People can’t see or smell carbon dioxide or methane gas. But saving the Earth from the worst effects of a warmer world require us to identify the sources of these climate pollutants and stop their emissions. And top tech companies and other corporations in recent years have been trotting out plans for doing just that.
Done right, it’s a daunting task to accurately tally up the tons of emissions and figure out how to decarbonize operations while still turning a profit.
The consulting and investment firm Carbon Direct is helping businesses forge these greener paths, most notably assisting Microsoft create its plan for becoming carbon negative by the end of the decade. Other publicly disclosed clients include Alaska Airlines and Shopify.
CEO Jonathan Goldberg launched Carbon Direct in New York in 2019. The company has approximately 70 employees globally, with plans to roughly double over the coming year.
While the startup has helped develop tailored carbon cutting plans for massive corporate clients, it’s also working to develop tools for wider use. Chief Product Officer Danan Margason, formerly of marketing analytics company Tune, is building out a second, engineering-focused office in Seattle.
In addition to advising companies in shrinking their carbon footprints, Carbon Direct also invests in startups that are removing carbon from the atmosphere or stripping it from industrial processes.
We caught up with Goldberg and Margason to learn more about Carbon Direct and the pursuit of decarbonization. Questions and answers have been edited for clarity and length.
GeekWire: Where are you investing, and can you get good returns in what can be a risky sector?
Goldberg: We are only investing in things that remove CO2 from the atmosphere, convert CO2 into useful products, capture CO2 from the point of emission, or manage the infrastructure of CO2.
We are having no problem underwriting deals in the space to more than acceptable commercial returns. So we underwrite specifically to financial parameters, and we have a 50-person science team — the bulk of our team — that has deep expertise in the technical elements of investing in CO2.
GW: How do you help companies come up with carbon-cutting strategies?
Margason: We’re getting deep into the specific daily choices that companies have to make. Say employee travel is a large chunk of my emissions, should I reduce employee travel? What’s the impact of that? Should I work with different airlines? Should I invest in sustainable aviation fuel? What’s going to be best for my business? How do I present this decision to the board, to my stakeholders? So those are the real choices that companies are having to make.
One interesting thing that a chief scientist at Carbon Direct developed through Columbia University is the “levelized cost of carbon abatement,” which is essentially a tool to figure out — just like with an investment decision — what is the biggest ROI from a climate perspective on a decision to make. So we’re trying to build that into our products.
GW: How big is the carbon management sector?
Goldberg: There’s 1.6 trillion tons of CO2 in the atmosphere. If you say the price of carbon, whether it’s the social cost of carbon or whatever metric you want, is 100 bucks, it’s $160 trillion that needs to be managed.
Our addressable market is unfortunately big. It would be better if it were small.
GW: How do you evaluate carbon pledges from non-clients as legit or empty promises?
Goldberg: Specific targets with immediate or intermediate time frames are always helpful. Saying we’re gonna be carbon neutral in 2050, when I’m retired, it’s not particularly helpful. But, [saying] we’re going to begin by purchasing a million tons of carbon credits, we’re using this framework, we’re doing this as a pathway towards 2030 when we expect these six parts of our supply chain to become decarbonized, that’s tractable.
Huge pledges with no time frame, with no real calculations, make me skeptical.
GW: Can Microsoft, which a super profitable company and has one of the more specific, transparent, aggressive plans for cutting carbon, be a model for others?
Goldberg: I think this harks back towards using these early movers as a template for what can be done and also template for rules that can be created to help everybody.
The other thing I really like that Microsoft is doing, or other clients are doing this as well, is they are buying the cost down not just in carbon removal, but in other areas… Clients who are buying sustainable aviation fuel at high prices today [for example] are doing a service to other companies, who can buy at lower costs in the future. That matters.