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Isometric is trying to become the most trusted name in the scandal-plagued carbon market.
Regulations are probably coming for the scandal-plagued voluntary carbon market. After years of mounting skepticism and reports of greenwashing, governments are now attempting to rein in the historically unchecked web of platforms, registries, protocols, and verification bodies offering ways to offset a company’s emissions that vary tremendously in price and quality. Europe has developed its own rules, the Carbon Removal Certification Framework, while the Biden administration earlier this year announced a less comprehensive set of general principles. Plus, there are already mandatory carbon credit schemes around the world, such as California’s cap-and-trade program and the E.U. Emissions Trading System.
“The idea that a voluntary credit should be a different thing than a compliance credit, obviously doesn’t make sense, right?” Ryan Orbuch, Lowercarbon Capital’s carbon removal lead, told me. “You want it to be as likely as possible that the thing you’re buying today is going to count in a compliance regime.”
That’s where the carbon credit certification platform Isometric comes into play. Founded in 2022, the startup raised $25 million in its seed round last year, co-led by Lowercarbon and Plural, a European venture capital firm. It has created a rigorous, scientifically-driven standard for carbon removal credits, with the intention of becoming the benchmark that buyers, sellers, and other stakeholders can coalesce around. So whenever federal standards or compliance regimes do kick in, there will be no doubt whether Isometric-verified credits are up to snuff.
“Isometric was basically founded to say, look, the long-term solution here is obviously government and regulation, but in the meantime, this is too important to let the market just keep doing it like this,” Lukas May, chief commercial officer at Isometric, told me. He believes that the government’s role in the carbon market should mirror the financial sector, but instead of preventing insider trading or predatory lending, federal regulators would make high-level determinations on things like what types of credits count and how long carbon must be locked away to count as “permanent removal.” Platforms like Isometric (often referred to as registries) could then focus on setting more granular, scientifically specific requirements for particular methods of carbon removal.
The startup aims to separate itself from existing registries, which include Puro.earth, Verra, and the Gold Standard, in two big ways.
First is just a focus on science. May said that 15 of Isometric’s first 25 hires were scientists. Today, the company’s chief scientist is Jennifer Wilcox, who recently left her position on the leadership team at the Office of Fossil Energy and Carbon Management, housed within the U.S. Department of Energy. Other registries, he told me, are “filled with NGO types” and “policy people” who lack the technical background to, say, evaluate what types rock formations are best for the geological sequestration of bio-oil or how CO2 fluxes in the soil impact enhanced rock weathering. These types of in-the-weeds analyses are integral to establishing stringent protocols to validate the amount of carbon that’s actually been removed.
Additionally, May, Orbuch, and Khaled Helioui, a partner at Plural who led the firm’s investment in Isometric, all said the company fixes a key flaw in the voluntary carbon market —- alignment of financial incentives. Traditionally, carbon removal suppliers pay registries to certify their credits, which creates an incentive for registries to overlook lax standards. But Isometric is instead paid a flat fee by the buyers for performing verification work on a per-ton basis.
This year, Isometric verified its first credits ever, from the carbon removal companies Vaulted Deep, which collects sludgy, organic waste and deposits it underground, and Charm Industrial, which injects processed biomass into abandoned oil and gas wells. Credits from these two suppliers were sold to Frontier, the carbon-removal initiative led by the payments firm Stripe. Just last week, Frontier identified Isometric as its first and only leading credit issuer.
“What makes Isometric stand out is they’re explicitly focused on durable CDR [carbon dioxide removal],” Joanna Klitzke, Frontier’s procurement and ecosystem strategy lead, told me. “Durable” refers to the fact that Isometric’s projects must sequester CO2 for 1,000 years or more. “They’re building tech products that make data and reporting particularly easy for suppliers and for credit management,” she added.
Everyone is essentially trying to avoid another scandal like the one that engulfed rainforest carbon offsets, which were found to be largely worthless. The industry has thus been shifting away from more nebulous carbon offsets, which seek to avoid future emissions by preventing deforestation or funding renewables development, and towards more concrete, but often more expensive, forms of carbon removal — think direct air capture, enhanced rock weathering, or biomass carbon removal and storage, all of which have seen a boom in investment.
“As carbon removal was emerging as a new and potentially very exciting way to do this stuff, potentially more measurable and more rigorous, we couldn’t just sit and watch the same registries do the same thing,” May told me, saying doing so would “destroy trust in the carbon removal industry before it’s even off the ground.”
In a past life, Isometric’s founder and CEO, Eamon Jubbawy, founded a digital identity verification company for the financial services industry. This gave investors confidence that he could bring his expertise in trust-building and verification services to the carbon removal space.
“It’s not a like for like, but there’s a lot of overlap in terms of actually introducing efficiency, effectiveness, and having technology really open a market,” Plural’s Helioui told me. “This is not an endeavor or an opportunity where I would have been necessarily that keen to back a first-time founder, just because of the complexity of what you need to manage,” he said. “We’re really talking about market creation.”
But May doesn’t expect Isometric to totally dominate other registries. Just like there are many private banks, May envisions an “ecosystem of high quality registries,” eventually unified around a set of federal guardrails. Until then, he believes Isometric’s role is to “set a bar that is so high that the expectation and norm in the market shifts,” thus avoiding a race to the bottom where companies are able to greenwash their image with cheap, low-quality credits.
Now, not every company can afford the highest quality credits. And because of Isometric’s 1,000-year storage requirement, many cheaper, nature-based projects, such as reforestation, are excluded from its registry, even though there’s still demand for them. Orbuch told me that Isometric will continue adding guidelines for different carbon removal pathways, as it recently did for biochar, a charcoal-like brick that locks up carbon contained within biomass.
It’s still early days, and there’s plenty of room for Isometric to grow alongside the market. After all, it’s only issued 5,350 carbon removal credits to date, while nearly two billion credits have been issued in the voluntary carbon market overall.
“The whole industry needs to be scaling up,” May told me. “So we need to, in 10 years time, be, you know, issuing and verifying hundreds of millions, if not billions, of credits annually.”
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Current conditions: Shanghai, still recovering from the strongest storm to hit the city in 75 years, is bracing for Typhoon Pulasan • Extreme flooding in the north of Italy has forced some 1,000 people to evacuate • It’s looking unlikely that this month will break last year’s record for warmest September ever.
The explosive growth in solar power shows no signs of stopping this year. New analysis from energy think tank Ember forecasts the world is on track to add 593 gigawatts of solar power in 2024, nearly 30% more than last year’s installations and nearly 200 GW more than the International Energy Agency predicted at the start of the year. The report underscores how a handful of countries are responsible for most of the world’s new solar capacity. China leads, followed by the U.S., India, Germany, and Brazil. These five countries are on track to account for 75% of new global installations in 2024. And they are sustaining their growth year after year.
Ember
Here’s the most important takeaway from the Ember report: “This now puts ambitious climate pledges within reach.” It’s very possible – and indeed likely – that the world will triple solar capacity by 2030. In this scenario, solar power would generate a quarter of the world’s electricity. “Countries need to plan ahead to make the most of the high levels of solar capacity being built today and ensure the continued build-out of capacity in the coming years,” the report says.
The Federal Reserve announced yesterday that it would reduce the benchmark federal funds rate by half a percentage point, from just over 5% to just below. What does this mean for renewable energy? Well, it just became a much more enticing investment, wrote Heatmap’s Matthew Zeitlin. High interest rates have an outsize effect on renewable energy projects, because the cost of building and operating a renewable energy generator like a wind farm is highly concentrated in its construction. Wood Mackenzie estimates that a 2% increase in interest rates pushes up the cost of energy produced by a renewables project by around 20%, compared to just over 10% for conventional power plants. “As rates fall, projects become increasingly financially viable,” said Advait Arun, senior associate of energy finance at the Center for Public Enterprise and Heatmap contributor.
The European Union’s head office has warned that the extreme weather devastating parts of the continent are proof that “climate breakdown” is “fast becoming the norm,” The Associated Pressreported. Parts of Europe are experiencing some of the worst flooding in at least two decades, while Portugal has declared a “state of calamity” as enormous wildfires rage out of control and threaten the homes of more than 200,000 people. “We face a Europe that is simultaneously flooding and burning. These extreme weather events ... are now an almost annual occurrence,” said EU Crisis Management Commissioner Janez Lenarcic. “The global reality of the climate breakdown has moved into the everyday lives of Europeans.” Europe is the fastest warming continent on Earth.
Today the startup Brightband emerged from stealth with $10 million in Series A funding and a unique plan to commercialize generative AI weather modeling. Instead of trying to go up against Weather.com, Brightband is tailoring models to specific industries such as insurance, finance, agriculture, energy, and transportation. The round was led by Prelude Ventures. AI models like Brightband’s are trained on decades worth of past weather data, and when fed a snapshot of current conditions, can predict what will come next, much like ChatGPT does with text. Brightband’s CEO Julian Green told Heatmap’s Katie Brigham that customizing forecasts for particular industries will also be as simple as querying a large language model. A wind farm operator could, for example, “just take an attached file of historical wind energy production, and throw it in there and say, hey, tell me what the wind energy is going to be like next week.” Brightband says it hopes to publish a paper by year’s end with an open-source version of its forecast model, alongside evaluation tools to assess its performance.
Truck drivers seem to really like Tesla’s Semi electric truck. PepsiCo is Tesla’s first customer for the trucks, and has 89 of them deployed across various fleets. Speaking at the IAA Transportation event, PepsiCo’s electrification program manager Dejan Antunović said some veteran drivers are reporting that they never want to go back to driving diesel after having handled the Tesla Semi. “Based on its history of delivering efficient electric vehicles in volume profitably, I think Tesla is the one to make commercial electric trucks happen at scale,” wroteElectrek’s Fred Lambert.
Researchers were pleasantly surprised to discover that 90% of young corals that were bred using in vitro fertilization and deposited in reefs across the Caribbean survived last year’s marine heatwave.
Brightband emerges from stealth to commercialize AI-weather forecasting.
The weather has never been hotter.
The past few years have seen a boom in the weather prediction industry, with AI-based weather models from the likes of Google DeepMind, Huawei, and Nvidia consistently outperforming traditional models. Most of that work has been research-oriented, but today the startup Brightband emerged from stealth with $10 million in Series A funding and a unique plan to commercialize generative AI weather modeling. Instead of trying to go up against Weather.com, Brightband is tailoring models to specific industries such as insurance, finance, agriculture, energy, and transportation. The round was led by Prelude Ventures.
Weather forecasting has traditionally been the domain of the public sector, with the most widely used models coming from the U.S. National Weather Service and the European Center for Medium-Range Weather Forecasts. Brightband’s CEO Julian Green told me that private companies haven’t been able to break in “because it has cost so much to have billion dollar supercomputers,” which are required to run today’s so-called “numerical” weather models.
These models rely on complex atmospheric equations based on the laws of physics to predict future weather patterns, and because of their computational intensity, are usually only updated four times daily. It’s possible then that AI-based weather prediction could thus actually reduce energy demand — because while it takes a lot of energy to train an AI model, after that’s done, generating forecasts is simple. “So instead of six hours to have a forecast, it takes under a second. Instead of using a billion dollar supercomputer, you’re using a laptop,” Green told me.
AI models like Brightband’s are trained on decades worth of past weather data, and when fed a snapshot of current conditions, can predict what will come next, much like ChatGPT does with text. “Think about the weather AI prediction problem as predicting the next frame in a radar sequence,” Green told me.
He said that customizing forecasts for particular industries will also be as simple as querying a large language model. A wind farm operator could, for example, “just take an attached file of historical wind energy production, and throw it in there and say, hey, tell me what the wind energy is going to be like next week.” Likewise folks in the aviation industry could have the model tell them if their plane’s wings are likely to ice up, utilities could get detailed insight into expected energy demand and generation, and finance companies could get up-to-the-minute information about weather-sensitive commodities. Previously, companies would’ve had to build their own forecasting teams or hire third-party advisors to get such specific predictions.
Brightband wants to further differentiate itself from the types of models that tech companies have already built by using only raw data inputs to generate its forecasts, from sources such as satellites, weather balloons, and radar systems. Perhaps surprisingly, this is not the way that most models currently work. Because there are data gaps, such as over oceans and in the developing world, the datasets used to train today’s AI weather models, Green explained, “smear the available data over a three-dimensional grid of the globe,” diluting the accuracy of both the real-time weather and presumably the resulting forecasts.
It’s hard to say how much more accurate using only raw data inputs will be, because “that’s what nobody has done yet,” Green told me. Data gaps are still an issue of course, but Green told me that Brightband’s approach will also allow the company to better analyze when and where filling these gaps would add the most value.
Brightband says it hopes to publish a paper by year’s end with an open-source version of its forecast model, alongside evaluation tools to assess its performance.
Renewable energy just became a much more enticing investment.
That’s thanks to the Federal Reserve, which announced today that it would reduce the benchmark federal funds rate by half a percentage point, from just over 5% to just below. It’s the beginning of an unwinding of years of high interest rates that have weighed on the global economy and especially renewable energy.
The Federal Reserve’s economic projections also indicated that the federal funds rate could fall another half point by the end of the year and a full point in 2025. The Federal Reserve began hiking interest rates from their near-zero levels in March 2022 in response to high inflation.
High interest rates, which drive up the cost of borrowing money, have an outsize effect on renewable energy projects. That’s because the cost of building and operating a renewable energy generator like a wind farm is highly concentrated in its construction, as opposed to operations, thanks to the fact that it doesn’t have to pay for fuel in the same way that a natural gas or coal-fired power plant does. This leaves developers highly exposed to the cost of borrowing money, which is directly tied to interest rates. “Our fuel is free, we say, but our fuel is really the cost of capital because we put so much capital out upfront,” Orsted Americas chief executive David Hardy said in June.
So what does that mean in practice? Let’s look at some numbers.
Wood Mackenzie estimates that a 2% increase in interest rates pushes up the cost of energy produced by a renewables project by around 20%, compared to just over 10% for conventional power plants.
Meanwhile the investment bank Lazard estimates that reducing the cost of capital (the combined cost of borrowing money and selling equity in a project, both of which can be affected by interest rates) from 7.7% — the bank’s rough assumption over the summer — to 5.4% would lower the levelized cost of energy for an offshore wind system from $118 to $97 — around 17% — and for a utility solar project from $76 to $54 — roughly 28%. While there's not a one-to-one relationship between interest rates and the cost of capital, they move in the same direction.
Reductions in cost of capital also make more renewables projects viable to finance. According to a model developed by the Center for Public Enterprise, a typical renewable energy project with a weighted average cost of capital of 7.75% will have a debt service coverage ratio (a project’s cash flow compared to its loan payments)of 1.16. Investors consider projects to be roughly viable at 1.25.
So at the cost of capital assumed by Lazard, many projects will not get funded because investors don't see them as viable. If the weighted average cost of capital were to fall one percentage point to 6.75%, a project’s debt service coverage ratio would rise to 1.28, just above the viability threshold. If it fell by another percentage point, the debt ratio would hit a likely compelling 1.43.
“As rates fall, projects become increasingly financially viable,” Advait Arun, senior associate of energy finance at the Center for Public Enterprise and Heatmap contributor, told me matter-of-factly.