Reversing climate change by removing companies' CO2 emissions

Published on 2022-07-15

Startup Story

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Mads Emil Dalsgaard - Co-founder and CCO at Klimate - explains how they provide access to high-quality, innovative and verifiable carbon removal solutions in order to scale demand and accelerate the development of methods and technologies needed to reverse climate change.


Now it is no longer enough to reduce emissions: we have to think about how to remove a large amount of CO2 from the atmosphere.

The problem is that there are solutions for this, but they are not scalable and are very expensive. Solutions already on the market, such as direct air capture, are known to many people to use large machines that suck CO2 out of the atmosphere, but there is a need for a sort of a market signal for people or companies to buy it in order to develop it. 

We started by creating portfolios, combining different solutions to make them more affordable for companies. 

The problem we started to solve was that if a company can afford to invest 30 or 50 euros per ton to offset its emissions and cannot afford to use direct debit capture, it can perhaps afford to do 90 percent forestry and 10 percent direct air capture. From there we then added many different methods, such as biochar, bio-oil, soil sequestration and blue carbon.

Variables used to help companies find the right solution for CO2 removal

In our analysis framework, we have about 250 different variables that we analyze in every project we work with. 

These variables are summarized in several groups: the most important one, at least from the perspective of climate change and global warming, we call climate impact and consists of three different categories in our analysis.

The first, which we may be familiar with for other types of offsets as well, is the concept of additionality. We have many parameters that we look at to ensure that when you invest in a carbon removal project, the CO2 that is removed is removed because of the investment. It is not something that would be removed anyway.
For example, if it is planting trees in a certain area, we need to ensure that these additional trees would not be planted. 

The next point is permanence, and this is where the different methodologies vary greatly. When we work with something like direct air capture, the CO2 is pumped underground, where it will remain for thousands of years. Whereas if you work with something like forestation, the trees grow quite slowly and the CO2 is stored in the biomass of the tree. If the tree is then burned, for example, the greenhouse gasses are released back into the atmosphere: so the permanence is less. 

Then we look at rapidity, that is how quickly the CO2 is captured.

In addition to the variables we look at them from a climate perspective, for example, we also look at co-benefits. When planting trees in agroforestry, for example, coffee farmers can benefit economically from secondary income and not just from coffee, the price of which is very volatile. When you have something like direct air capture, where there is just a machine humming and absorbing CO2, there are not many co-benefits.

The importance of transparency in the CO2 removal industry

We believe that strong transparency is needed in this area of carbon removal. 

The various governments in the European Union are increasingly requiring that if you make claims about sustainability, reduction efforts or carbon removal, you need a third party that can verify them and provide transparency.

In our online system, we have made it so that companies can share a link where anyone can go and see exactly what they have purchased and can track the underlying certificates of different projects. That way there is a kind of traceability all the way back to the origin of the credits.

We list everything we have bought and sold, so there is no way to count twice. Then, of course, we also provide some analysis based on the size of the client, but we also provide some customized reports for companies that they can use for their ESG reporting, which is also critical for companies.

The target of Klimate

It is often thought that we always target the biggest emitters, so the companies and industries that emit the most CO2. Actually, because we work with these frontier technologies, which are in the early stages and are generally more expensive, we target companies that emit relatively little, because they will have an easier time offsetting their emissions by using high-quality products.

So we don't work much with heavy industry or these kinds of companies, but with service companies, agencies and consultants. 

Of course, we have some exceptions: we work with an airline, for example, that provides different types of portfolios to its passengers, which is obviously a high-emissions industry.

We have focused on places where the problem is relatively small, so we can scale it up to places where the problem is larger. 

In general, we only work with companies that already have a fairly serious reduction plan. So we can easily tell if companies just want to compensate for their missions and do nothing. It's pretty easy to figure that out. With the prices we have, these kinds of companies also tend not to respond, so we only work with the most ambitious companies.

Case study of a carbon removal project in action

There can be case studies from the perspective of both the client and the individual projects we are using. 

A really interesting example of a very ambitious company is our client Sympower, a technology company in the field of sustainability in the Netherlands. The most interesting aspect is that they have calculated that they save companies about 70,000 tons of CO2 emissions per year because of the service they offer. Compared to that, their CO2 emissions suggest a few hundred tons per year.
They are a company with a very positive impact on the planet, but they still want to eliminate all emissions from their company. They know they're doing something good, but they can't do it without taking a plane, having offices and having events: all these things still emit CO2, and they want to make sure they eliminate that as well.
They're only doing that with highly permanent carbon removal-they're really doing ambitious work and it's worth highlighting.

To give some examples on the project front, one that is always fun to discuss is a project that we are using a lot in the United States called Charm Industrial. Their job is essentially to convert biomass - which could be an agricultural waste, for example - into oil through a rather complicated process.
They get oil from biological material, which would otherwise rot and emit greenhouse gasses, and then they take that oil and pump it into depleted oil reserves. Basically, they put the oil back into the ground instead of extracting and burning it. 

This is a concrete way to show how we are working to support these companies that are reversing climate change. 

Why companies that remove co2 should not also calculate total emissions

One of the peculiarities of our approach is that we only deal with carbon removal: we do not calculate companies' emissions. 
Other companies that do carbon removal or offsetting go a whole route where they calculate emissions and then offer to offset them.

We think there is a conflict of interest: kind of like having a doctor who works for a pharmaceutical company. 

We like to have a separation, and that's why we have created partnerships with a number of different consultants and technology companies that are involved in calculating CO2 emissions. We can be fairly neutral on those numbers. And then it allows us to focus on analyzing carbon removal methods and projects. Because if we were to build an entire company around calculating emissions, it would be a completely different business. 

The main challenges to be faced in the process of developing the Klimate project

In this kind of two-sided activity, there is always the chicken-and-egg problem.

We have access to some really interesting carbon removal projects, and to get them started, they need a lot of capital and a lot of demand before they can actually develop the project. 

On the other hand, we have very ambitious companies that want to do a lot, but it is difficult to get these things done at the right time. This is precisely the problem we are trying to solve. 

We are introducing the financing aspect so that we can help pre-finance these projects and get new projects off the ground without necessarily having the company that will buy the credits ready.

Is the market ready for these kinds of services?

A very specific niche market is ready for these kinds of services, but the “good thing” is that the supply is very, very limited. 

What we are trying to do is to take that small niche market where there is demand and a small amount of supply, and then really accelerate the scale of this industry. 

If you look at all the research, it is clear that this sector is going to become huge. We just want to make sure that happens even faster, because otherwise it will be more or less impossible to stay within the Paris Agreement targets, or it will take a long time to get back to those targets. 

In my personal opinion, the most realistic scenario is that we will exceed those targets, but we are working to figure out how sooner we can get back to a two-degree temperature increase over pre-industrial levels.

It's about reducing the amount of CO2 in the atmosphere. 

About the author

Mads Emil Dalsgaard

 Co-founder and CCO at Klimate