Proof of Carbon Offsets on the Blockchain. Will Foulkes, CEO of Stabiliti - E97

On this week’s episode of The Encrypted Economy, our guest is Will Foulkes, Co-founder, and CEO of Stabiliti, a platform that provides complete end-to-end transparency and traceability across the lifecycle of carbon offsets. We discuss the carbon credit and offset market, and the challenges that innovators are facing in this space. Be sure to subscribe to The Encrypted Economy for more perspective on how developers are using web 3 to tackle some of the most pressing issues of our time. 

Topics Covered:
·    0:00   Intro
·    2:30   Will’s Background
·    7:20   Defining the Space Stabiliti is in
·    9:40   A Background on Carbon Credits and Offsets
·    18:40   Understanding Poor and High-Quality Offsets
·    24:10   Other Names in the Space
·    31:40   What Countries Prioritize ESG?
·    35:20   What Models Will Increase Interest in ESG?
·    43:00   Walking Through Bringing High-Quality Offsets Online
·    49:20   Discussing Examples of Carbon Offsetting Producers
·    55:00   Measuring Carbon Emissions

Resource List:
·    Will’s LinkedIn
·    Will’s Twitter
·    Stabiliti
·    Regenerative Finance
·    Carbon Credits and Offsets
·    Regeneration Earth
·    Climate Collective
·    LIDAR 

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Transcript

Eric: [00:00:00] So on today's podcast, we have Will Foulkes, the CEO of Stabiliti. This episode, and in the subsequent episode, we're gonna be trying to cover publicly beneficial use cases for blockchain technology. This week, it's carbon offset. Next week it's DeCi. Now one of the big knocks on the carbon credit market, and in recent years, the carbon offset market, has been double counting and auditability.

Now, these are areas that digital assets space focuses on. Some companies like Stabiliti, aim to improve auditability, and to the extent those offsets are auditable, they can be verified by immutably leveraging the blockchain and bonding it to a tradable high-quality carbon offset. We discussed the development of the carbon credit and offset market, the past and current challenges of the carbon market, and its increasing importance.

We discuss the alignment of blockchain with high-quality carbon offsets, and even particularly measuring it locally and with micro measurements. The point is that carbon credits and offsets and digital assets are uniquely aligned. This isn't getting enough attention. [00:01:00] Now in this recording. For some reason, I seem to have a mental block about using credits when we should be talking about offset.

So I had to go back in and I had to overdub all these different spots where I screwed it up, even though will tried very nicely to tell me, I just didn't take the bait and I kept on going. So I don't know how many episodes I've had, I just haven't ever screwed up a single word so badly as I did on this one.

So I hope you forgive me nonetheless. It is a phenomenal episode. I hope you learn a lot from it. I hope you share it with others and I hope you take hard in it because right now it's like hard to take a lot heart in a lot of things in digital asset space with FTX and dg. But look at this, look at dsi.

Look at all the positive use cases. And there's also a market there, and there's also a lot of ability to incentivize builders. So that's what we're about here. Thank you for listening to the podcast, and I encourage you to share this podcast with others. 

Welcome to The Encrypted Economy, a weekly podcast featuring discussions exploring the business, laws, regulations, security, and [00:02:00] technologies relating to digital assets and data.

I am Eric Hess, founder of Hess Legal Counsel. I have spent decades representing regulated exchanges, broker dealers, investment advisors, and all matter of FinTech companies for all things touching electronic trading with a focus on new and developing technologies. 

So this is Eric Hess. I'm here today with Will Foulkes , the CEO of Stabiliti.

Welcome. 

Will: Thank you very much. Hi, Eric how are you? 

Eric: Will, today we're gonna be talking about basically carbon trading and how it interrelates to the blockchain and different things. Obviously there's a lot more to the podcast in that little short blurb, but why don't we start off with your background and tell us a little bit about I think your career started at Link Leaders.

But then it seemed to have shifted toward blockchain, environmental cause causes. So obviously there was a bit of a journey there. Why you give us a little bit of background about it? 

Will: Yeah, [00:03:00] absolutely. A good starting point perhaps is that I've been described more than once by some of my clients as an entrepreneur trapped in a lawyer's body which I quite like.

So I think from the outset before starting my career as law, I always knew that I wanted to build my own thing. And of course Laura is a fantastic foundation for being an entrepreneur and getting started with your own business. And I haven't fully decided that I'll never go back to the law because it's quite exciting and quite interesting at the moment.

Yeah, my, my life started at Link, which is an international law firm and I was very lucky with them that I was able to work in London, but also in Paris and. Not quite sure how I was able to brag to seek abroad as a trainee, but I did have a very good time out there. And then became a structured finance lawyer.

For the first few years of my career I've had a very unusual securities path in that I then went to the south of France for four years and ended up being a French lawyer for a few years. There was a wife involved. It [00:04:00] wasn't purely random but yeah, I got admitted to the Montpelier bar as their first English lister involved a lot of very serious French and the judge saying, never forget the humanity in this profession.

Inclusion many very strong. Yeah, which tells you something about perhaps the French legal profession. But yeah, back in the UK I got into blockchain. That's obviously where we, how we connected. Eric was deciding to go all in on blockchain around about 2016 and decided that I really wanted to make that my specialism.

And through that and some of the people I met I found myself with a group of people. That were really building things in this space. And of course I wanted to learn as much about the technology purely out of a geek perspective. I really was very interested in it. And saw obviously the law wasn't there.

So a deep understanding of how the tech worked would enable me to advise ahead of the law as you do, of course, as well. And so it was really there when that we started on this journey together. Me and two other guys. [00:05:00] So 

maybe before we dig into it we could, you could set the stage a little bit about re what regenerative finance is since it's not something that we've ever specifically covered on the podcast.

Sure it's not yeah, I'll try and give a succinct explanation as to my understanding of what it is. The reality is, it seems to be quite an evolving concept, but at a very basic level, if you think that money was once backed by gold, appreciate that it isn't anymore. But that there is something of value that underpins money or money as we know it today, that gold doesn't have any real use.

And indeed mining it can actually be bad for the environment for various reasons, but outside of it's rarity and the fact that it is a pretty metal I know there are some uses for it in circuitry and what have you, but generally it's not a very useful metal, doesn't really do anything. The idea is regenerative finance is, it deals with the fact that currently economic.

Is at odds with the environment the more we need [00:06:00] economic growth as a society in order to not fall over and have riots on the streets. If you, I won't again, dig into how economics works completely, capitalism works. But we it's extremely important that we continue to grow economically.

And that is that there are examples that I can give, but for example, building a high speed railway between London and Birmingham that we can maybe touch upon later is amazing for the economy. It enables people in the north of England to be connected to our capital, get better jobs, better income, et cetera.

But it caused a huge amount of environmental damage. Behind that. And this tension between economic growth and the environment has existed for a long time. The idea with regenerative finance is that you back money with a natural asset. So rather than having gold or something that is necessarily good to the environment, you have trees because the carbon captured by trees or any other real life asset has value.

And the value is relatively stable, and you can use that to back a currency. And at a very high [00:07:00] level, what that means is that the more money and circulation, the more need there is for these natural assets to back that money, which in turn leads to more natural assets being planted. So trees and then more carbon capture, et cetera.

Hopefully that makes sense. Okay, 

Eric: great. And then, the space that Stabiliti is in, would call it at a broad level, the regenerative finance space. And then there's probably a couple of different buckets, more than a couple within that. 

Will: Yeah, we, yeah we aspire to be, we're not fully there yet, though

it's on a roadmap. If I tell you maybe just perhaps of whereStabilitifits into that, that might be a good segue then into into regenerative finance. The problem, in order to have regenerative finance, in order to have money that is backed by carbon, you need to really know that there is carbon being captured.

That there is that you have that equivalent of a pot of gold, and that gold is stable and real and hasn't already been allocated [00:08:00] multiple times to back other money. So you need to have certain. That there really is carbon and natural that is captured by natural assets. So that's the problem that we set out to solve.

And actually, it came about, this wasn't the root in it came about because we wanted to offset the carbon emitted from another project of ours. And as we started to dig into it, we realized that actually it's very hard to do that reliably, legitimately because there's a high degree of opacity or a lack of transparency, let's say.

Behind carbon offsets that are currently in the market. There are various different overlapping standards. Vera gold standards, UN standard Woodland carbon code. There's a bunch of different standards and often very little auditing or irregular auditing and a lot of double spending. Trees that are being planted are allocated more than once to offset more than one project.

And because of all of the, [00:09:00] sometimes just a lack of detail, sometimes over fraud, there is a lack of trust in the carbon offset market, which means that a lot of people don't offset or don't pay to reduce. Carbon in what they're doing. And so we really wanted to solve that. And a and we, I can talk about how we've tackled that.

But the natural lead on from that is once we've solved that and we can reliably prove that there really is carbon being captured and it's stable, then we can use that to create a regenerative currency regener currency. Hopefully that makes sense. It 

Eric: makes sense. So you, you said a lot there in a short period of time.

And we got the rest of the podcast to dissect it. So we're talking about carbon offsets. We're gonna circle back to players in the space and how blockchain fits into it. But to even take a bigger step back here into the history of carbon credits and offset. So carbon offsets and, I'm gonna ask you to pick [00:10:00] up on the relevant portions that shape the current trajectory of where you are.

But carbon credits in, offsets that followed. It started effectively in 1997 the UN United Nations Kyoto Protocol. There were pledges to cut CO2 emissions. And there was within that protocol, a clean development mechanism known as CDM of people like the acronym that would allow countries to reduce the emissions abroad.

So I could burn up, have these huge smokes. I'm sure it isn't this terrible, but like I could have these great smokestacks, sitting on the banks of, in Ohio just pumping out crap all day long into the environment. But as long as I like bought a tree farm in, a rainforest somewhere, I was in good shape.

And so there were, there have been stop goes to the market. So I [00:11:00] remember going back a number of years cuz I've been in practice for a while and we won't get into how long but I remember that there was this for a while when this first came out and people. , it was really emanated from a electronic trading markets and, that there was a lot of, how could electronic trading markets, obviously equities drop first, but then there was like, okay, how do we get other things into electronic tradings, market derivatives, this, that, and we got carbon credits and, I was a lot associate at the time, I was thrown into this sort of trading market perspective of carbon credits and it never went anywhere.

And so we'll get a little bit into this notion of legacy carbon offsets, but before we do, maybe we could talk a little bit about the stop go nature of the history of carbon offsets and credits. 

Will: Yeah, there's certainly, and this just a really good point to pick up on a terminology point. So we're talking about two, there are two different things here.

There are carbon credits and carbon offset. Carbon credits are. So if you [00:12:00] are a project, you need a certain number of car or you're allocated a certain number of carbon credits by the government and they will say, okay, you, this project, you are able to omit up to a certain amount of carbon that's permitted.

And if you go above that, there are fines or you need to go out and buy other carbon credits on the market if you met less than that or if you're doing a project that is deemed for whatever reason to merit getting those carbon credits and you don't need. Such as Tesla, you can go and trade those yourself and make money from them for other projects that need those carbon credits, perhaps because they're in danger of exceeding their allows.

So that's one thing, and they have a use, but you're right there, there's, they're a little bit of a, it's actually not doing anything. The goal of is that, is to get people or projects to try and limit the amount that they're emitting in the first place, which is a good goal of course, offsets What we're talking about is the addressing the fact that we need to remove 10 gigatons of carbon from the atmosphere by 2050.

[00:13:00] Otherwise, everything else that we do is in vain. So if we do, if we fix our food supply chain, if we fix our energy, and there's a lot of big ifs in this if we fix transport and we're able to move away from diesel, if we fix industry, et cetera, et cetera. If we are unable to remove 10 gigaton of carbon from the atmosphere in addition to all of that, by 2050 we still melt.

We hit the tipping point. And we are done. So offsets are a different idea. Offsets are, I will plant this tree and it will capture a certain amount of carbon over its life cycle. It will suck that out of the atmosphere and store it into the woods of that tree. And I can use that in addition to any credit that I've been allocated by the government that is gonna incentivize me to lower my output for the output that I do still emit anyway because everything does.

I will try and at least match or go beyond and capture more than I emit. Now, that is essential if we [00:14:00] are going to prevent a climate catastrophe. We need to do that. And the problem is at the moment is that there is a lot, as I said, fraud and issues with transparency. So although this as a concept exists, it's not working at the moment and there are not enough people a deciding to buy these offsets and actually do this.

And then on the other side, there is not enough reliable carbon actually being captured. So projects, farmers, landowners are not planting enough natural assets for there to be enough supply. 

Eric: We're gonna return to this distinction between legacy carbon offsets and higher quality offsets. It's a very critical part of its Stabiliti is focusing on.

So I think what you were saying by breaking it between the offset and the credit was the, this with regards to this notion of carbon offsets, More recent years. I think that's the case where previously it was probably more about the credits and the trading market, and that's what I was really exposed to some time ago, which we won't define when [00:15:00] was was really this notion of the offsets.

And it was, I think it was where it was assigned to a particular industry where they were emitting a fair amount and the government had said, listen, you gotta reduce it and you gotta find some way to offset it. Again, it was a market that, that was immature. It was interesting. There were some big players in it.

I'm sure they may still be around. I didn't do my research on whether they were or not, but it, it seemed like it, in terms of the intensity of the discussion, it faded. And then I think with ESG and some of the other initiatives it is really picked up again. Yes, that's correct.

And so now shifting a bit to legacy carbon offsets, or what you'd probably call poor quality offsets. Let's define what a poor quality credit is with some historical examples. If you have a, either a carbon credit or an offset you may actually need to purchase more and what you do if you need to purchase more.

So I guess if you're buying [00:16:00] that credit which seems to me similar to an offset cuz somebody else is creating it but what are those characteristics of a poor quality credit? 

Will: So the main issue that we have is that there is this lack of transparency in the, so typically a poor quality credit will be, will have poor initially verification done on the project itself.

So the way that a and I'm gonna talk about offsets here because credits are slightly different. They're typically government issued, but yeah, off offsets the history of those. You would have a project in usually or could be a country like south America where you have large rainforest or Africa, where you have these laings.

And also towards the east there's a lot of large projects there. And there is, it's very difficult to know if the methodology put forward by Vera or gold standards or one of those, the large authorities that sets out what you need to do to measure [00:17:00] the amount of carbon that is being captured by atri in a place in a forest is actually being followed.

So who are the people on the ground checking that? Apart from day one perhaps, and someone from Vera really did go and visit that project. Let's assume that they did. Who is maintaining the day to day making sure that is done properly? And even if that is being done properly, once those trees have been verified and the carbon is being captured, there is no granularity on linking an offset to those trees.

So let's assume the verification, all the science and everything is done very accurately and properly. If you are unable, then to directly link 1, 2, 5, a pool of those trees to an offset, it all gets muddled in together because you have offsets that are just linked to a project. And if some of those trees burn down and no one is always are chopped down, which often happens who is tracking is there a reserve pool of [00:18:00] 20% or so set aside to take account for that's balanced at the end of the year, that sort of thing.

Is there a process in place? To make sure that you can be certain that an offset link to that project really has got what's called additionality. So there really is additional carbon being captured. So poor credit will just not have any of that. It will be in irregularly audited, the science won't be very good, and then it's traded at a low price.

So there'll be typically two to $3 a ton for an offset from a a low quality project. The, one of the issues that we have at the moment is there isn't an incentive for businesses who are told that they need to offset to choose a higher quality offset. And often, sadly, they pick their cheap stuff because they get to tick the box.

And yeah, at the end of the day, it's a cost of their business. Does that make sense? 

Eric: It does. L let's spend a little bit of time more on this notion of legacy and poor quality offsets. Cause I think it's really important to understand [00:19:00] what they represent before contemplating the importance of the higher quality offsets.

Obviously one scenario is where there is poor auditing. That could be a current project where it's just not the best standards. There's also this notion, and perhaps it dates back to the origination of the clean development mechanism where you had large industries that were effectively sponsoring these forests.

But to your point, they weren't hitting this additionality. And they, these these projects these are forests that would exist anyway. And, these big industries can continue to do what they've done. And I don't mean this in a how dare you kind of way. It just, meaning they, they say, oh, we got this forest and we're good and they can trade it.

Yeah. But like to your point, nobody's actually saying, , is this is this [00:20:00] achieving, the goal? Is it still Yeah, productive? And apparently some of this, the standards and maybe even some of the if you can't verify it, then a low quality credit to your point, doesn't equal the same as one where it's audited and you can Sure it's actually producing what it's supposed to.

So that leaves this gray legacy market of carbon offsets that are just not achieving the fundamental objective when there's technologies and ways to go at it. So now you and I talked about, so a bit this example of this element of the carbon offsets. . But then there's also this notion of a broader notion of greenwashing, right?

Yeah. Meaning Hey I bought this forest in Amazon, so look at me. I'm phenomenal. I'm, like I'm polluting me. I got that smokestack going, but man, you just look at trees when you see that smoke blowing in the air. They're just trees going in the atmosphere, right? And it's not happening.

And I think you, you raised a particular example that was, I thought, enlightening just in this greenwashing and still this [00:21:00] carbon carbon reduction falsification. 

Will: Yeah, let's say but yeah, there are rumors that a yeah, a beer company that's, that is very, they're extremely vocal about planting trees and basically, yeah, this, the, all that they're doing for the environment.

And it turns out from my source that is inaccurate. That there is not actually, that's actually not happening. And that is just one example that I know of. There are of course many more. And it's just comes back to even with the best will in the world, if you go. Numerous now shops. If you go online and you say go to a let's say you wanna buy a nice pair of swim shorts and it'll tell you how many kilos of carbon have been emitted and say, and we're offsetting this.

We click through that and you see the part they're using just says all the detail that you get is that we work with these projects and that's it. So there is no, yeah, but how do you know that the 1.6 kilograms created in this making a swimsuit really has been matched all [00:22:00] further and they just, the technology that there is no cha chain there.

There's no granularity, there's just, there's a forest that we work with. We know that we are planting trees, therefore, but there's no idea if that forest is being used for other ones, et cetera. 

Eric: Yeah. Could be the owners like saying, look at, look, I bought a hundred acres with the money I made and there trees on it.

So there you go. The money's going 

Will: flee the trees and I can sell it seven times. So it's super hot. And this is, and so getting started on this adventure that we have this lofty goal of trying to fix this problem, we found there are so many, it's not just a technology solution. Technology is part of it, but there also needs to be good business process and needs to be vetting of projects.

There's a whole, yeah, basically a whole process that needs to sit around this to make sure that things are done properly. And it's not straightforward because people are sadly incentivized to lie and to, yeah, they can make money from it. So 

Eric: ultimately what it boils down to, which is what [00:23:00] we are pivoting to at this point in the podcast, is high quality offsets.

There are the low quality, they're the fakers, they're the green washers, they're the people that really aren't doing what they claim to be doing but wanna look like they're doing it. But then there's these high quality offsets and how do we create a workable marketplace where the parties that generate the high quality offsets are rewarded?

And then there's the market itself. And the projects that consume the high quality offsets are also rewarded. So possibly they would get more of the ability to make these claims and they're verified. And at some point you're gonna have the Panama Papers of all these crappy projects that did the screen washing, and they'll be like executives ducking their heads as they get into their Mercedes-Benz and jet off.

Maybe even just we're entering into another space in the ecosystem, we'll just call it the ecosystem of higher quality offsets or the segment of the [00:24:00] ecosystem. What are or who are the parties other instability that are active in this space that people, may hear about the name or if they wanna follow up and get the bigger picture?

Will: Yeah, definitely. So we are, we're very much a technology company and we rely hugely on our partners at Regeneration Earth who are a great group of people based in Canton, England. Doug WTO leads them also another guy called Richard Bo. They have been trying to fix this problem from a project side for the last seven years now, I would say.

So it's five when we started. And they are working with a group of uk, a very large now network of UK farmers and landowners. Who they want to help them be able to sell their carbon and incentivize them to plant new trees and start Yeah, capturing more carbon. And so they're very focused on getting these [00:25:00] people together, building trust and relationships with them and saying, look, we have a new.

Methodology. And one of the key problems that they are seeking to overcome, and this is one of the reasons on the project side, why more people, more farmers don't get involved, is that it currently costs about 300,000 pounds to get onto a carbon exchange and start trading any carbon that you've captured.

And it takes about 18 months to 24 months for Vera or Gold Standard to approve your project and to say yes, okay, this is a viable project. So if you put those two things together, 18 months to two years and 300,000 pounds in fees almost no. And you need to be pretty sophisticated to get onto a carbon trading market.

It's quite a closed group of people, as you say, if you experience that as an associate, it's it's not for the faint hearted. So they sort to address those two issues by creating their own UK carbon code, which takes the best elements of Vera and Gold standard and UN code, and brings them together to a very highly accurate and [00:26:00] high standard code.

Also reduces the verification time down to three months from 18 to 24. So it's a lot quicker, it's a lot easier. And in conjunction with our platform, we're not charging them anything to come onto our platform. So there is no 300,000 pound barrier. And through that approach we're building Yeah, very good community of people who are bright minded so that there is this, there's a reputational thing, there's a real sense of community amongst these people who want to do it.

That deals in large part with the issues of project fraud because I'll go into how, but we're incentivizing them in other ways to make sure that everyone tries to report to the highest possible standard of accuracy, if that makes sense. So regeneration earth, I definitely one to watch out for.

And yeah, we can share if there are notes after this, we can share a link to their website. But yeah, they've been instrumental in getting us. 

Eric: Right and to draw the line to draw blockchain into it, not, [00:27:00] more so from the perspective of blockchain based organizations that are active in the intersection of regenerative finance and web three oh.

I know there's one organization, climate collective.org. Yeah. 

Will: Yeah. Yeah. So they, so we are incubated by cell. So we are one of the cell companies this year last year as well. And they're so Cell are a fantastic they're a blockchain proof state blockchain, but a great community of people that they have two twin pillars.

One is the environment and the other is financial inclusion. So for Laura Wallet, they're heavily incentivized around yeah. General global financial inclusion, but they have something called the Climate Collective, which is highly focused on replacing as much. I think they, I don't their exact goal, but they've got a large amount of assets under management and they want to replace as much of that as possible with natural backed assets.

So they are, the climate collective is part of that helping [00:28:00] to find projects and bring people on board. But yeah, seller have been phenomenal and I can say how our blockchain solution works. But yeah, they've been a great support in getting us this far as well. 

Eric: Excellent. Let's talk about some of the forces pressing for higher quality offsets.

There is a communities, there are various communities that are pushing for it, but more specifically countries industries within countries that are particularly focused on this, where, where do you see the flywheel really generating on this? 

Will: Yeah, it needs to be in large projects.

It needs to be a top down approach. We have a very exciting project that we're working with at the moment. If I'm, if I can speak about one specific one that hopefully will set a standard in construction, which is the HS two rail network that I I mentioned earlier. We have done a series of workshops with key stakeholders from HS [00:29:00] two and also their contractors about seeing how it's a 10 year project's, currently the largest project construction project in Europe with evaluation about a hundred billion, which seems an awful lot of money to build a train line.

But I, that's not me to say that. And so they, it's very rare in a construction project that you get a 10 year window. Usually they're done three to four years, so much more much quicker. And you don't have the ability to test things and get learnings in the same way that you do. On a 10 year projects.

So there are already various there are various new mechanisms being introduced into construction bidding and tender contracts that require construction companies who want to bid for work to adhere to certain standards of offset and carbon reporting. And the idea is with this new project, that those are gonna be taken to a higher level, and we're gonna ask for and provide the tools to [00:30:00] create a high level of granularity around carbon emissions.

So on the reporting side, and then introduce actual live offsetting. So matching and going beyond that and to create a carbon negative a carbon negative project and making sure that is backed by local assets. So not projects in other countries, but actually local UK based assets which of course will be lead to job generation job creation and investment into the localities around where this round network is happening.

So we see that as really being, so we need the sort of, whether it's government or whether it is these huge projects. They need, they're the ones that set the criteria in the same way that in aerospace, the Boeings and the air buses that say what criteria and standards their supply chain needs to measure up to in terms of purity and accuracy of reporting, like all the way down to the in or they it's [00:31:00] the end purchases or the end project managers that need to require that.

And that's the same thing needs to happen in carbon because it is a cost, it is time and effort to do this, both from an emission measuring perspective and also from an offsetting perspective. And put simply it's voluntary at the moment and people aren't doing it properly. So it needs to be incentivized.

If you don't do this, you will lose out on work, for example. 

Eric: So what so I think what you're referring to is just more public projects tend to be the leaders on this Yep. At the moment. And so let's double click on countries. So UK obviously. Is doing work on this.

I know ESG is a priority in the eu. Are any particular, is any particular country blazing the trail in, in terms of what you're seeing? 

Will: So there are various countries that are doing well. None that we are currently working with [00:32:00] sadly. But I know I think Germany is doing some good stuff.

And Switzerland has also been very keen on this stuff, obviously with France, Paris Accord. But that was really just a nice place to be. I haven't heard that much coming outta France recently. And then there are countries outside of Europe the Nordic countries that. So Norway, Sweden, Finland, they have been very strong on and Iceland getting slightly further field that are extremely hot on the environment.

A lot more government pledges around electric vehicle rebates, things like that. I think the UK is we are doing okay but there's a lot more that we could do. Yeah. So 

Eric: does it drift downward as you go? Southern Europe? Maybe less

Will: I couldn't comment on that. I think, 

Eric: Spain, Italy, [00:33:00] Portugal, do they seem to be.

Hot areas for this or less? 

Will: Not that I'm aware of, but I might be wrong. Okay. The is the issue is in any country and some of those countries you just mentioned have had some very difficult recent economic times, is that the environment tends to get pushed down the lists as we're also seeing now in the uk.

People are gonna struggle to heat their homes affordably this year because of everything that's going on in the world. And business is the same. There are no caps on energy costs for businesses which means that they can be I mean something like nine times I've heard reported in terms of the cost, how high it could go telling them that they need to spend additional.

Climate doing things for the environment when that is a 10 year, perhaps less than that, but five to 10 year thing, whereas they're thinking about this winter and whether they'll survive till next year. That's why it's particularly difficult. So we've come up with an approach [00:34:00] I can talk to in a minute that hopefully deals with that problem.

Eric: So yeah so you're referring to a cyclicality in interest on, on, on this front. So yeah maybe we should talk about that. Apparently the, like coal burning is on the rise, across the world at this point, and not just the US and in Europe that are afflicted by, the pipeline deliveries of natural gas in Ukraine.

But also even like China, like they're, they have some serious energy demands that they're, struggling with. Of course, it is like you listen to one report, it says, it's like all these crazy energy depends, demands, and you hear next report, it's like we're in a recession.

It's hold it. How's that supposed to happen? Recession means anyway, it doesn't matter. But but I think what is critical. Is, are models for moving past where people, aren't as [00:35:00] focused on it, right? They become like, Hey, I just want I don't care whether it's Cole or my neighbor's house.

I just wanna keep my home for, the, this winter. And I don't care what I'm spending if if I'm gonna be cold or I'm gonna, I'm gonna incrementally impact the environment. I'm gonna go incrementally impact the environment, then that's hard politically to manage as well.

So what are models that can smooth this sort of maybe fickle interest in esg. 

Will: Yeah, so a lot of it comes down to cost, of course. So when regenerative, oh, sorry, not regenerative, renewable fuels were introduced and started to, we started to say a lot of them maybe, gosh, come up on 10 years ago now in the uk where you had a renewable alternative to coal fired or gas fired energy.

Initially that was at a higher price, and so very few people. Actually chose to take it. And then [00:36:00] various, through various different ways, our energy companies were able to blend it in and say, okay, this 40% is renewably sourced, 60% isn't. And of course I won't go into how none of that is provable either.

But in theory that's a nice idea that, and then people started to get more into it. But at a time of economic difficulty it'll come down to cost at the end of the day and people will just pay. They might say, I would like to, but they would. Ultimately they'll go with what they can afford and what they can and what will keep them warm.

What we want to do is come up with ways that incentivize people. And at this stage we've only got models for businesses but that ultimately incentivized businesses to be able to. Be greener and offset, but without it impacting their bottom line. In fact, creating new revenue streams for them.

Because that's when we see a real step change and in terms of adoption. And then we have a scalable solution that trickles all the way down from businesses and people purchasing these offsets [00:37:00] all the way down to people then actually being incentivized to create them. 

Eric: Excellent. It also works at the retail level.

Like particularly my house has solar panels on it and I just figured I figured I'd go flat, I did. I got my SX and it's actually makes a huge difference in this. What made 

Will: you decide to get solar panels of interest? Cause that must have come at quite a cost cuz they're not cheap.

Eric: Yeah, it was years ago when they were even more expensive. We've had 'em on the house for, I don't know, 15 years now. But and they weren't cheap, but there was a federal rebate and a state level rebate. And it took the cost down quite a bit. It's still into the tens of thousands of dollars.

But I figured at the end, if I'm flat, who the hell cares? And it's actually worked out, I have to say, because solar energy we didn't even do a battery, but in the summer when the sun is out, you're, [00:38:00] our bills like we don't have. Electrical bills in the summer. That's amazing. We have my wife would be like $10 in August and we ran the AC the whole time, like just crazy.

Do you ever get 

Will: money back? Does that work 

Eric: that you can say? Yes. I'm supposed to do sre. So sx, they initially they were solar renewable energy credits. Initially they were like, they were like quadruple or more what they were. So I got a really good period of time where I was like, loading up on the SRE so that consumed a further third of my cost after the rebates and then the SRE market bottomed out and I just, I've got all these srex that I actually don't even turn in, although they're probably worth like another 10,000 at this point.

And I'm blowing it, but I just, it's so painful. But I have to say that the impact on like solar energy in the summer, if you think about it over a course of 10 years [00:39:00] or so it's a no-brainer. It's like you throw it, if you got a big roof, you throw it on top of your house and it's phenomenal, yeah. That's very smart. While we're off on complete tangents that's, there's also this thing called a loie, which is a which is a Compostor electric Compostor. So my son pushed forward and I'm like, there's no way in hell I'm gonna, I'm like electric composter.

It's like I get use electricity, so how is that actually, but I did my research. Apparently it's a net carbon offset even with the electricity. And I did all my research on it, so I got scientific data on it, so 

Will: there you go. Okay, cool. That sounds a lot better. We had a worm farm when I was in the south of France, but we didn't put it in an optimal location, and the little worms overheated and it was terrible.

I'll never. Yeah, I would not do that again quickly. Yeah, I love the 

Eric: idea of, and while we're just riffing [00:40:00] on tangents, or maybe I'm riffing on tangents, I don't know we'll swing back and maybe I'll have to cut some of this out cause I'm just I went off the deep end.

But one of my, one of my clients actually is growing these sargassum farms. So sargassum farms are seaweed farms and they basically, they are, Sargassum in particular, is very effective at drawing carbon from the environment. And when they get all filled up and they've run their life cycle, they sink to the bottom of the ocean like little carbon batteries.

And then you have to do this whole ecosystem to make sure that the nutrients are being reabsorbed to the sargassum farm at the surface. But if you do this sort of like piping mechanism, you can reutilize. The sargassum on the open floor to revitalize your next batch of Sargassum.

So it's just like a sink. 

Will: Wow. Oh my [00:41:00] God. Have to 

look into that. 

Eric: I didn't even know what Sargassum was, 

Will: but now it's do it. I do now. Yeah. But yeah, if all of that could be tracked and traced and put into a token, then that's yeah. That sounds. 

Eric: There you go. That's what Stabiliti needs to focus on.

Sargassum. I'm just kidding.

Will: Yeah. Oh, anyway, I'll do that. We'll focus on that. But we do go, but jokes aside, we do any, that the actual asset that sits behind it can be anything provided. We can verify it and it's real. So we work with trees, also work with hemp. Hemp is a wonderful plant which says many things.

And it's apparently the second best carbon capturing asset that we have on this planet. The problem is, it is controversial, so some people don't wanna buy offsets that are linked to hemp. And obviously in some jurisdictions it's, it can be complicated. But it's very good. But yeah, also seaweed is great.

Kelp is another one. Bio char, soil, carbon, all kind, anything. If it can capture carbon and we can verify it with science, then we're going, 

Eric: yeah. Hell in New Jersey where you [00:42:00] legalized marijuana, it's you can, people would love hemp. They're like, yeah, grow it here. Fine. And New York, they could go both ways.

New York is hey, some PA places may not want it. Other people may be like, can I grow something else there? Anyway. Yeah. But yeah that, that's how get the whole, that's how you get the whole legalized marijuana crowd be to become environmentally friendly. Just . 

Thank you.

I'll let grow crop. Although smoking marijuana is not environmentally friendly. Me like damnit 

gummy bear anyway. 

Will: Yeah, 

Eric: exactly. Put in the brand carbon reducing I don't even smoke this stuff honestly. But I it's, anyway, the, it's a t-shirt 

Will: slogan in itself that Yeah.

Eric: take a lace, scummy bear and save the environment. There you go. Like exactly. Be stoned in class. I know. You're saving the environment. Exactly. So I'm really derailing this. I'm gonna have to work through this. That's okay. It's [00:43:00] okay. Anyways I'd like to walk through a little bit more the process for bringing high quality offsets online.

Meaning, a commercial enterprise. The recognition of the ability to monetize it. Who's involved in that process? The, you talked about like a period of time, whether it's the Vera standards or others. There still is a an assessment process, a verification process, and presumably there are things like you have to also.

Build or ensure that you're capturing and communicating. Yeah. So maybe just walk through what's involved from like that whole life cycle. 

Will: You're right. And this is the classic thing with any blockchain platform, it's the wet to dry conundrum. So you can have the best platform for tracing anything.

But if you are unsure [00:44:00] about the quality of what goes in at the beginning, then it's all in. So having sure at making sure that you have good process involved for doing that initial verification is critical if this is gonna work. And there's a lot, so we are. To a degree we're blazing new trail, new grounds, breaking new grounds in doing this.

So we're having to invent and come up with some new ideas in addition to what's been done before because we wanna do it better. So typically you would have someone who would go and inspect a project and would work with the people doing the project to make sure that yeah, that there really are trees there that what they're saying is, and it would be a physical visit to the site that could be over a period of days to, to walk around and inspect and register and measure take samples of soil if necessary, otherwise yeah, measuring the trees and what have you.

And then using various metrics that we have so a atri, this type will capture this amount over this amount of time and using that data to [00:45:00] understand how much carbon has been captured and how much carbon will be captured over the life cycle of that tree before it is retired. And the trees that we work with typically have a life cycle about eight years.

So they're relatively shortlived, but they grow very fast. So they're able to capture a lot of carbon in that time, about half a ton per tree. So we know that with a high degree of accuracy what one of these trees in a certain environment will capture. And all of that is. So the data that we already have, plus the site visits comes together to, to produce a report and to produce Basically local very accurate data that we can then put into offsets that would then go into our platform that we call Carbon Track.

And initially at this stage of where we are, so we're a young company, only two years old. Ideally this will be automate automated in the future. So there's a lot of technology out there that can do so technology called lidar that can actually measure carbon entries and [00:46:00] scan project or see how many trees there are and do very high quality topographic measurements using drones and going above to terrain without needing to walk around with the tape measure.

A stick. So those are technologies we're very, so internet things, devices those sort of things. But that's further down the line. And our roadmap initially is it is very manual. And once products have been verified and they come into our system, we tokenize the data. Down to the trees they go into, we use an NFT structure.

And actually semi fungible tokens to make sure that certain parts, certain features are fixed and certain parts that data is fixed and stay there forever and other parts of it can be amended. And we make sure that there is a pool of at least 20%, although we recommend this to a project that ultimates the project who decides, but 20% of anything they upload is set aside as [00:47:00] a reserve pool in case there is a fire or some of it burns down.

So we make sure we can draw on that pool and keep the quality. Quality very high. And then, yeah the, these tokens that we create, track those projects down to the tree over the life cycle of those trees, and they have a little, like a ticker inside them. So they actually, you can see how much carbon they're capturing over time.

And at any point in time you can trace it back directly to that asset. And because it's because it's blockchain, we can fractionalize those assets. So carbon offsets are typically sold by the ton. We go down to the gram, in fact lower down to the femto gram. So multiple decimal places to get a very high level of accuracy and then to allow us to do things like micro offsetting which we is very useful for small amounts of carbon emissions.

So with another company that we're working with World Line they're Europe's largest payment provider. And we are talking to them about offsetting payment [00:48:00] transactions live, so that we take the trees, we take the manual process of verifying them and putting that into our technology platform.

Once we're sure that the projects we work with are adhering to our high standards and then that we take that technology, that token and we can do a lot of different things with it. And the differentiator is that with ours, you really can see exactly where that comes from and we can talk in a minute about what our competitors are doing.

And there's a lot of noise in this space at the moment. But no one is doing that at the moment. 

Eric: That high level of granularity and the ability, 

Will: yeah, no one is going right back cause it's boring and it's really hard work to do that. And it's taking us two years to get here, but to build those relationships with projects, to build out the new UK carbon codes to make sure that what you are putting in is blockchain and technology compatible.

And it's highly accurate. It's, that's a lot. A lot has gone into that on the supply side has been really our [00:49:00] focus. Whereas a lot of other companies in this space are really on the sell side or the buy. So they're looking at making carbon offsets more tradeable, more liquid, so tokenizing them, making it easier to trade them.

But not, but no one is saying actually, hang on, is there anything still behind these that we're tokenizing and trading and making more liquids? Or actually, is it the same rubbish that's just now easier to pass around? 

Eric: Great. The greenwash the greenwash. You talked a little bit about the London to Birmingham train line.

So the project, presumably there's an entity that bid. To be the I guess the offsetting carbon producer for this project or maybe entities and then they bid. And so how does that typically work? Is it like is it like a new or an entrant that, first gets a, bids [00:50:00] on it and then if they get the bid, then they go and they purchase a property or they turn some sort of property they have and they start planting trees on it?

Or, 

Will: or is it like, it's not being done, it's not been done yet like that before. So bef so typically what a project would do is they just go out and buy a load of offsets on the market. So they'll go out to a carbon exchange and just whatever they can find, whatever they get their hands on that they at a price that they want to pay.

But it's not necessarily local, as I said, and it's not necessarily real. No one. What we are doing is because this is, we're getting in an early stage with them they, they will do an open tender process soon in the next month or so. We're hoping that because we've worked with them already to get to this point that we will be as shoeing.

We might not be, we might we might not get to work with them anymore. I have to hear this podcast. But , the idea is that we will work with them to develop their own internal marketplace. Their own [00:51:00] internal ways of measuring like their internal systems. Because with any large project, they're currently dealing with a lot of disconnected systems.

It's the nature of the beast. They've got different companies with different reporting standards, different spreadsheets, and what we wanna do is bring a a very clear one platform approach to all of that, which just by doing that, just by bringing everything into one place and introducing the mutability of blockchain we deal with double spending and double recording errors.

And that in itself will save a ton of money and. So yeah that's how we're approaching this. So it will be years of working with them to get this done. And then hopefully we will be able to take this to your point, and then this will be something in other projects where they say, okay, we wanna make sure we do something at least as well as what was done on this first project.

And we wanna follow a similar approach. 

Eric: And you're fostering companies that could provide that kind of service locally, which Yeah, absolutely. [00:52:00] I guess if you think about it which is why we're doing the podcast, of course. It's particularly in the western eyes of developed world, we're very used to the nimby, not in my backyard for any public project and the, if somebody was building a project in your area that you found, Problematic from a pollution environmental perspective.

The fact that they were like buying trees in South America to be like, yeah, but that really doesn't do anything for us here. You know it, and also by the way, you're not, I know that the, I know that the Amazon Forest is shrinking, so I know if you're applying that anyway. But yeah. Yeah. I would think that there is a market, and you may need to think there may be a local, there may be a broader one, particularly for the developed world, tapping into that, then you could address the nibi [00:53:00] concerns.

Yeah. Potentially it's, and at the same time, even potentially foster a business which you could then build excess carbon offsets that could, that could be sold to another venture. 

Will: Yeah. So if you're a, if you're a farm owner and you suddenly find out there's gonna be a big railway built to, at the end of your farm that might.

Upset you for numerous reasons. If what might slightly lessen the pain is if you were then told that you could make a lot of money from it by planting trees in your land. That doesn't exist at the moment because they, these just, there's no way of doing that for the reasons I've just said. But if we can make it very easy for projects to do that, for people to start monetizing their carbon, it means, we're talking a lot of money here.

And it's farmers in the UK are not generally the yeah it's very, it's a very hard living. I've worked with farmers before. It's immensely demanding. And if you can say actually we can start to get you a lot more money for what you're [00:54:00] doing that's general. Generally comes across quite well.

So that, that's really the and we are leading the charge in some respects in this. But my goal is that it will just, it will activate a lot of people and get a lot of people fired up and wanting to do this. We are just gonna be, we provide the framework and then other people will build on it.

And this is something that's, it's hugely exciting, like with this never been done before, but if we can create remove the barriers to getting people to, onto this, into this world, this ecosystem of being able to monetize their carbon, and then we are able to get incentivize the purchases or the projects to actually start buying local carbon.

So money starts coming down. It's very good for our economy and it's also obviously very good for the environment. 

Eric: Interesting. Yeah. It'd be amazing if the end result is that you end up with our excess carbon offset that could be sold. Yeah, absolutely. Why not? Alright What, [00:55:00] so we talked a bit about the ability to measure carbon emission.

Through radar. What was it? It was radar, but no, was 

Will: lidar, LIDAR, light. Yeah. Yeah. I think it, I dunno if it's ultraviolet or I think it's infrared light, maybe that it's used. It's not a physical spectrum light as far as I understand. Hold on. I'm not an expert by any degree. 

Eric: You're not, anyway. No, 

Will: no. , I dunno, everything.

Eric: No, this podcast is gonna, that lidar from this point forward. I'm just kidding. . Yeah, so that's truly amazing that they could detect detect that with Lidar, cuz otherwise you're making assumptions about you, you can say this tree produces it consumes this much, carbon or, but those are 

Will: assumptions.

You do a lot with it. Yeah it's very accurate for a lot of different things. [00:56:00] Spoil soil spectography or graphic analysis you can do incredible things with it. It's expensive. So it's not in, it's not widely used at the moment, but of course those costs will come down. And we've already seen with, so farmers use drones all the time at the moment.

You can get a, just get it out the box and it flies a grid and measures your property. It's very impressive what you can do with drones already. So yeah, hopefully as cost comes down, we'll be able to start to incorporate that more. 

Eric: Phenomenal. Anything that I I said I was gonna circle back to and I didn't or other questions 

Will: to?

No. There's one thing I guess I'd like to mention that we haven't touched upon is the, how we economically incentivize businesses to get involved with this. Because my end goal is to, the issue that we have at the moment is you can create, and we've had this for the last several months, is that we've created, we've got 45,000 tons of UK sourced, verified high quality [00:57:00] carbon that is at a premium in price, but it's not crazy expensive.

And when we went out to the market the overall response was, that's great, but we'd rather just buy the cheap. Sorry, it's a cost At the end of the day, we can't afford this, so we're gonna just get the cheap stuff. So one of the key problems that we wanted to overcome was how can we incentivize financially these businesses to start buying?

And the answer is, you share any benefit that you get with them. So you cut them in on the deal. So if we are, if we sell at a margin, some of that margin goes to the businesses. And where we can do that very effectively is when we start offsetting on the micro level. So typically all offsetting at the moment is done at the end of the month.

How many tons did we emit? Okay, we'll buy a similar amount of tons, but it's done on a monthly, in arrears basis. What we can do with our platform is do it live and we can offset very small amounts of carbon, which is currently just completely ignored. This laptop, for example, emits 13 grams of carbon an hour along with the heating and [00:58:00] lighting for me to sit here.

And this is government recorded statistics. So if we could offset 15 grams for every hour that I work as a lawyer, Then the work that I've done is carbon negative because it's more than what I've created. And that's just not done at the moment. None of it's just not done like that. So what our approach is to go to service firms Foulkes is taking an example, the law firm and say rather than you needing to pay, why not introduce a small voluntary green service charge your invoices?

That would be typically less than percent, maybe half a percent of your overall invoice, maybe 10, 15 pounds for an invoice of around 3000 pounds invoice. And that would pay for all of the carbon emitted in the work. And then that small fee that you charged, some of it would come to us and go to the farmers and the lenders, but some of it would also go back to the law firm.

So they would then overnight get a whole new revenue stream. Into their business for facilitating that [00:59:00] that, that carbon capture. And yeah, basically the response we're starting to get now is, okay let's have a discussion because suddenly I won't give you the figures, but we're talking to the largest law firm in France.

I can give you figures. We, yeah. Fidel's, a firm I used to work for they have 80,000 clients, roughly 40,000 invoices a month, very roughly. We figured out that we would get them an additional 500,000 Euros in revenue. Looking at a very small additional fee. It could be more than that.

But for not doing anything they would just get that as new revenue. And it's, it leverages out across all the clients because yeah, for every invoice you issue. So that's one approach that rather than going to a service home and saying, you need to offset, you need to pay. This is to say, okay, how would you like an extra 500,000 pounds a year?

Then we can do it and work with you. And the same with HS two, so that it's a very expensive project. Our approach with them is to say when you start selling tickets, if we put a [01:00:00] very small additional service charge into that that would cover the carbon created. We can split that with you so you start to make money from that.

Same with you go on the tube in London, you tap your cards there's an additional one penny or two penny charge when you pay. And that offsets all the carbon. And we share that with transport for London, for example. So that's the approach. We're not greedy at all. We're trying to solve a problem.

So it's how can we make this work for everyone? And once that money starts coming in from businesses paying for this, it will have an explosive effect with projects, as I said, then wanting to get involved. Everyone will start coming forward to say, okay, we're now ready to start doing this. And our end goal, of course, we're starting with the uk, but we wanna create a model that will replicate across the world particularly of course in developing countries to make it easier for farmers to start monetizing their land and their carbon capturing assets whilst maintaining that same integrity and accuracy that is currently [01:01:00] lacking.

Eric: I guess, I suppose over time disclosures will also improve as to whether the carbon offsets are audited or not, because it seems like there's a wide gap between the two. And, anybody can say anything. Like in the case of the beer producer which will remain nameless for the balance of this podcast they can make these, they make the statements.

It could be a complete inaccurate claim. Yeah. But having said that they could say we did this thing with this. Guy, and I don't know, you seem like an okay guy. I am grass on my property and we take all our employees and we measure their grass blades and whatever.

But there's really no, there's no standard for auditing. If you, like in the US you have like the FTC and there's like false advertising claims. If you're actually advertising that you are this, then arguably you should [01:02:00] be held to it and to make that state. Without any substantive basis. Again I actually think over time, if ESG or particularly environmental disclosures could continue to be important, which I imagine they will be, the importance of this, those disclosures is gonna increase, and you're gonna find more countries that are gonna be regulated.

Maybe you just disclose are you auditing or not? Because if you're not, it's probably a low quality credit. And if you are, it's a high quality credit. So anyway 

Will: there's, and you've nailed something really good there, and it's, there's a mul there's various different ways to incentivize people outside of what they actually must do.

And so with our projects, we're taking like an Airbnb approach saying you, if you wanna be a four star rated project, cuz we, the idea is that we give HS two and other partners a choice. So where do you wanna buy your carbon from? Do you wanna buy it from next door? Do you wanna buy it from the other side of the country?

Et cetera. And each of these projects will have a rating and that those ratings will be determined by how much effort than saying with Airbnb, how much do you clean your apartments? Do you [01:03:00] put out a bottle of wine? You know what, do you go above and beyond? Or are you just doing the minimum to create this kind of commute community incentivized thing?

Same with Uber, that mean people that actually then try and go above and beyond and they're self policing at that point. So yeah that's the goal on the project side. And then, yeah, I, same with businesses ultimately what are you buying? How good are you buying? And then people start to be proud about, see I buy AAA credits.

I, and we've seen this with B cause in the uk that businesses are trying to do more to be seen, to be environmentally friendly because it means they get better customers and et cetera. So all of this is a bit of a dream at the moment, but having independent certification a body that will say like a standard so like the soil standard.

You have this already for organic food in the uk. But having the sort association, I was gonna say for organic food is having a similar thing for carbon, I think will help [01:04:00] with that as well. So that was a bit of a ramble. 

Eric: Excellent. With that thanks so much. Where can people find out more about Stabiliti and what you're doing?

Will: So, our website is Stabiliti.io. We're starting to get, we've been in stealth mode for the last two, two and a bit years while we're building the technology and all the relationships, we're gonna start to be very loud next year with our marketing. And yeah, you'll be able to hear more from us then.