Voluntary carbon offsets: long-term potential and short-term troubles

Voluntary carbon offsets: long-term potential and short-term troubles

Hi folks,

You probably already heard about voluntary carbon offsets. As VCs, we heard about them A LOT in 2020 and 2021. The topic was maybe as hot as Web 3 after several reports showed an incredible market potential. 

Note to those who live in a cave : voluntary offsets allow to finance projects that are positive for the planet (mangroves, preserved corals, sustainable agriculture practices…), in exchange for the right to show a lower “net” carbon footprint. 💡

Where do we stand today ? 

Firstly, the idea that a company can reduce its own “net” carbon footprint by financing a reforestation across the globe is still debated. There are plenty of (fair enough) reasons: fear of greenwashing, lack of transparency and quality controls in offsets, point that budgets allocated to carbon offsets should go to R&D financing the switch away from carbon emitting activities. 

Secondly, people have not given up on voluntary offsets, especially for removal projects. We keep seeing great teams addressing the issue – and we keep assessing those investment opportunities with attention 🧐

Thirdly, 2022 was a calmer year in the voluntary offset market and it is probably beneficial to the space overall : this unregulated sector still needs some time to set proper standards and systemic integrity, which is harder to do when each month dozens of new startups receive buckets of private equity funding to accelerate. 🚀

If you’d like to know more, do check out our study here

Da yours,

The daphni team

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