Corporate sustainability and carbon markets: The role of data science

 Every Earth Day we hear from companies around the world about their sustainability efforts - the gallons of water they have saved, the reductions in energy use, the systems they have converted from fossil-fuel to renewable energy, the ecosystems they have restored and, more recently the amount of carbon they have offset. On the face of it, these are amazing and hopeful numbers - the very fact that corporations are paying so much attention to sustainability and the environment is testament to the fact that consumer and citizen pressure is yielding results. In fact, with every successive year, it seems that companies and organizations are able to sequester more carbon, minimize greenhouse gas emissions and thus mitigate climate change. 

 

What allows companies to make these claims - especially with respect to carbon and greenhouse gas emissions? The way that most companies claim these credits is through carbon markets or “cap and trade” programs. In these programs, a community or a non-profit or a local government, maintains forests that would have been clear-cut otherwise or restores forests on degraded land. The carbon that is stored in these forests is calculated against a baseline and the additional carbon that is not emitted because of the actions taken by these groups is sold on a carbon market as carbon credits. Companies then buy these credits to offset their greenhouse gas emissions and can thus claim reductions in how much they are impacting the environment.

 

But is that really true? Carbon markets are relatively new and have just begun taking off in different parts of the world. California, for example, has a carbon forestry offset program that is at least $1.8 billion in size. States like Oregon and Washington have begun developing similar “cap and trade” programs. And then there’s the multi-national REDD+ forestry offset program conducted under the auspices of the United Nations that has already resulted in carbon trading of $4.6 billion over the last few years. However, as is the case with most new systems, there have been reports of the market being gamed by actors so that the actual benefits to the Earth are less than what’s being reported.

 

News reports from Bloomberg and  MIT’s Technology Review highlighted problems with the way carbon was being counted in projects and programs in the USA - including those run by reputable non-profits such as the Nature Conservancy and the Audubon Society. These reports claim that the carbon credits were too generous in these programs. In some cases, there was no danger of the forests being cut down and the organizations simply sold the credits to increase their income. In other cases, because forest ecology and understanding how carbon is stored is a big, messy problem - the level of carbon stored in forests was overestimated. In both cases, not counting carbon levels accurately means that more greenhouse gases are emitted than expected - and that in turn impacts how much work has to be done to reduce emissions and keep the Earth’s temperature at habitable levels.

 

So how can we measure, model and track carbon levels and emissions with greater accuracy?

 

Enter data science - including remote sensing, machine learning, the Internet of Things and all that’s related to big data! Here, satellite or drone imagery is often used to evaluate behavior before the project was put in place - for example, was the land really deforested or was surrounding forest being clear-cut at certain rates? Then ecosystem models are used to estimate carbon stored - values which are often validated using smart sensors (the Internet of Things) and a combination of spatial and temporal statistical models. 

These technologies have been used by scientists to answer questions about climate and ecosystem health and are now being deployed commercially by startups like Silviaterra. And it’s probably safe to say that we’re likely to see many more startups in the space! Carbon markets are forecast to grow at at least 33% annually and are expected to reach $100 billion by 2030 - so lots of opportunities for startups and professionals in the space.

 

If you’re curious about sustainability analytics, including carbon markets, and how data science is impacting funding, jobs and companies in the space, click here to join us on Saturday, May 22nd for a free webinar on the topic.

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