Axios Pro: Climate Deals

January 25, 2023

Axios Pro Exclusive Content

🐪 We made it to Wednesday. Let's dive in.

1 big thing: Capitalizing on the carbon credits credibility gap

Illustration of a calculator that reads CO2

Illustration: Sarah Grillo/Axios

A pair of startups raised seven-figure seed rounds for their efforts to bring renewed transparency and accountability to carbon credit markets.

Why it matters: Carbon markets have a credibility problem.

  • These two companies, WattCarbon and Senken, represent the latest efforts by investors to fix it — and make a healthy return.

What's happening: WattCarbon, a Bay Area-based carbon accounting startup that also manages a virtual power plant network, raised $4.5 million in seed funding, Megan reported this morning.

  • True Ventures led the all-equity round and took a board seat in the deal. CEO McGee Young declined to share the round's valuation.

Meanwhile, Senken, an online marketplace for on-chain credits, closed a $7.5 million all-convertible seed round, the company told Alan.

  • Obvious Ventures led and took a board seat. Offline Ventures, Inflection, Kraken Ventures and Climate Capital participated.
  • CEO Adrian Wons similarly declined to share the round's valuation. The company is based in Berlin and South Africa.

State of play: Companies bought fewer carbon offsets last year than in 2021, per a report from AiDash.

  • Executives are wary of relying on offsets to meet net-zero pledges given the multitude of headlines on loopholes and lack of standardization.
  • Indeed, this was the headline of a Guardian investigation of Verra last week: "More than 90% of rainforest carbon offsets by biggest provider are worthless." (Verra disputes the findings.)

Zoom in: Both WattCarbon and Senken say they're hyper-focused on credibility.

  • WattCarbon uses publicly accessible, open-source software to bring transparency to its accounting metrics.
  • Senken uses blockchain technology for its credits, which it says makes them far more traceable. It plans to work with an insurance provider to support its "Carbon Forwards," which will fund projects still in development.

What we're watching: Whether investors remain cool to carbon credits schemes — and whether these latest attempts by WattCarbon and Senken rekindle interest.

  • We're also standing by for whatever the next investigation might be.
  • When it came to the alleged problems with Verra, a provider once seen as the standard-bearer for rigorous carbon credits regimes, "it feels like it was an open secret in this space," Senken's Wons tells Alan. "Everyone knew it."

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