Why this investor doesn’t back companies that use carbon offsets
Zachary Bogue, co-managing partner for Data Collective LLC, speaks during the Future of Innovation: Spotlight on Artificial Intelligence Conference in San Francisco, California, U.S., on Thursday, June 22, 2017. The market for AI technologies is estimated to generate more than $60 billion in productivity improvements for U.S. businesses annually.
Bloomberg | Bloomberg | Getty Images
The Silicon Valley venture capital firm DCVC invests in all kinds of climate tech companies including geothermal power, aerial methane imaging, advanced nuclear fission reactors, fabrics made out of mycelium, wastewater filtration technology — to name a few.
But there is one category of the climate tech landscape that Zack Bogue, a co-founder of DCVC does not invest in: Carbon offsets.
“We really don’t underwrite or like to see companies that are using carbon offsets,” Bogue told CNBC in an interview at the end of September in an interview in the Palo Alto office. “We do not look at companies that need to use carbon offsets to make their business model work.”
A carbon offset is a certificate or voucher that a company or organization buys that represents the reduction of a metric ton, or 2,205 pounds, of carbon dioxide emissions. If a company or organization is unable to eliminate the release of greenhouse gasses in their operations, they may purchase a carbon offset to compensate for their emissions.
“There’s been some studies out there that up to 90% of carbon offsets are completely ineffective — have had no impact — which is a tragedy of our time, because big Fortune 500 companies are paying millions of dollars to these carbon offsets, and continuing to emit in the meantime,” Bogue told CNBC. “And these offsets are actually having zero impact.”
The effectiveness of a carbon offset is a contentious issue, but at least one white paper published in April 2021 from the Finnish nonprofit and startup Compensate found that 90 percent of carbon capture projects were ineffective. Compensate has both a non-profit advocacy arm and a company that sells what it deems to be high quality carbon offsets. For the white paper, Compensate analyzed more than 100 nature-based carbon offsets certified by third-party verifiers in the space.
Of the carbon offsets which Compensate deemed a failure, 52% were guilty of what Compensate called “additionality” — for instance, offset credits sold to protect trees that were never in any danger of being cut down. Another 16% of the projects Compensate analyzed were considered a failure because their permanence was considered in jeopardy. For example, coastal restoration projects for mangroves in Bangladesh were jeopardized when floods devastated the country, Compensate said.
So, too, said Bogue of local California projects.
“There were some forests north of here that were the subject of carbon offsets where someone paid millions of dollars to not cut the forest down and — whether or not that’s legitimate, we can leave that aside — because those forests burned down,” Bogue said. “So they actually released the carbon that the company was paying to not have released and that the company emitted.”
DCVC does not invest in companies that use carbon offsets right now, but that is not an indictment against the idea.
“To be clear, I want I want them to exist,” Bogue told CNBC. “I want there to be a carbon tax, I want carbon credits, carbon offsets.”
But there isn’t enough transparency or accountability in the industry, Bogue said. To properly stand up the industry, there would need to be an agency akin to the United States Food and Drug Administration (FDA), according to Bogue.
“There’s a very set and rigorous process that you need to do to take a molecule from discovery and up until you’re dosing a human with it: You need to prove that it’s effective, you need to prove it’s non toxic,” Bogue said. “I would say that the imperative to reducing CO2 is as high of a human health imperative as putting small molecules into our body. Full stop.”
Until then, the industry is too uncertain to be a safe place for the money that DCVC invests on behalf of its limited partners, which are the likes of college endowments and hospitals.
“It needs to be rigorous, and apples to apples and, and verifiable and documentable,” Bogue said. “That’s just not where it is today. That’s where we need to get to, but that’s also why don’t think it’s investable.”
After a month off trying to wrap our heads around all the chaos surrounding EVs, solar, and everything else in Washington, we’re back with the biggest EV news stories of the day from Tesla, Ford, Volvo, and everyone else on today’s hiatus-busting episode of Quick Charge!
It just gets worse and worse for the Tesla true believers – especially those willing to put their money where Elon’s mouth is! One believer is set to lose nearly $50,000 betting on Tesla’s ability to deliver a Robotaxi service by the end of June (didn’t happen), and the controversial CEO’s most recent spat with President Trump had TSLA down nearly 5% in pre-morning trading.
Source Links
Prefer listening to your podcasts? Audio-only versions of Quick Charge are now available on Apple Podcasts, Spotify, TuneIn, and our RSS feed for Overcast and other podcast players.
New episodes of Quick Charge are recorded, usually, Monday through Thursday (and sometimes Sunday). We’ll be posting bonus audio content from time to time as well, so be sure to follow and subscribe so you don’t miss a minute of Electrek’s high-voltage daily news.
Got news? Let us know!
Drop us a line at tips@electrek.co. You can also rate us on Apple Podcasts and Spotify, or recommend us in Overcast to help more people discover the show.
If you’re considering going solar, it’s always a good idea to get quotes from a few installers. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. It has hundreds of pre-vetted solar installers competing for your business, ensuring you get high-quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use, and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.
FTC: We use income earning auto affiliate links. More.
Hyundai is getting ready to shake things up. A new electric crossover SUV, likely the Hyundai IONIQ 2, is set to debut in the coming months. It will sit below the Kona Electric as Hyundai expands its entry-level EV lineup.
Is Hyundai launching the IONIQ 2 in 2026?
After launching the Inster late last year, Hyundai is already preparing to introduce a new entry-level EV in Europe.
Xavier Martinet, President and CEO of Hyundai Europe, confirmed that the new EV will be revealed “in the next few months.” It will be built in Europe and scheduled to go on sale in mid-2026.
Hyundai’s new electric crossover is expected to be a twin to the Kia EV2, which will likely arrive just ahead of it next year.
It will be underpinned by the same E-GMP platform, which powers all IONIQ and Kia EV models (EV3, EV4, EV5, EV6, and EV9).
Like the Kia EV3, it will likely be available with either a 58.3 kWh or 81.4 kWh battery pack option. The former provides a WLTP range of 267 miles while the latter is rated with up to 372 miles. All trims are powered by a single electric motor at the front, producing 201 hp and 209 lb-ft of torque.
Although it may share the same underpinnings as the EV2, Hyundai’s new entry-level EV will feature an advanced new software and infotainment system.
According to Autocar, the interior will represent a “step change” in terms of usability and features. The new system enables new functions, such as ambient lighting and sounds that adjust depending on the drive mode.
It’s expected to showcase Hyundai’s powerful new Pleos software and infotainment system. As an end-to-end software platform, Pleos connects everything from the infotainment system (Pleos Connect) to the Vehicle Operating System (OS) and the cloud.
Pleos is set to power Hyundai’s upcoming software-defined vehicles (SDVs) with new features like autonomous driving and real-time data analysis.
As an Android-based system, Pleos Connect features a “smartphone-like UI” with new functions including multi-window viewing and an AI voice assistant.
The new electric crossover is expected to start at around €30,000 ($35,400), or slightly less than the Kia EV3, priced from €35,990 ($42,500). It will sit between the Inster and Kona Electric in Hyundai’s lineup.
Hyundai said that it would launch the first EV with its next-gen infotainment system in Q2 2026. Will it be the IONIQ 2? Hyundai is expected to unveil the new entry-level EV at IAA Mobility in September. Stay tuned for more info. We’ll keep you updated with the latest.
FTC: We use income earning auto affiliate links. More.
Tesla has unveiled its lithium-iron-phosphate (LFP) battery cell factory in Nevada and claims that it is nearly ready to start production.
Like several other automakers using LFP cells, Tesla relies heavily on Chinese manufacturers for its battery cell supply.
Tesla’s cheapest electric vehicles all utilize LFP cells, and its entire range of energy storage products, Megapacks and Powerwalls, also employ the more affordable LFP cell chemistry from Chinese manufacturers.
This reliance on Chinese manufacturers is less than ideal and particularly complicated for US automakers and battery pack manufacturers like Tesla, amid an ongoing trade war between the US and virtually the entire world, including China.
As of last year, a 25% tariff already applied to battery cells from China, but this increased to more than 80% under Trump before he paused some tariffs on China. It remains unclear where they will end up by the time negotiations are complete and the trade war is resolved, but many expect it to be higher.
Prior to Trump taking power, Tesla had already planned to build a small LFP battery factory in the US to avoid the 25% tariffs.
The automaker had secured older manufacturing equipment from one of its battery cell suppliers, CATL, and planned to deploy it in the US for small-scale production.
Tesla has now released new images of the factory in Nevada and claimed that it is “nearing completion”:
Here are a few images from inside the factory (via Tesla):
Previous reporting stated that Tesla aims to produce about 10 GWh of LFP battery cells per year at the new factory.
The cells are expected to be used in Tesla’s Megapack, produced in the US. Tesla currently has a capacity to produce 40 GWh of Megapacks annually at its factory in California. The company is also working on a new Megapack factory in Texas.
Ford is also developing its own LFP battery cell factory in Michigan, but this facility is significantly larger, with a planned production capacity of 35 GWh.
Electrek’s Take
It’s nice to see this in the US. LFP was a US/Canada invention, with Arumugam Manthiram and John B. Goodenough doing much of the early work, and researchers in Quebec making several contributions to help with commercialization.
But China saw the potential early and invested heavily in volume manufacturing of LFP cells and it now dominates the market.
Tesla is now producing most of its vehicles with LFP cells and all its stationary energy storage products.
It makes sense to invest in your own production. However, Tesla is unlikely to catch up to BYD and CATL, which dominate LFP cell production.
The move will help Tesla avoid tariffs on a small percentage of its Megapacks produced in the US. Ford’s effort is more ambitious.
It’s worth noting that both Ford’s and Tesla’s LFP plants were planned before Trump’s tariffs, which have had limited success in bringing manufacturing back to the US.
FTC: We use income earning auto affiliate links. More.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike