Treefera raises $2.2 million to solve carbon credit credibility problem with AI - A revolutionary solution!

Questioning voluntary carbon credits

Earlier this year, Disney, Shell, Gucci and several other major corporations discovered that they had purchased carbon credits that were essentially worthless. A collaborative investigation revealed that Verra, the world's largest issuer of voluntary carbon credits, had sold credits for forests that were not threatened with destruction, wiping out the value of the credits. Consequences followed. In the months that followed, Verra's CEO resigned and the organization rewrote its verification methodology.

This wasn't the first time that large-scale voluntary carbon credits had been called into question, and it probably won't be the last.

Forest characterization is a difficult job. To get a truly accurate assessment, foresters have to scour the landscape, measuring trees the old-fashioned way. This takes so much time and manpower that too many measurements would raise the price of any associated carbon credit beyond what the market can bear.

While there are many types of offsets, forests are a preferred option in many cases. Stopping deforestation is relatively cheap, and looks good in marketing materials. For many companies, it's a win-win situation.

Verra and many other certification organizations have emerged over the last few decades to bring order to the vast and often chaotic world of carbon credits, doing the hard work of verification for their clients.

However, the Verra scandal has shown that while certifications are useful, companies should probably carry out their own checks, just as investors do when deciding where to put their money.

Using AI to analyze forests

This comparison was at the forefront of Jonathan Horn's mind when he founded Treefera last year. Horn had been an investment banker at Citi when the 2008 financial crisis erupted, and the role of the rating agencies in the crisis left its mark on him. For example, S&P gave Lehman Brothers an A rating just days before the company went bankrupt. "A big part of the problem we had during the crisis had to do with the reliability of the data underlying the actual assets," he told us+.

For a carbon credit to be valuable, buyers need to be confident in the amount of carbon contained in forest trees, and in the amount they are likely to sequester in the future. Organizations like Verra offered a simple way of doing this, although the scandal exposed some of the system's flaws. Horn and co-founder Caroline Grey hope that Treefera can close some of these loopholes.