The carbon offsets that companies buy to help make up for their emissions aren’t always credible. A new index of projects gives corporations an alternative to support climate action with a group of projects carefully selected to have as much impact as possible.
“We’re all seeing the reporting on how offsets can often be ineffective,” says Robert Höglund, climate advisor at Milkywire, the Swedish nonprofit that created what it calls a climate transformation portfolio. “Even when they are effective, [companies] are sort of leading a race to the bottom to find as cheap acceptable credits as possible, just in order to be able to make a claim. We want to incentivize companies to contribute to climate action, but to do it in a way that is both credible and impactful.”
Like Stripe, Shopify, and Microsoft, all of which are supporting “carbon removal” solutions, Milkywire’s list includes some new approaches for permanently sequestering CO2. A startup called Heirloom, for example, speeds up the ability of some minerals to capture CO2 from the air. Climeworks, another startup, uses direct air capture machines to do the same thing, then works with partners to pump the captured CO2 underground. Husk, a Cambodian startup, turns rice husks into biochar to help store carbon in soil. Other projects help support nature, like Warsi, which helps local communities in Indonesia get the rights to their land so they can legally prevent deforestation. A third category of projects help support decarbonization, such as Atmosfair, which is replacing polluting diesel generators on an island in Tanzania with a gasifier that makes energy from old coconut trees and other local crops.
Klarna, the Swedish fintech provider, contributed more than $1 million to the projects chosen for the portfolio. For nonprofit projects, the money is donated; for some of the startups with new technology, the funds pay for CO2 removal at a per-ton rate that’s much higher than most options on the market now, to help those companies scale up. By the middle of the century, the world may need to remove 10 to 20 billion tons of CO2 from the atmosphere each year, in addition to eliminating emissions—and right now, the infrastructure for doing that doesn’t yet exist. Companies can help fund it as it gets started. “They’re buying carbon removal, but accepting a high price and doing it in order to help kickstart those solutions and get them down on the cost curve,” says Höglund.
Milkywire has opened the platform for other companies to follow Klarna’s steps. “Now, we’re looking for getting more companies interested in this approach,” says Höglund.