Calculate the offset, reduce it, or both What is the next huge Carbon management startup a great opportunity for startups?

Let’s relive some of our childhood memories. Remember the last page in Classmate or Sundaram notebooks? They came with some interesting information, interesting trivia and an inscription saying–You saved the trees using recycled paper.

The card gave us a feeling of satisfaction, awakening the conscious consumer in us. We felt as if we had made an impression.

Today, technology has created new methods for companies and consumers to minimize the environmental impact of the course of their daily lives.

New age startups have appeared around the world including in India for helping people (B2C)calculate the amount, track, to reduce carbon footprint, or emissions (carbon dioxide CO2) produced during their activities and offset that carbon footprint by financing an environmentally friendly project.

The activities can be as simple as booking an airplane flight, buying something on the internet or having coffee. Every single activity creates a certain amount of carbon dioxide.

The concept has been a common theme all over the world’s business and organizations for more than 10 years. Many major companies have signed up with advisories to make their business carbon-neutral by using green practices or buying carbon credits.

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In the same way the option of becoming carbon neutral is also available to consumers , as websitesincluding those like Shopify, Stripe, TrueLayer, Shipbob, have partnered with tech companies to offer the service during payment stage.

Carbon credits are an kind of permit which represents one tonne CO2 that has been removed from the air. They are typically generated by green initiatives.

The Carbon footprint reduction marketplaceis expected to grow to $12.2 billion in 2025 with a Compound Annual Ratio (CAGR) in the range of 6.2 percent over the forecast time. The market was estimated at $9 billion by 2020 according to estimates from MarketsandMarkets Research.

In India the concept to achieve carbon neutrality in India is in the beginning of its development with startups leading the way. Players such as Climes, Lowsoot, and WOCE have launched new offerings while one of the few existing major players, EKI Energy, looks at scaling up B2B (business-to-business) operations while also targeting B2C.

Get the ball rolling using B2B

A number of companies, including those like Reliance, JSW, Tech Mahindra, have or have pledged to be carbon-free, or have been mandated to do it through the state or their international clients.

They either employ internal teams to determine the carbon emissions or collaborate with project experts or advisories such as EKI Energy.

The EKI is listed on the BSE. EKI aids companies, generally in the developed world, to calculate their carbon footprint. It counsel companies on green practices and then provides them with carbon credits to offset non-avoidable carbon emission.

It provides more than 100 million credits for carbon year to companies in the developed world and runs more than 1,000 climate projects operating across 16 countries (to obtain carbon credits).

India is the largest carbon credit supplier, but is not the primary buyer since things are not required in this country. But, the idea is gaining ground and over the next two years, we’ll see more companies and brands adopting this idea, says Manish Dabkara the CEO of EKI Energy Services Ltd.

Airports Authority of India, World Bank, SoftBank Group, NTPC, Indian Railways, Indian Oil Corporation, ReNew Power and Gold Standard are a few of its Indian clients.

It is crucial to remember offsets are merely an interim or short-term measure. Some people are against carbon offsets because they make emitters feel guilty of their climate crimes and allow corporations to throw money at the issue, without having to do the work of altering their own actions to cut emissions.

“Reduction requires long-term planning. In this case carbon offsets/credits can be used as a quick fix. Additionally, purchasing credits is cheaper then investing into greener practices. And in reality, most people would opt for the latter option, says Manish.

New Delhi-based Lowsoot is a New Delhi-based company that is a newcomer to the B2B market. Although the business model remains the same (calculate the amount, reduce it and offset) The main goal is reduction of footprint, rather than simply offering credits. This is achieved through the implementation of renewable and energy efficiency methods in place.

The offsets have yet to be realized and are not any importance in the business model of the startup.

Offset is the final option that we offer. It’s the idea behind helping businesses reduce their emissions first, and then use offsets or credits as the final option, says Sachin Sengar the founder of Lowsoot.

Founded in 2021, Lowsoot has automated the footprint calculation process by developing a SaaS (Software-as-a-Service) tool for businesses. The dashboard offers information and analysis on emission, reduction, and goals for companies to make informed choices.

It earns money through its SaaS subscription, consulting on emissions reduction, the sale of credits and setup expenses.

The company has joined forces with the mobility company the eBikeGo to help bring lower its carbon footprint per product or employee as well as per revenue unit. Lowsoot is currently conducting pilots with other companies and brands in the metals, manufacturing electronic, energy as well as the FMCG segment.

Another company, WOCE, which began offering the services on June 20, 2022 has created an appCarbonBook. CarbonBook–to aid both businesses as well as individuals monitor, measure and control your carbon footprint.

The app is intended for employees of an organization. After downloading the app, employees can monitor their emission levels through eating out, travel and energy consumption as well as waste disposal and other such. It is a SaaS tool allows companies to consider every employee, track their emissions, track, reduce and eliminate emissions and record the same (if required by law).).

This will distinguish the organizations who are committed to making changes versus those that are talking about it but do not have a concrete plan put in place, says Anup Garg, founder of WOCE.

The company is currently in discussions with organizations currently and will soon introduce cloud-based SaaS solutions for large companies as well as MSMEs across India.

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Inspiring consumers to buy it through brands

The possibility of becoming carbon-neutral at the checkout is among the current trends to be seen in the Indian market. International brands like Cloverly, Patch, Cooler, Pachama and Lune have become popular in the international markets because they act as “engines” connecting platforms/brands on the internet and the consumers, streamlining all processes.

The leader to lead leading the Indian marketplace The leading Indian company is Sequoia-backed company, Climes.

The company was launched in January 2022. the Bengaluru-based startup has teamed up with brands such as Makemytrip, Zingbus, The Wedding Brigade, TEDx and fashion labels such as Aastey to provide the service during checkout.

Let’s dive deeper into the mathematical basis of the math behind. First comes the calculation of emissions. There are a variety of methodologies, developed by different organizations (standardised) which can be used. The startups study the business database as well as research models and scientific standards to make calculations for both services and products and then make them available to companies in a way that is automated (SaaS) as well as to consumers during checkouts through API integrations.

Imagine that a person produces 180kg of carbon footprint during a three-hour flight. They are informed of the carbon footprint at the point of purchase and given the alternative for “neutralise” the carbon footprint by purchasing carbon offsets or credits equivalent to the amount (i.e reduce emissions in the world in the same amount- so that their trip is carbon zero).

The credits, in this instance are referred to as climes which are sold at a different price/margin (depending on the project and their use cases, footprints, and more). This is how these platforms earn revenues. Each credit/clime represents one metric tons of CO2 that is reduced, eliminated or eliminated.

The progress of projects and the results they have produced can be monitored on the startup, which is in this case it is on Climes platform. Typically the project or NGO or organization that is associated with the project receives the funds in under 15 days.

The model for revenue of these companies (who earn their money from the retail aspect of carbon credits) is not in complete contrast to that of the international players , who generally charge for API services they offer.

Furthermore, the possibility of offering the carbon trade individual customers (where they could sell their credits to exchanges) is not part of the current offering.

The market hasn’t changed significantly with regard to guidelines. So, the only value proposition we can offer our customers right now is to quantify and offset. This is (trading) is not the kind of business we’re currently in and do not see ourselves in the next couple of years. Our model is unit-positive as we earn revenue on every client we work with says Siddhanth Jayaram Co-founder of Climes.

The startup has recently raised $1.2 Million by Sequoia Capital and Kalaari Capital, Rainmatter, and Avaana Capital.

Brands are warming up for the consumer

With the nature of voluntary and the almost no revenue generated by companies to offer carbon neutral options and a call to action on climate change perhaps a branding push may influence them to reconsider their carbon management strategies.

Providing this first layer of protection free makes it more attractive, easy and quicker for brands to sign up too. We’ve partnered with four brands, with 18 more on the way. This means that they are aware of the necessity. Costing accuracy is crucial for companies to join the fold, says Anirudh Gupta Co-founder of Climes.

Offering consumers the option to be carbon neutral can boost a brand’s recognition value, according to industry insiders.

Any innovative new feature provides the opportunity for a PR or marketing boost to a brand at least the first 12-24 months. This is sure to give an”X” factor to a brand , but it will not be the main motive for users to select this brand claims Prashant Kumar co-founder of the Zingbus, an intercity-based mobility startup. Zingbus which has teamed with Climes.

To our delight we found that more than 50 percent of Zingbus customers chose the checkout option, he adds.

What’s next?

After traveling, Climes is looking at connecting its platform to D2C brands that are in the fashion, toys, jewellery food delivery, beverages , and the meats as new categories emerge. However, Lowsoot will soon offer its services to the public and extend its services to businesses.

 Sustainability is being viewed as a license to participate in the marketplace. Consumers are demanding it , and the futuristic brands are conscious of it. Therefore the B2C startups in this area are incredibly promising as they can provide simple solutions to launch quickly, says an expert in the green solutions space.

Data conundrum

Data sharing is a major issue in the field of carbon management, especially when it comes to manufacturing and logistics firms which emit large amounts of CO2.

The authors mention that brands are not always willing to disclose even the smallest information on the supply chain, volumes operations, etc making it difficult to estimate how much footprint (especially when it’s not required).

Startups, in this scenario, need to get over that barrier in order to get the non-disclosure document and smooth the transition as per Irfan Khan. Khan is the the founder and CEO at eBikeGo.

New startups with new opportunities

The potential for scaling carbon management startups is massive in India because many brands are moving towards sustainability not only because of obligation or PR activities in the name of PR, but due to the demand of consumers.

Swapna Gupta the Partner at Avanna Capital weighs in.

These startups can be a great start point for the industry. The business models will slowly change as markets develop. There is no consensus on is the most efficient method of making money. Perhaps, as well as cutting and offsetting, customers could be rewarded for their good behavior, that they record on their own platforms. These can then be converted into points redeemable. There are a myriad of possibilities and we’d like to participate in this growing conscious behavior.

On the B2B end carbon management gained momentum on the 3rd of August when it was announced that the Union Cabinet approved India’s revised nationally Determined Contributions (NDCs), according to which India is now committed to reducing emissions intensity in its economy by 45 percent by 2030, down from the 2005 levels, and to achieve the goal of zero net emissions in 2070.

Furthermore there is there is the Energy Conservation Bill that is in the Parliament, and provides norms to establish carbon markets as the first step formal in the country’s progress toward neutrality and emission reductions. Thus, the increasing demands for the services.

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A prominent climate financer and policymaker Mark Carney has declared that carbon offsets could become a $100 billion industry in 2030. Certain experts believe that the market is at the point of explosion, with companies all over the world planning to embark on an offsets buying purchase.

We are likely to see a surge in startups offering a variety of services that are carbon neutral in India over the next couple of years. This could include a broker/trader for carbon credits or developers providing API solutions to platforms on the internet (B2C) and advisories or project developers providing end-to-end solutions to businesses (B2B) markets and carbon credits exchanges as well as energy auditors, tech products, energy efficiency solutions providers , and so on. Manish of EKI Energy. Manish from EKI Energy.

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