published, high fives all around. But have you really achieved anything if you have had zero impact on your local grid and its emissions? If those credits aren’t really additional (i.e. would that hydro dam have been built anyway)? And are those credits net of the emissions from the cleared forest that just got flooded?

WattCarbon’s distinction is that their platform leverages what’s relevant, knowable and verifiable. It brings location and time into the equation to significantly improve the accuracy of carbon measurement and to verify which projects will have the highest impact. For instance, investing in a solar farm in California is great, but it can be adding renewable energy to the power mix at a time of day when California’s grid is already relatively clean. WattCarbon’s software can show you that maybe your most carbon intensive hours of energy consumption are in the evening once the sun has gone down, so buying renewable energy in the middle of the day isn’t having any additional impact. In this case investing in a Virtual Power Plant project that can provide support to the grid after the sun has gone down will have a more direct impact on decarbonizing the grid. The first iteration of WattCarbon’s market will allow any energy consumer in the US to, “match every kilowatt of electricity consumed, every hour of the year, with an equivalent kilowatt produced or reduced by a new energy resource.” WattCarbon’s initial slate of Carbon Free Energy sources include:

  • Demand Response — reductions in energy consumption at particular hours of the day or shifts in load from one time of day to another.

  • Renewable energy — grid-connected production of renewable energy from solar, wind, or small hydro facilities.

  • Electrification — replacement of fossil-fuel powered heating and cooking equipment with electrical equipment.

While building owners plan their own electrification projects, they can invest in other decarbonization projects to meet carbon net zero goals in the short term.

GSPV’s Vision for WattCarbon

When it comes to Climate Change and the Built Environment, we believe that the problem is the solution. Leveraging WattCarbon’s platform, we can begin to accelerate the reinvention of the economics of decarbonizing buildings. With more accurate carbon accounting, WattCarbon will create a stronger carbon pricing signal — along with a registry of verified, additional and permanent offsets — that will help funding flow to the highest impact projects. Our vision is that any building owner will be able to use WattCarbon’s platform to assess their carbon emissions, identify the quickest path to decarbonizing their own assets and purchase offsets in the interim to achieve true net zero. To build out this marketplace, WattCarbon needs to assemble the best carbon free energy developers, incentivize buyers and create a new standard for carbon offsets. This is a monumental task but as we heard a few times in our diligence, “If there is anyone that can figure this out, it’s McGee!”

As part of our advantage, we look forward to accelerating progress by connecting WattCarbon to our portfolio of established decarbonization companies like Electriq Power, CarbonCure and Ivy Energy, as well as buyers of carbon offsets in the form of our international network of real estate owners and investors.

Malcolm Cameron is a Principal at Toronto-based Greensoil PropTech Ventures (GSPV), a venture firm with $US138M under management, investing at the intersection of PropTech and ClimateTech. GSPV recently joined WattCarbon’s $4.5M seed round lead by True Ventures.

About WattCarbon

Founded in 2021, WattCarbon is a clean energy platform that connects organizations to 24/7 carbon free distributed energy resources. The WattCarbon marketplace offers a wide range of procurement options, including renewable energy, demand response, and electrification projects. WattCarbon is committed to accelerating the transition to a clean energy future and reducing our reliance on fossil fuels. For more information, visit http://www.wattcarbon.com.