Earthbanc: Carbon Credits | ESG | Artificial Intelligence
Carbon – an exponential asset class
Restoring Nature and combatting Climate Change. How Earthbanc solves the crunch on supply.
5 Key Take-aways on
Carbon and it´s markets
from Tom Duncan (CEO, Earthbanc AB) at our 22nd Investment Conference (2022)
Carbon today is an exponential asset class which prices grew 300% last year.
Earthbanc and UNCCD have created a new standardized forward contract for carbon.
Earthbanc applies exponential technology and machine learning to measure carbon and gather data.
The problem of fake carbon credits must be handled.
Earthbanc features a one-stop shop for carbon credits.
Carbon: the new exponential asset class, what it´s missing (and how earthbanc solves this)
taken from CM-Equity AGs 22nd Investment-Conference (October 2022), presented by: Tom Duncan (CEO, Earthbanc AB)
3 Key Statements from the presentation:
“We created a new standardized forward contract, which is a pre-purchase instrument with the UNCCD”
“We accelerate carbon removal and achieve ESG investment goals through our platform and API and automated carbon measurement technology.”
“If you are based in Europe or you’re selling financial products in Europe, you need to comply with the greenwash regulations.”
About Earthbanc AB
Restore nature and combat climate change
The carbon project development and finance platform for farmers, NGOs and carbon buyers. We support farmers to take care of the planet, and help business achieve their net zero goals with long term carbon forward contracts.
Transcript of Summary
“Who here knew that carbon prices grew 300% last year? That’s why we’re calling it an exponential asset class. 300% in the last year. People ask why did that happen? Was there a price squeeze? The answer is 196% increase in companies pledging to meet their net zero targets. Those net zero targets are for 2030 and 2040, and the top 3000 global companies are now committed and accountable to that at the board level.
With that in mind, why is there such a crunch on supply? The biggest reason is there’s a lack of standardized forward contracts. And so that’s what we’re on the cusp of today, and that’s what we’re discussing about how Earthbanc solves that bottleneck.
And today we’re talking about scaling carbon markets. It’s an exponential asset class and we accelerate carbon removal and achieve ESG investment goals through our platform and API and automated carbon measurement technology.
Now, as we know, every commodity market that is mature has a forward contract market as well. There are derivatives, there are physical delivery of commodities that is lacking in today’s global carbon markets. The global carbon markets is an $861 billion market. Yet it has no standardized forward contracts. It’s quite remarkable opportunity.
So by 2035, the carbon price EY predicts will be $80 to $150 per tonne. Now, as of yesterday, it was $8.60 per tonne. So within this timeframe, from now until then, it’s a 9x to 17 x increase in price. 99% of all of this future growth must go through forward contracts. So what Earthbanc is doing is positioning investors to get into this asset class, but not at the spot price markets. We offer a way to get into these assets at an up to 80% discount. Why? Through a standardized forward contract.
What we did is we developed the world’s first partnership with the UN Convention to Combat Desertification. We created a new standardized forward contract, which is a pre-purchase instrument with the UNCCD. We call it a sustainable land bond, which is essentially a forward contract wrapped up in a bond, where you get paid out in carbon credits. Now what it means is you can purchase carbon at an 80% discount.
And with the partnership with UNCCD, our pipeline has now expanded to 250 million hectares. And in fact, the UNCCD has identified 2.5 billion hectares. So to achieve that 2.9 billion tonne annual reduction you need to scale to 2.5 billion hectares of degraded land. So how do you do that in a cost effective way?
The answer is you need new exponential technology, and we’ve patented that AI and exponential technology. And we got venture backing from the European Space Agency to develop this patent. What this patent does, it gives us the technology and tools to automate the project from beginning to end. So the satellite’s passed over the earth every 6 days, we pick up all this super high-res data. We run it through the machine learning model, automatically measure all of the carbon in the trees and in grasslands, also in the soil. We can go to 60 centimeters depth into the soil to see how much carbon is there.
This technology is already proven. We’ve licensed our technology to the European Space Agency and that means we can task their satellites for free and get the data for free.
Every other startup out there competing against us is paying a lot of money for data. So licensing and IP is very important to have scalability. And we’ve made it 100x cheaper to audit and measure carbon in the landscape through this technology and 5x faster.
It’s award-winning technology. We won the Best Product Award with Swedbank, Sweden’s oldest bank, and a very green bank. And we won the MasterCard Lighthouse Finitiv program in 2021 Spring as the best FinTech in the Nordics and the Baltics. Some of our industry partners, Smart Head, they’re carbon accounting and ESG reporting platform. And some of their customers are Citibank, Tesco, Deutsche Telecom, EY, IBM, Dell. So we just can get our products distributed into the biggest companies in the world.
If you are based in Europe or you’re selling financial products in Europe, you need to comply with the greenwash regulations. And how do you do that? Because 30% of carbon credits are actually fake carbon credits. That’s the problem we set out to solve when we founded Earthbanc. What we do is we provide a firewall for our clients to protect them against greenwashing claims using satellite measurement technology, which is ISO 26000 certified process. And we’re the first one in Europe to do that.
We have four projects currently under development, close to 40,000 hectares. And for investors who invest in our projects, in the forward contracts, they’re expecting between 30% to 50% average annualized APY. Now, how is that possible is because they’re buying in at a very deep discount, and so we can sell a carbon tonne for $7, and when someone else is buying a carbon tonne in 2035 for $80 to $150, our clients are still buying at $7 for 20 to 30 years.
So how can we do that? We get the supply and we develop the project. We measure it, we issue it, we sell it. It’s a full end-to-end solution. That’s how we create that value. So that’s about 31 million tonnes. And that’s assets that we own. And that’s what makes our company valuable. This is our impact. We’ve helped protect 300,000 hectares of forests in many countries around the world. These projects are not that expensive to develop. Its knowledge is what’s valuable and technology is what’s valuable.
We have an API that is already working and distributing carbon credits into any digital platform, any bank, any asset management platform, any e-commerce platform, anyone can tap into our universal API, sell carbon credits and sell forward contracts. So we’ve created a universal one stop shop where anyone can get access to this.”