Commons Offset Portfolio Update: Q2 2023
Since April 2021, the Commons community has purchased over 61,129 tons of carbon. That's an impact equivalent to taking 13,603 cars off the road. You can watch the live update from our CEO and founder Sanchali Pal, along with Carbon Strategy Manager, Sophie Janaskie. Plus read below to get more info about each partner in our portfolio.
Carbon markets update
1. Buyers and sellers are recognizing the need for more standardization in Measurement, Reporting & Verification (MRV) approaches for carbon offsetting.
The market for carbon offset credits still lacks regulation and standardization. Offset projects can be poorly measured, tracked, and verified, drastically overestimating their impact. When offsets are abused as a license to pollute, people in vulnerable communities are most at risk. Recent research by the Guardian showed that as many as 90% of forestry offset projects may be having less impact than expected. In response, Verra updated its own standards and committed to changing how it evaluates all projects by 2025.
That’s why Commons uses rigorous criteria and conducts our own research above and beyond third party standards. In our 2022 procurement process, we evaluated 24 offset projects, but only selected 6 for inclusion in the Commons Offset Portfolio.
Given the continued evolution of standards, Commons is continuing to do our own evaluation and monitoring of our offset projects.
2. Using Web3 to tokenize offsets was all the rage. But many believe its early applications to carbon markets actually caused more problems than it solved.
Tokenized carbon credits had a big moment in 2022. Web3 enthusiasts saw an opportunity to integrate carbon offsets and web3 technologies, citing transparency, enforceability, and greater liquidity as key benefits of tokenization.
However, many of the underlying problems in carbon markets stem from the lack of standardization in credit quality. In some cases, the tokenization of carbon credits actually exacerbated these underlying issues. If you’re curious about this topic, we’d highly recommend CarbonPlan’s article, Zombies on the Blockchain.
3. There’s a growing consensus among rigorous offset buyers that we should treat offsets like stocks: without a guaranteed return. Building a diversified offset portfolio is becoming the standard of quality.
At Commons, we curate a portfolio of offsets with the greatest potential for impact. You wouldn’t put all your money into one stock, and we don’t invest your full offset into a single project. We curate a portfolio of climate solutions that minimize risk and maximize impact.
The Oxford Offsetting Principles, published in 2020, provides guidance on how to create an offsetting strategy that supports net-zero by 2050. These principles suggest a portfolio approach that increases its percentage of long-duration removals over time. This has increasingly become the standard of quality for rigorous carbon offset buyers. Leading corporate buyers like Stripe, Shopify, and Microsoft use this approach, and third-party carbon accounting firms are embracing this approach to maximize impact.
Read more about how we select projects →
Commons Offset Portfolio Updates
On a regular basis, our team monitors and evaluates our carbon providers to ensure we are sourcing the best offsets on the market for the Commons community. In this quarterly update, we review the latest updates from our carbon providers.
NCX Updates
Based on our Q2 evaluation, Commons is removing NCX forestry credits from the Commons Offset Portfolio and replacing them with higher-confidence credits. There will be no change in price for our customers.
NCX pays landowners to not cut down trees, with the goal of increasing old-growth forests which absorb more carbon emissions.
NCX built its innovative project structure to crowd in participation from landowners of all sizes in carbon markets, which maximizes the near-term climate impact of their projects. We included them in our portfolio because of the truly additional nature of their work – they pay landowners directly to not cut down their trees.
One unique aspect of their program is how permanence, or magnitude and duration of climate impact, is defined (more here). However, their methodology is still novel, and their approach to permanence has not yet been accepted by third-party certifiers, including Verra, as initially hoped.
In close coordination with NCX, Commons has made the decision to replace NCX credits in our customer portfolios with credits that fulfill the traditional definitions of permanence as defined by rigorous third-party evaluations.
We will be replacing your NCX credits with a blend of Pachama and Charm Industrial credits. This will provide you, our customers, access to the same number of credits, with greater permanence and confidence, for the same price. Both replacement projects have been vetted by our team.
We are excited about the innovative work that NCX has done, but the measurement, reporting, and verification methodologies in innovative areas of carbon crediting are still in flux.
For our community, we’re committed to providing carbon credit products that can be applied more confidently as an offset against your carbon footprint.
Pachama Updates
We believe a few Pachama projects are performing below expectations. We are exploring solutions to resolve this.
Pachama verifies and monitors carbon offset projects using satellite imagery and machine learning. Read more about Pachama.
Recent highlights
- As of June 2023, our portfolio includes four Pachama projects: NIHT Topaiyo, Brazil Nuts, Agrocortex, Manoa.
- Manoa and Kalimantan projects score highly with ratings agencies like Renoster and BeZero and they’re performing at or above expectations.
- However, the Agrocortex and Brazil Nut projects have had less climate impact than anticipated.
- The NIHT Topaiyo project’s climate impact is inconclusive, and it is facing a lawsuit from the local community regarding their free, prior, and informed consent.
- We are working with Pachama to cease future sales of these projects, and shift our community's support to higher performing projects more in line with our evaluation criteria.
Read more about Pachama ->
Charm Industrial Updates
Charm Industrial turns inedible crop residue into carbon-rich bio-oil, then pumps it into underground disposal wells, where it’s stored safely and permanently.
Recent highlights
- Announced removal of 6,200 tons of carbon since the beginning of 2021
- Signed offtake agreements with Frontier and JPMorgan Chase to permanently remove an additional 140,000 tons of atmospheric CO2
- Raised $100m Series B led by General Catalyst, and joined by Lowercarbon, Exor Ventures, Kinnevik, Thrive Capital and Elad Gil to scale removal further.
- Charm expects to complete bio-oil injection for Commons offsets by the end of 2024.
Read more about Charm Industrial ->
Grassroots Carbon Updates
Grassroots Carbon works with ranchers to apply regenerative farming practices that help the soil absorb more carbon.
Recent highlights
- In 2022, Grassroots Carbon paid out $2 million to its ranchers.
- Secured a major partnership with to help Nestle make their U.S. supply chain more sustainable.
- The team is launching a formal referral program to expand its regenerative approaches to more farmers, faster.
Read more about Grassroots Carbon ->
Nori Updates
Nori is a soil carbon credit marketplace that works with farmers to quantify and verify transparent, blockchain-based carbon removals.
Recent highlights
- In June, Nori announced $6.25m in new funding and appointed a new CEO, Matt Trudeau. Trudeau has extensive experience in digital markets and exchanges.
- In March, Nori announced a public Web3 platform to enable fast, straightforward carbon removal purchases.
- Nori’s new partnership with Bayer will increase the number of farmers using regenerative, carbon sequestering methods on their land
- The Nori team has been exploring a new product that would pair the immediate impact of short-duration removals with the permanency of long-duration removals. Learn more about it in their whitepaper.
Read more about Nori ->
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Running Tide Updates
Running Tide removes carbon by growing kelp in the open-ocean and sinking the kelp over deepwater ocean basins, permanently storing kelp carbon on the ocean floor.
Recent highlights
- Started deploying floating buoys containing limestone and algae seeds which will remove carbon through algae growth and boost ocean alkalinity.
- Running Tide released a public MRV protocol that’s being verified by a third party and is building a live dashboard for purchasers to monitor deployments
- Microsoft purchased 12,000 tons of CO2e, bolstering demand and scale.
Read more about Running Tide ->
Updating our cost structure to continue to serve you
Our small team has been working extra hard to evaluate our carbon providers and ensure your offsets have the most impact. By holding our carbon providers accountable for their obligations, our team has been able to procure higher quality credits for a slightly lower price.
Your cost for the Commons Offset Portfolio will remain the same: $25 per ton. But effective starting from your June Climate Neutral purchase, Commons will increase our margin from 17% to 19%. This increased margin will allow us to continue to invest the time required to evaluate and monitor the quality of our community’s offset projects.
Read about Commons’ Approach to Carbon Offsetting →
Have questions about carbon offsets? Email us! We’d love to hear from you.
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