;

Carbon Direct Raises $60m To Achieve High-Quality Carbon Removals And End-To-End Carbon Management

  • Blog
  • ESG & Sustainability

Carbon Direct Raises $60m To Achieve High-Quality Carbon Removals And End-To-End Carbon Management

On the 24th of August, Carbon Direct announced a $60 million funding round led by Decarbonization Partners, the new venture capital launched by Temasek and BlackRock, and Quantum Energy Partners’ Innovation Fund. Carbon Direct, founded in New York City in 2019, offers science-based solutions for corporates to decarbonize their operations and offset emissions. Based on the expertise of over 30 carbon scientists, Carbon Direct developed a software solution that leverages machine learning to assess the climate risk of carbon removal projects. Customers can then select high-quality carbon project portfolios and purchase credits directly on the platform through APIs.

As an increasingly larger number of firms are pledging to net zero, carbon offsetting is being incorporated into their roadmaps. In the early stages of the voluntary carbon market, few standards existed for evaluating credits. Today, general corporates are no longer interested in cheap, low quality carbon credits that might hinder their reputation, but they are looking to buy high quality credits with verifiable outcomes. In March 2022 Carbon Direct, in collaboration with Microsoft, developed a list of criteria for high-quality carbon dioxide removal, addressing common issues like additionality, carbon accounting methods, durability and leakage. The document covers innovative topics in the carbon project development landscape, such as blue carbon, carbon mineralization and the use direct air capture technologies. 

Since COP26 and the development of Article 6, technologies that enable the transparency and traceability of carbon credits have boomed, with more and more funding pouring into new vendors like Carbon Direct that facilitate carbon credits verification. For example, NCX raised $50m in March 2022, Pachama closed a $55 funding round in May 2022, and Sylvera a $32 million one earlier in the year. Verdantix is also seeing carbon offset portfolios being incorporated into carbon management software, with new partnerships arising. The carbon offset API developer Patch has partnerships with carbon management software providers Normative, Persefoni and Plan A. Other carbon management software vendors developed their own catalogue of certified carbon offset projects. In the 2022 Verdantix Green Quadrant Enterprise Carbon Management Software, as part of the criteria, carbon management software vendors were scored on their carbon credits and allowance capabilities. High scores were given to Sweep that allows its customer to set certain criteria to automate carbon credits purchase in their credits marketplace, and OneTrust, that allows customers to purchase credits on the Planetly platform directly. 

Carbon Direct will use its new funding to further develop its end-to-end software, adding carbon management and accounting capabilities. With investors such as Decarbonization Partners having a target of $1 billion in fundraising, we expect voluntary carbon market software and technologies to be a priority in future funding rounds. With the upcoming COP27 and new regulatory pressures on carbon offset disclosures, corporates should consider investing in platforms that facilitate their road to net zero, offering end-to-end solutions from calculating emissions to reducing and offsetting.

To learn more about carbon management software read the full report: 2022 Verdantix Green Quadrant Enterprise Carbon Management Software. Follow this link if you would like to learn more about the future of the voluntary carbon market. 

 
Analyst

Alessandra Leggieri is a research analyst specialised in ESG & Sustainability. Her background is in Biology (BSc Imperial College London), with a focus on Environmental Sciences. Prior to joining Verdantix she completed a Master's degree in Environmental Technology with Distinction. Her thesis project looked at biodiversity-friendly pest management decisions in communal gardens, which involved a collaboration with the Royal Borough of Kensington and Chelsea. She has experience with both quantitative and qualitative data analysis, using R and NVivo.