CO2 offsets: Pachama’s AI platform?

Pachama is a nature-based technology company, which has raised $79M, to create a portal where buyers can choose “from rigorously vetted forest restoration and conservation projects”, which in turn are tracked using proprietary AI. This data-file is a Pachama CO2 offset review. We have assessed the portfolio, some challenges and our own experiences, via our usual framework for assessing nature-based CO2 removals.

As of November-2022, the majority of projects available on Pachama’s portal are avoided emissions projects. These are excellent conservation projects, accredited by VERRA, protecting vulnerable eco-systems, and achieving some of the highest biodiversity scores of any projects that have crossed our screens.

However, it remains debatable whether these projects can be considered to be “offsetting CO2”. CO2 credits are not being awarded for pulling additional CO2 out of the sky and storing it in a natural eco-system, as per other CO2 removal projects that we have assessed.

Rather, CO2 offsets are being issued relative to a hypothetical scenario where a protected forest is deforested at a rate of 1-2% per year (varies by project) over the next 20-70 years (chart below).

We think that over time, Pachama would like to seed new forests, and more incremental projects on its platform, but for now there is limited depth in the nature-based CO2 market, and most of the certified CO2 offset projects are REDD (conservation) projects.

In one of the largest CO2 offset projects in the Pachama portfolio today, CO2 offsets are issued relative to a scenario whether a carbon-dense, 26-000 year old peatland is drained and thus caused to release c500MT of CO2. Blue carbon eco-systems can store a lot of carbon, over 1,000 tons/hectare, possibly over 2,000 tons/hectare. But 500MT is a truly enormous number. It is equivalent to the direct annual emissions of the entire global fertilizer industry per our CO2 breakdown. This raises some question marks.

It gets a bit philosophical, but in our view, carbon “offsetting” should be about cancelling out the net impacts of emitting +X tons of unavoidable CO2 into the atmosphere by pulling out -X tons of CO2 from the atmosphere and sequestering it over the long-term. Not by avoiding a further +X tons of emissions. (Morally, you cannot atone for a murder by enumerating the list of people you have not murdered !!).

We want to support conservation of nature, and high-quality organizations in nature-based solutions; and so we allocated $700 to offset 40 tons of CO2 from the Pachama portfolio at the current price of $17.6/ton. However, our overall experience was somewhat disappointing: per the Pachama website, we thought we were buying from “Pachama’s global portfolio of high-quality forest projects” (screenshot above). But after making the purchase, all of our purchase ended up allocated to the single, large peat conservation project, described above.

Further details on our Pachama CO2 offset review are in the data-file. We have also appraised other CO2 removal projects using the same framework.

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