tl;dr: the nascent market for voluntary carbon credits feels a lot like the early days of crypto. A sequel?

In the The Urgent Climate Market, I shared the impact of a book I read The Uninhabitable Earth.

On an emotional, psychological, and security level, it raised a lot of alarms. Even if the thesis is only 50% right, it’s worth paying attention to.

The good news, if there is any, is that there are plenty of people paying attention and who also see opportunity in it, as the  Green Opportunity of the 2020s and We Have Entered the Climate Decade: A long boom of climate tech is just getting started, where Andrew Beebe writes:

The decarbonization of the global economy is a transformation on par with the digitization of the economy before it.

https://worldpositive.com/we-have-entered-the-climate-decade-70b7f433271b

If that’s the case, then the combination of the decarbonization with digitization is just really, really awesome.

This is where the MCO2 token comes in (available on Uniswap).

Disclosure: Now, before we go further, I need to disclose that I am in final talks with the project behind MCO2, Moss.earth, to serve as a marketing advisor. So, I have a bit of skin in this game. I also intend to purchase some MCO2 tokens, because I believe in the project and the opportunity.

In addition, this post should NOT be construed as financial advice of any kind.

Now that that is done, let’s understand why I think this is an interesting opportunity on multiple levels.

About the Voluntary Carbon Credit Market  

According to research from Forest Trends, the Voluntary Carbon Credit (VCC) market is expected to grow from $100 million to $500 million over the next 5 years as demand outstrips supply by 4x over the next 3 years. 

This is not surprising given how much momentum the VCC market has, including: 

• growing global concerns about climate change threat to society including 73% of citizens in China, 47% in the EU, and 39% in the US (source)   

• favorable political “green agendas” in many countries including China that will cover 70% of global GDP  
   
• multiple public commitments to carbon neutrality from companies like Microsoft, Amazon, Apple, Nike, Delta, Shell, Unilever, and Google 
   
• the world’s leading VC fund creating a dedicated climate fund 
   
• research from the Economist Business Unit showing that 93% of millennials want to buy from, and invest in, “impact” companies that model sustainable and environmentally conscious behaviors. 

The VCC market is different from the more familiar regulated carbon credits, where polluters must participate in “cap and trade” exchanges. That market, which is well established is currently globally worth $250 billion annually. 

In fact, according to Refinitiv, (source)

“the total value of global carbon markets grew nearly 20% in 2020, reaching €229 billion based on our assessment of traded volume and carbon prices. That marks the fourth consecutive year of record growth and more than five times the value in 2017.”

The VCC market, however, is in its early stages, with the price of carbon credits expected to reach $100 (source) from where it is today at $18-20 (itself a 4x increase in the past 2 years alone).   

This is why the opportunity is so large right now. 

Meet Moss…the Company Poised to Own the VCC Market 

There is one company, MOSS, which has managed to capture 20% of this nascent $100 million market in a year.   

Furthermore, MOSS is strategically positioned to own the voluntary carbon credit market in Brazil, where it is based, and which is home to 50% of all of the world’s carbon reserves (source: FAO) and nearly double that of the #2 supplier of carbon reserves (Russia). 

Brazil is sometimes called “the Saudi Arabia of Carbon Sinks.”

This is because MOSS has developed a unique, blockchain and token-based solution (MCO2) that will facilitate global liquidity of carbon credits and, as a result, could become the dominant player in this emerging market, and not just in Brazil. 

The founder, Luis Adaime, sometimes referred to as “the Satoshi of Carbon,”  is a former Credit Suisse banker, veteran of a $20bn hedge fund at York Capital Management, a Stanford graduate, and has legitimate backing from world class investors such as John Pfeffer.   

The company’s innovative solution for transferring carbon credits to the blockchain (represented by the MCO2 token) has undergone rigorous examination, with a process audited by EY Armanino and Certik and they have passed due diligence by the Craftory and are represented by the law firm of Perkins Coie.

Furthermore, the leading carbon credit certification authorities such as Social Carbon and VCS have certified the project. 

Obviously, any meaningful investment would require further due diligence, but they certainly pass the “sniff test.”  

When all is said and done, more people will be able to buy more carbon credits faster and cheaper than today but do it all via the Ethereum (currently) blockchain-based platform and its unique and potentially profitable token-based revenue model. 

But wait, as they say, there’s more.   

May as Well Save the Rainforest 

Not only can MCO2 provide opportunities for returns, but the company (which is accepting equity investments now as well) plans to build a “Green Wall” in the Amazon (the source of the carbon credits), and which will have the secondary (primary really) benefit of preventing future deforestation of vast sections of rain forest.

Basically, it means that we have a chance to save ourselves from climate change related disaster. 

The Urgent Need and the Potentially Big Opportunity

Carbon credits represent a genuine opportunity to “do well by doing good.” 

Of course, I could argue that “saving the planet” should fit in everyone’s investment thesis, but that’s a topic for another time…

By the way, in the time it took you to read this blog post, we have lost 15 football fields of Amazon Forest.