Climate Tech Canada #9

Apr 13, 2022

Hey there,

Welcome to another issue of Climate Tech Canada! It’s been a busy few weeks around here so coming at you a bit later than scheduled. In this issue:

A primer on carbon offsets
Federal & provincial budgets with climate commitments
Funding announcements for carbon capture
And more!

Counting carbon

Carbon offsets have come up a lot in conversation lately, whether with friends looking to offset their own emissions or the many announcements from companies about carbon credit purchases and net-zero claims. It’s a space I didn’t know much about though and wanted to understand how to think about offsetting, how to evaluate climate commitments and some of the criticisms about offsets.

What are we talking about?

Offsetting refers to the practice of making an investment that leads to emissions reductions that are equivalent to the emissions you produce. The reductions can come via reduction, avoidance or capture. The emissions reductions must:

Occur outside your own activities (i.e. not reducing emissions generated by you)
Be a result of your investment (i.e. wouldn’t have happened otherwise)

At its core, offsetting looks at emissions through a balance sheet. Does your balance sheet, including emissions and activities that offset those emissions, net out to zero?

Carbon offsets are used as part of an overall emissions reduction or net-zero strategy that follows three main stages:

Measure emissions
Take actions to reduce emissions as much as possible
Purchase credits to offset the remaining emissions

Carbon credits are a standard unit that is sold, bought or traded. A credit represents an amount of emissions reductions, verified by some kind of certification body. The credit system aims to bring both credibility and transferability to offsets. (There are other vehicles for claiming emissions reductions like Power Purchase Agreements, though the effectiveness of these options isn’t as concrete.)

Who offers what

Below are some of the Canadian companies providing solutions related to emissions management, accounting, offset creation and selling:

Purchasing Individual Offsets

Carbon Neutral Club (Toronto) - based out of Toronto, CNC allows you to offset your estimated carbon footprint for a monthly fee. Think of it like a carbon offset subscription. They have a diverse portfolio of projects behind their credits, and help drive better individual purchasing by partnering with sustainable brands to offer discounts. Other offerings for individuals include Joro and Wren.

Creating Offsets

Tree of Lives by Viridis Terra (Quebec City) - With a focus on land restoration projects, Viridis Terra takes a different approach, acting as an impact fund by allowing you to invest in projects with a target return rate while providing carbon credits.
Carbon Block (Winnipeg) - Acting as a broker or market for companies looking to purchase offsets. Carbon Block creates their credits from renewable energy projects, agriculture and emissions reductions in transportation.

End-to-end

Radicle Balance (Calgary) - A consulting and technology company that helps companies develop climate strategies. Their technology and services include measuring emissions, provisioning and trading carbon credits, and other professional services.
Manifest Climate (Toronto) - Focused on climate risk management, Manifest provinces software and services to help companies measure their climate impact and develop strategies to reduce their footprint. Not just offsetting.
CarbonZero (Toronto) - Operating since 2006, CarbonZero helps companies measure, report and reduce their emissions. They offer their own “Carbonzero Certified” program to help clients establish carbon neutral status.

What to look out for

What's your goal?

If your goal is to meet a net-zero commitment, offsets are likely a good fit - particularly for emissions that are hard to reduce. However, we can get very different outcomes for the environment depending how and where they're deployed.

For heavy emitters offsets may not be the best way to contribute. Rather than using capital to buy offsets, they can use it to fund the development and scaling of solutions that drive real emissions reductions. They are uniquely positioned to drive change in a key sector. Similarly, a tech company with a small footprint (i.e. Shopify, Stripe) may have more impact by deploying catalytic capital or supporting higher-risk ventures like carbon capture. These won’t show up on your emissions balance sheet, but arguably are more effective.

Driving political change is another route you can pursue, and is probably one of the most impactful ways to contribute. This is the approach taken by the likes of Patagonia, and while they have a net-zero goal, it isn’t distracting them from political action. Be wary of a narrow focus on carbon neutrality through offsets and only looking at it through a balance sheet.

Scope matters

Which scopes are being offset? Scope 1 and 2 are direct emissions and indirect emissions from business activities. Scope 3 includes all of the emissions that the company is responsible for across the value chain. For example, a bank could claim that they have achieved net-zero by reducing and offsetting their offices, business travel, data centres etc. But if they're still lending for fossil fuel projects or investing in companies with poor climate track records, it's not going to matter that much in the big picture.

Pay-to-play

Offsetting can also be a pay-to-play scheme. “Continue your business as usual, emitting as you please, and buy offsets so you can tell the world that you're carbon neutral”. This video about the situation in Australia is a prime example, as are claims about “carbon neutral oil”. Some of these claims are only based on emissions from producing oil, not from its eventual use. This approach also doesn’t account for the other environmental impacts of these activities like water pollution, tailings, ecosystem degradation, etc.

Credibility

Finally, there are issues with the credibility and quality of offsets. There are lots of high quality offset credits out there delivering real reductions in emissions. But because the industry lacks regulation and standard frameworks, many offsets are doing very little to drive down parts-per-million. Some key credibility questions that need to be answered:

Durability - will the carbon remain captured? What if those trees you planted burn down?
Attribution - would the project have gone ahead without your funding?
Verification - is it real? Is it only being counted once?

Diversification of offsets is one way to mitigate these risks, both in the types of offsets you invest in and diversifying your overall strategy.

Keeping our eye on parts-per-million

At the end of the day, what matters most is parts per million. Your approach will differ based on the industry you’re in, stakeholder pressures, access to capital, unique skill sets, and more. Offsets should be one of the tools in the toolbox to drive emissions reductions, but I would be skeptical of any approach that relies on them heavily.

Funding and growth

Manifest Climate (Toronto, ON) raised $40M in Series A funding to scale its solution globally. Manifest’s solutions help companies manage climate risk, meet regulatory requirements, and drive climate action in their business. The round was led by BDC Capital Women in Technology Venture Fund and Climate Innovation Capital, and was driven by investor interest.

IntelliCulture (Waterloo, ON) closes $1.7M seed round to accelerate the growth of their farm management platform. IntelliCulture’s precision solution allows growers to operate more efficiently.

LOOP Mission (Montreal, QC) secures $4.7M in grants from the Federal and Quebec governments. LOOP uses imperfect fruits and vegetables that would otherwise be wasted to make juice, beer, gin, soap and more. Funding will enable them to purchase automated equipment to increase production capacity and meet increased demand.

Entropy (Calgary, AB) secured a $300M capital commitment from Brookfield Renewable Resources to scale up deployment of their carbon capture technologies.

Evok Innovations (Vancouver, BC) announced the first close of its $300M cleantech investment fund. The fund will target early stage companies in North America and includes Suncor, EDC, RBC and TD Bank as investors.

Spark Microsystems (Montreal, QC) received $7.1M in funding from Sustainable Development Technology Canada (SDTC) to drive the development and commercialization of their energy-efficient technology for wireless devices.

Shopify (Ottawa, ON) announced additional funding for carbon removal projects, bringing their total commitment to $32M. Recipients include Carbin Minerals (Vancouver - mineralization), Noya (DAC), Sustaera (DAC), DroneSeed (forestry), , CarbonBuilt (materials), Loam (soil), 44.01 (storage), Twelve (transport) and Remora (transport).

Winners of the Impact Canada Challenge were announced with $1M awarded to Equilibrium Engineering (Kentville, NS) for their Alba Nova smart-grid project, $5M to Enerkem (Montreal, QC) for their work on sustainable aviation fuels, and $1M to e-Zinc (Toronto, ON) for their work on long-duration storage using zinc.

Milestones & Growth

Flo introduced their new Level 2 charger which has a maximum output of 19.2 kw, making it the most powerful on the market. The charger is also designed to have flexible output, allowing fleet owners to lower the output while charging light vehicles during the day and increase it while charging large vehicles like buses overnight.

Two Canadian climate companies joined the latest Y-Combinator batch. KorrAI uses their geospatial platform to make mining operations more efficient and has plans to improve environmental permitting and monitoring impact. Wyvern aims to make high resolution satellite-based imaging more accessible, with applications in agriculture and environmental monitoring.

Vancouver’s HydroGreen was selected as a finalist for the “New Economy” category at the SXSW Awards for their Automated Vertical Pastures for growing feedstocks

Water-tech company Aduro Clean Technologies is developing a pilot plant for their technology in partnership with Switch Energy. The plant will use Aduro’s technology to convert waste agricultural polyethylene into high-value products.

Peak Power signed a partnership with utility Oshawa Power to pilot the use of distributed energy resources (DERs). The pilot aims to demonstrate the effectiveness of pooling distributed energy sources such as EV and solar installations to improve grid resiliency

Here & there

Looking to understand battery fundamentals better? Check out Intercalation Station’s battery taxonomy guide

See the winners of the 2022 BC CleanTech Awards, featuring X Y Z

Could carbon pricing be a revenue driver for Canadian farms?

Quebec goes all-in on electrification with all-EV new driver training

Lightspeed founder Dax Dasilva’s nonprofit donates $14.5M to BC Parks Foundation for conservation efforts

In the news

The Canadian government released its plan to reduce emissions by 40% by 2050.

The IPCC released its latest report on climate change, focusing on impacts, adaptation and vulnerability. Carbon Brief breaks down the report here.

The Quebec government released its 2022 budget, which committed $1B to the province’s “Plan for a Green Economy” and renewed the Roulez Vert program (albeit with reduced purchase incentives for EVs).

A group of provinces are backing Small Nuclear Reactors, with Saskatchewan, Ontario, New Brunswick and Alberta working together to produce a strategic plan to expand the industry.

In Alberta, Emissions Reduction Alberta put up $50M in funding for the Circular Economy Challenge, which aims to fund early-stage emissions reductions projects. The province also selected six proposals to develop carbon capture and storage hubs.

BC introduced a new BC Hydrogen Office to develop a hydrogen strategy for the province and manage hydrogen projects and proposals.

The Ontario and federal government committed $518M in grants to support the retooling of GM plants in the province. GM is upgrading its Oshawa and Ingersoll plants, with Ingersoll being retooled to focus on EV production.

Stellantis and LG announced the development of a large-scale lithium ion battery production plant in Windsor, ON. Stellantis is the parent company for brands like Chrysler, Fiat, Dodge and Jeep among others.

Opportunities

Applications opened for CleanBC’s Industry Fund. The fund is seeking applications from companies or projects that will reduce emissions in industry.

Sobeys launched its “Plastic Waste Challenge” in partnership with Ignite Atlantic, Divert NS, and Atlantic Canada Opportunities Agency. The challenge aims to identify potential partners and solutions to create sustainable packaging for use in stores.

Fun Stuff

Brighten up your Twitter feed with Carbon Removal Memes.

And everyone’s favourite question: Yes, but what’s your web3 strategy?

That’s all for this week. As always, thanks for reading and if you’re enjoying the newsletter, considering forwarding to a friend!

Justin

Climate Tech Canada