Nori, a Seattle-based startup that uses blockchain technology to create transparency in the carbon offset market, has just closed a $4 million round from Placeholder, Tenacious Ventures, and North Island Ventures, among others. The funding will enable Nori to launch an industrial-grade carbon marketplace in an effort to help reduce global emissions.
Decades of industrial agriculture have exhausted our soil from carbon and essential nutrients. Across the globe, different initiatives are testing ways to offset carbon emissions by planting trees and adopting agricultural regenerative practices that can improve ground health, reduce pollution, lower the use of chemical fertilizers, and return carbon to the soil.
Platforms like Nori help farmers quantify and verify the addition of carbon to their fields and support them with regenerative practices. When farmers register these removals in the marketplace, they can sell directly to individuals and organizations that seek to pay for ownership of the carbon removed from the atmosphere. Corporations like Microsoft and Amazon use platforms like Nori in their effort to become carbon neutral.
With the addition of edge technologies such as blockchain, Placeholder’s first investments in Nori begin to bridge the gap between crypto and the “real world,” turning carbon credit exchanges into safe, transparent transactions.
Nori makes it easy to fund carbon removal by allowing businesses to remove carbon emissions they can’t avoid creating. Founded in 2017 by a small Seattle team led by CEO Paul Gambill, the platform creates a marketplace where individuals and companies can support regenerative agricultural projects that pull carbon dioxide out of the atmosphere and store it in a credible way. Their ultimate goal is to reverse climate change.
Nori’s main method for removing carbon is soil carbon sequestration on croplands, which includes practices like planting cover crops in the winter and reducing tillage to rejuvenate the soil and capture carbon.
The company uses blockchain technology to create transparency and account for and audit the carbon-backed assets that farmers produce. This includes, in large part, solving the problem of “double-counting.” Double counting occurs when buyers of carbon offsets resell them to secondary buyers, making the reported volume of credits increase without actually decreasing the amount of CO2 in the atmosphere.
Nori tokens will have a value that fluctuates with market demand and can be redeemed for cash or used as currency.
Blockchain technology is a distributed ledger technology that allows data to be stored on thousands of servers globally, making every transaction and its associated value visible to everyone who can access the system. Every node on the blockchain network has a full copy of this database or ledger.
When applied to carbon credits, blockchain can guarantee a faster implementation of these transactions and reduce the costs involved in verifying them.
Today, most companies use different standardization metrics to calculate their footprint. When organizations use a blockchain network, a single platform can not only increase transparency but also make it easier to compare different numbers.
Last April, the International Chamber of Commerce (ICC) launched its new Carbon Council initiative to create higher liquidity for the carbon market. Their public-private partnership uses blockchain technology to digitize trade and create a more transparent system for funding global action.
Because Nori uses a blockchain token (the NORI) as a medium of exchange, the requirement for project sellers and buyers to find a counterparty is removed, allowing all parties to participate in the market easily.
The Carbon Offset Market
The carbon offset market dates to the 1970s but gained momentum after the 1997 Kyoto agreement. It’s seen significant setbacks in recent years, including the 2008 financial crisis, the 2010 closure of the Chicago Climate Exchange, and the COVID-19 pandemic, which dealt a blow to big buyers like the activation industry.
However, this year has seen a broader corporate demand for voluntary carbon offsets. The new wave of companies that have opted to offset their emissions, mostly in the developing world, reflects a wider commitment to reduce the environmental impact of operations. This voluntary market includes hundreds of small consultancies and brokerages that sell carbon credits to developed-world buyers that find it financially unfeasible or physically impossible to reduce their greenhouse gas emissions. China, India, Turkey, and Brazil account for nearly 44% of active projects in the voluntary market, and the US for 23%.
The market for voluntary offsets came close to $300 million in 2018, trading almost 100 million metric tons of carbon dioxide equivalent. The size of the global carbon compliance offset market is estimated at between $40 and $120 billion.
There’s also a compliance market that includes several initiatives such as the European Union (EU) Emissions Trading System and the United Nations (UN) Clean Development Mechanism; however, it’s a hundred times smaller than the voluntary market.
Norway has set itself the goal of reaching zero-emissions by 2050, using offsets to pay for the remaining carbon-heavy sectors of its economy. And this month, Google announced that the company would be carbon-free by 2030. In order to achieve this goal, it will need to offset the emissions it cannot eliminate.
A frequent critique related to carbon offsetting is that companies outsource most of their emissions reductions to faraway places, where project monitoring can be challenging. Tree planting projects have also faced criticism due to its heavy reliance on monocultures, which can damage biodiverse ecosystems.
Projects like Nori, however, guarantee that edge technologies are working in support of diverse regenerative practices in order to assure transparent and consistent results.