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CarbonClick: The NZ company trying to revolutionise the carbon-offset industry

CarbonClick aims to build a trusted system to drive greater uptake of voluntary carbon-offset schemes. Illustration/Getty Images

New Zealanders are being encouraged to voluntarily repay their carbon debt with trees before climate change becomes an international emergency.

While the signatories to the Paris Agreement try to reconcile the yawning gap between their progress on reducing emissions and the cuts we need to make to avoid dangerous climate change, others are planting trees – billions of them.

A flourishing market for voluntary carbon offsets has reduced or sequestered more than 430 million tonnes of emissions since trading really began in 2005, the equivalent of not consuming more than one billion barrels of oil.

But that’s a drop in the ocean compared with where we need to be. Scientists estimate that at least 11,000 MtCOe (million tonnes of carbon-dioxide equivalent) of emissions need to be eliminated to prevent the world from warming more than 2°C.

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The revamped Emissions Trading Scheme (ETS) and the Zero Carbon Act will be the biggest levers to reduce emissions across all industries in New Zealand as the Government seeks to achieve carbon neutrality by 2050. But an increased focus on sustainability and corporate responsibility could see voluntary carbon offsets (an offset is a unit, equivalent to a tonne of carbon-dioxide equivalent, that has a financial price attached to it) playing a bigger role, too, particularly as the scenarios from the world’s climate scientists become starker and the immediate effects of the changing climate become more obvious.

To date, uptake of voluntary carbon-offset schemes has been patchy. That has been put down to a lack of understanding about how they work and the impact they have in tackling climate change.

Paying your part

As we jet back from holiday, or load up the car for the trip home with the family, few of us will be thinking about the CO we’ll add to the atmosphere or how to offset it.

Doing so should be simple. When you buy a product or service you can sometimes choose to pay an extra fee to have the emissions resulting from its production offset by activity that reduces emissions elsewhere.

Your contribution could go towards building solar-power plants or schemes to reduce methane emissions from landfill sites. If a home-insulation scheme is verified to reduce emissions by 100 tonnes, then typically it would be eligible for 100 carbon credits.

In New Zealand, the most common projects involve planting forests or grasslands to act as a carbon sink. Already, forestry offsets nearly a third of our emissions. Experts agree that a key component of plans to reduce emissions long term should involve slowing the rate of deforestation, particularly in places such as the Amazon and Indonesia, and planting more forests, too.

Hence, the Government’s plan to plant a billion trees by 2028. But that scheme, although impressive sounding, will have limited effect by itself. Government documents released to the National Party late last year under the Official Information Act revealed that planting trees will reduce our liability under the Paris Agreement by $2.7 billion by 2030, but only $900 million of that is expected to come from the One Billion Trees programme. The rest is expected to be achieved as a result of the ETS, which incentivises the planting of forests.

Voluntary carbon-offset programmes have a small but important role to play because they are highly visible and linked directly to our actions.

The best-known scheme here is probably Air New Zealand’s FlyNeutral, which lets you pay extra to offset the emissions your flight produces. Aviation contributes 2-3% of global CO emissions each year, but air travel increased 7% last year alone.

Jan Czaplicki, left, and Paul Brady. Photo/Carbon Click

It’s deeply offsetting

An individual offset for a return flight from Auckland to Wellington currently costs $3.14, offsetting 136kg of CO. Auckland to London and back will cost you $68.12 and offset 2936kg of CO. Air New Zealand buys carbon credits from permanent forest schemes in New Zealand and renewable energy projects overseas at a carbon-credit price of $23.20. Jetstar has a similar carbon-offset scheme in place.

Now, two former Air New Zealand employees, Jan Czaplicki and Paul Brady, are developing CarbonClick in an attempt to build a trusted system to drive greater uptake of voluntary carbon-offset schemes.

Czaplicki was a business analyst at Air New Zealand when he worked on a project to overhaul the airline’s carbon-offset scheme.

“We took the factors that the Ministry for the Environment provides for the real carbon impact of seat-per-kilometre, and we did all the calculations to make it really accurate,” he says.

“It changed from a static, dumb offering for you to pay someone to offset your carbon, which wasn’t necessarily linked to the actual carbon amount of the flight.”

About 5% of Air New Zealand flights have voluntary offsets applied to them. The key to improving take-up, says Czaplicki, is more transparency and trust in carbon-offset schemes and a better user experience, which, to date, has been clunky.

“It’s an industry that has been pretty traditional and stagnant on the innovation side,” Czaplicki says, reaching for a well-used Silicon Valley analogy to illustrate the change that needs to come – the ride-sharing giant Uber.

“Carbon offsets are still like a big, monolithic taxi company doing it the same way they have been for a long time.”

What could the future look like? “When I’m stepping out of a taxi and am prompted to pay, there could be a one-click offset, the green button on my screen that adds 10 or 20 cents,” says Czaplicki.

“That ultimately gives the consumer a little reference that they can choose to explore further and that will show them exactly which offset they’ve bought and where it is making an impact.”

Tracking the trees

Czaplicki and Brady, a software developer, recently received $100,000 in investment from Centrality, an Auckland company developing blockchain technology, which also underpins cryptocurrencies such as Bitcoin but has much wider applications for recording and securing digital transactions.

Blockchain could enable CarbonClick customers to purchase carbon offsets and track them down to the tree being planted. It would offer a more secure and transparent way to guard against double counting of carbon markets, which has undermined the credibility of such schemes in the past. Although a carbon credit representing an offset can be issued and retired only once, it may be traded numerous times before it is finally retired. The blockchain ledger would record all those transactions.

Czaplicki admits that it has been a bad year for blockchain, which has been associated with the wild fluctuations in the price of Bitcoin and other cryptocurrencies and dubious investments offered in blockchain-based ventures by means of numerous initial coin offerings.

“There’s been a lot of hype,” he admits. “It was extremely speculative. The bubble has deflated, but the change is real. The industry is maturing.

“We think we can create a really close connection for people to feel where their contribution is making an impact,” he says.

The other component the team is working on is a user interface that could plug into a company’s website or app to allow simple participation in the CarbonClick scheme, which will initially look to buy carbon credits from local permanent forestry schemes.

“We will buy offsets, create digital assets that represent those tokens, so there’s a one-to-one relationship and we can’t double-sell those credits,” he says.

CarbonClick won’t integrate with the ETS at this stage. There’s still a big question mark over how such schemes will work with domestic carbon-pricing and emissions-trading schemes that are emerging as a result of the Paris Agreement.

Czaplicki says he and Brady are focused on getting a product into the market that allows companies to do something highly visible to meet their sustainability goal of getting people to think more about their carbon footprint. They hope to have a “minimum viable product” ready by the end of next month.

“It’s a really big problem and we need a lot of players. There won’t be one that rules them all,” says Czaplicki.

“I’m quite competitive, so I’ll sacrifice a lot of sleep to make this happen.”

This article was first published in the January 19, 2019 issue of the New Zealand Listener.