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This startup ensures that forestry-based carbon offsets deliver on their promises

The market for carbon offsets could be worth $100 billion by 2030. Pachama cofounder and CEO Diego Saez Gil is keeping it transparent and accountable.

This startup ensures that forestry-based carbon offsets deliver on their promises
[Photos: courtesy Pachama, iStock]
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Forestry preservation and restoration projects can play an important role in fighting climate change. And companies that are looking to reduce their carbon footprints—and achieve net-zero—are increasingly willing to fund these efforts through the purchase of carbon offsets. By some estimates, the market for carbon offsets could be worth $100 billion by the end of the decade—up from $300 million in 2018.

But tracking the effectiveness of these offsetting forestry projects can be a challenge: It’s traditionally been a labor-intensive, manual process, without a lot of transparency. And there have been prominent reports over the past year of carbon offsets being sold to protect land that isn’t actually threatened and of projects overestimating how much carbon they’re sequestering. 

On this week’s Most Innovative Companies podcast, Diego Saez Gil, cofounder and CEO of the year-old offset startup Pachama talks about how his company uses leading-edge technology, including satellite images and AI, to measure changes to forest cover around the globe—and to ensure the quality of the carbon credits sold on its platform. Its customers now include Shopify, Microsoft, Gitlab, and the Latin American e-commerce giant Mercado Libre. Fast Company recognized Pachama as one of the world’s Most Innovative Companies in artificial intelligence in 2021. 

Diego Saez Gil [Photo: courtesy Pachama]
Saez Gil says that Pachama grew out of technological advancements over the past few years. “We have private companies launching nanosatellites into space and making that data available for others to consume. We [have] made tremendous progress on the field of artificial intelligence and deep learning. And we have cloud computing that allow us to process terabytes of data, even for a small startup like us,” he says. “We saw these technologies being applied on other things, such as mining or defense.” Pachama, however, was the first to apply them to tracking the effectiveness of forest projects. 

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The company trains algorithms to correlate features of a satellite images, such as the greenness of the trees, with carbon sequestration. It also uses lidar technology to understand how the height of trees is associated with carbon measurements. With enough of such data, says Saez Gil, an algorithm can predict how much carbon is being sequestered when it “sees,” for example, a certain level of greenness in a certain type of forest. Pachama is experimenting with other technologies, including drones and on-the-ground sensors, to refine its measurements and even begin understanding the concentration of biodiversity in its forestry projects, not just their potential for carbon sequestration.  

Saez Gil acknowledges that the market for carbon offsets is still developing–and that certain forestry projects have overestimated their climate benefits, as recent reports have shown. But, he insists, the majority of these issues are the result of “good actors with good intentions that just lacked the data or misunderstood protocols.” He says new technologies, like the ones Pachama deploys, can help ensure the “integrity, transparency, and accountability” of forest-sequestration projects. “If we don’t fund the conservation and restoration of nature, it’s going to be way harder to mitigate climate change,” he says.

Before Pachama, Saez Gil founded the smart luggage company, Bluesmart, in 2015, which pioneered the idea of embedding tracking devices in suitcases. Two years later airlines began imposing restrictions on smart luggage due to the fire risk of lithium ion batteries: They required passengers to remove such batteries from any checked bags. Bluesmart’s, however, were non-removable.   

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“It was a black swan event for a startup,” says Saez Gil, who ended up shutting down the company and selling its IP. But he emerged with a valuable perspective that has helped steer Pachama to success: “It is important to move fast on experimentation and  on learning from customers and the market, but it’s also important to move slow on things that can have policy implications [and] to think long-term.” 

You can listen and subscribe to Most Innovative Companies on Apple Podcasts, Stitcher, Spotify, or wherever you get your podcasts.