This story is part of ClimateTechReview Climate Tech 100 series, which will feature 100 global companies helping address climate change by innovating in the fields of renewable energy, electric mobility, energy storage, energy efficiency, CCUS and climate finance. If you have a story to share, email us at hello@climatetechreview.com.
As the world seeks to address the challenges of climate change, the role of technology in the fight against it cannot be overstated.
One area where technology is making a significant impact is in the carbon markets.
This is where Verst Carbon, an integrated carbon markets technology provider comes in.
Verst Carbon’s mission is to fill the infrastructure gap in the African carbon markets by improving access to finance for climate mitigation project developers, improving revenue repatriation frameworks to community-led initiatives, and facilitating the exchange of carbon credits through the Verst Carbon Marketplace.
In this latest episode of Climate Tech 100, we speak to Verst Carbon about their innovative financing model for carbon project development, community governance and revenue repatriation, disintermediation through the provision of direct marketplace access, and the deployment of digital MRV to boost transparency.
We also explore some of the challenges that small and medium-scale project originators face in participating in carbon markets and how Verst Carbon addresses these challenges.
Can you tell us more about Verst and its mission to fill the infrastructure gap in the African carbon markets?
Verst Carbon is an integrated carbon markets technology provider that seeks to scale the participation of Africans in carbon markets by improving access to finance for climate mitigation project developers, improving revenue repatriation frameworks to community-led initiatives, and facilitating the exchange of carbon credits through the Verst Carbon Marketplace.
Our solution is centered around four key pillars: innovative financing for carbon project development, community governance and revenue repatriation, disintermediation through the provision of direct marketplace access, and the deployment of DMRV to counter the verification and validation capacity constraints on the continent and boost transparency.
How does Verst ensure the quality of the carbon credits it aggregates and sells on its marketplace?
Verst Carbon ensures the quality of carbon credits in the following ways:
1. Accuracy: Our deployment of digital MRV (DMRV) systems ensures accuracy in setting baselines, data collection, and analysis. DMRV systems have been proven to be 30-40% more accurate than conventional MRV which relies heavily on human auditors.
2. Transparency: All transactions on our platform are logged onto the blockchain ensuring full auditability and transparency.
3. Durability and permanence: Our DMRV systems enable real-time project performance tracking for different stakeholders. Buyers are able to verify permanence through long-term monitoring and engagement with the underlying carbon project.
4. Stakeholder engagement and focus on co-benefits: By engaging community members, we ensure that they are well-informed on the importance of the project and are actively involved in supporting its development, ensuring permanence.
What are some of the challenges small and medium-scale project originators face in participating in carbon markets, and how does Verst address these challenges?
- Revenue leakage to intermediaries. By providing direct market access to project developers/originators, we ensure that at least 90% of the carbon revenue gets repatriated back to the community.
- Long project verification lead time due to validation capacity constraints on the continent. By leveraging DMRV we are able to reduce the lead time for project verification and credit issuance.
- Inadequate financing for carbon project development. We have set up a blockchain-based financing framework that allows both institutional and retail investors to finance the development of projects on the continent.
- Unwillingness by project developers to aggregate smaller projects, instead focusing on large-scale projects. We are implementing similar to the Program of Activities to enable small-scale projects to be bundled up and have credits issued collectively and proceeds shared proportionately.
How does Verst work with project originators to ensure their projects meet the requirements for generating carbon credits?
Verst Carbon has an in-house Carbon specialist, as well as a network of consultants who have experience working with multiple project originators on the continent. Using their input, we have streamlined the project development cycle and digitized some aspects such as project design and PDD preparation to alleviate existing bottlenecks.
In addition to this, we engage project originators at every stage of the project development cycle, providing step-by-step guidance on how to proceed. We provide guidance on tasks such as the preparation of a PDD document, DMRV, and registration with registries among other regulatory disclosures and requirements depending on the country.
Can you discuss some of the key partnerships Verst has formed to support its mission?
Verst Carbon is a member of the Africa Carbon Markets Initiative (ACMI) which was launched at COP27 with the aim of dramatically scaling voluntary carbon markets across Africa. ACMI has 13 action programs centered around scaling the VCM in Africa by tackling key challenges on the content.
How does Verst leverage technology to support its operations and make the carbon credit marketplace more efficient and accessible?
We have leveraged technology in multiple aspects of our solution. To reduce the lead-time for project verification and credit issuance, we have implemented a digital-first approach to monitoring, reporting and verification (MRV) ensuring both time and cost savings for project originators.
We are establishing working relationships with technology providers to provide IOT devices for energy projects, satellite imagery for nature-based projects and blockchain to ensure transparency in the MRV process.
As a blockchain-based platform, we provide full visibility and auditability of all transactions on our platform to prevent fraudulent activities.
Through the tokenization of carbon credits, we are able to eliminate human error by deploying smart contracts to handle different aspects of our solution such as revenue repatriation and credit custody tracking.
We are constantly looking for more ways in which we could leverage technology to streamline carbon trading and the project development process.
How does Verst ensure that the local communities where carbon projects are located benefit from the projects?
Verst Carbon has a robust community governance and revenue repatriation model that we have built out in consultation with project developers and originators on the continent. We adopted best practices from these engagements to build a governance structure that ensures the direct disbursement of carbon revenue to community-led initiatives and community members whose livelihoods are linked to the projects. We have a keen preference for supporting projects supporting women and youth groups who are most disenfranchised.
We have deployed smart contracts that ensure full transparency in revenue repatriation, avoiding middlemen and brokers who often take a cut of the revenue. We keep records of community members and related projects with which we engage directly.
Can you speak to Verst’s impact on reducing greenhouse gas emissions and advancing the goals of the Paris Agreement?
By alleviating bottlenecks such as inadequate financing and validation/verification capacity on the continent, Verst Carbon is incentivizing the development of more carbon removal and avoidance projects thus contributing to the reduction in GHG gas emissions.
This reduction in GHG emissions in turn directly contributes towards the Paris Agreement’s central aim of strengthening the global response to the threat of climate change by limiting global warming to well below 2°C and pursuing efforts to limit it to 1.5°C.
What are Verst’s plans for the future, and how does it see the role of carbon markets evolving in the fight against climate change?
Verst Carbon’s plan for the future is to lower the bar for access to the VCM and unlock carbon financing to incentivize the development of more climate-positive initiatives on the continent. This will go a long way in enabling African countries to meet their climate action goals as listed in their Nationally Determined Contributions.
We believe carbon markets will play a significant role in not only supporting project developers/originators, but also fostering the development of community-led initiatives and improving livelihoods. This is why we do not just focus on the emission-offsetting aspects of the credits issued, but also the co-benefits such as improved livelihoods and quality of life for communities.
Anything else you would like to add on?
We are advocates for incorporating co-benefits in pricing carbon credits to ensure that community initiatives in Africa whose livelihoods depend on said projects also get to benefit from carbon financing.
Summary
To find out more about Verst Carbon, visit https://verst.earth/.
