Pachama ($79 for carbon credits trading platform)

Pachama is a climate-tech company that uses artificial intelligence (AI) and satellite data to generate, verify, and monitor nature-based carbon credits. Using remote sensing, Pachama observes the earth to create more accurate models for measuring and monitoring the carbon stored in forests over time. The company’s mission is to increase funding for effective reforestation and conservation projects that sequester carbon, enhance biodiversity, and benefit local communities worldwide.

Challenges: forest conservation and carbon credits

Deforestation is severe in tropical forests in South America and Africa. Forest fragmentation, climate change, and atmospheric pollution threaten forest conservation. Additionally, there are challenges related to forest management, such as a lack of consensus-oriented approaches, inadequate investment, and insufficient participation of local communities and other stakeholders.

Another significant challenge is the lack of funding for forest conservation and restoration efforts. Forest conservation and restoration need to earn a return sufficient to meet investor needs. This requires making the case for finding sources of financing that can reorient the decision-making process towards conservation and restoration.

Climate change poses a significant threat to forest conservation. The impacts of climate change include melting permafrost, worsening storms, melting glaciers, and rising sea levels, which contribute to coastal erosion, subsidence, damage, and loss of forests.

Reforestation projects that generate carbon credits are one of solutions to these challenges of forest conservation. Reforestation projects generate carbon credits by sequestering carbon dioxide from the atmosphere through the growth of trees and other vegetation.

Carbon credits are certificates that represent quantities of greenhouse gasses that have been prevented from entering the atmosphere or eliminated. Carbon credits can be sold to businesses and individuals seeking to offset their carbon footprint.

However, it is essential to measure, monitor, and verify (MRV) the carbon credits generated by reforestation projects to ensure their legitimacy and accuracy. Monitoring is the process of measuring the total quantity of carbon taken up by trees. These measurements are done according to strict guidelines set by the Intergovernmental Panel on Climate Change and must follow methods set out by the UN’s Clean Development Mechanisms. On-the-ground measurements are costly and time-consuming, so scientists rely on measurements from a sampling of trees, typically in randomly located plots, to estimate carbon in entire forests.

Transparent and standardized information about the carbon credits generated by reforestation projects must be provided to investors. The information must be immutable and openly accessible. The carbon capture potential of reforestation projects should not be reported per tree planted, as this ignores limitations at the forest ecosystem level. Instead, the carbon capture potential should be reported for the entire forest ecosystem.

Verification involves ensuring that the MRV process is accurate and trustworthy. Third-party verification is conducted to ensure that the MRV process meets the highest accounting standards for the most trustworthy results. Verification reports are conducted periodically, and the costs depend on the third-party.

Pachama Technology

Pachama uses AI and satellite imagery to provide automated and trustworthy monitoring reforestation projects without imposing large up-front costs to landowners, thereby lowering the barriers to new forest offsets and delivering a more accurate product to offsetters. Pachama is building the infrastructure to support the functioning of carbon markets by providing vital transparency and accountability. They remotely verify projects to ensure they follow international standards for carbon credits.

How does Pachama accomplish this?

The company uses remote sensing, LiDAR imaging, and satellite photography to estimate the carbon stored in forests over time and to detect changes.

Using satellite imagery, a vast network of field plots, LiDAR imaging, and other remote sensing data, they first train machine learning models to identify key forest characteristics that are used to estimate the project’s carbon footprint. They do this by matching pixels within the surrounding region to each and every pixel within the project boundary based on attributes such as distance to roads, topography, and forest structure.

They then train additional machine learning models to estimate forest carbon storage. Pachama’s method is much faster than traditional ground-based verification because it uses aerial data to measure the entire forest rather than just a small sample. They eliminate the need for expensive and time-consuming manual measurements for individual carbon projects.

Pachama’s forest monitoring system detects changes in carbon projects over time, shares these insights, and updates directly to offsetters and project developers alike. Pachama uses machine learning models to quantify the additional benefit and compare it to the volume of carbon credits offered by the project. Pachama’s technology enables afforestation at scale and makes carbon removal more transparent and accountable.

Images of the biomass of Fazenda Sao Nicolao (Source Pachama).

For example, the images above compare the biomass of a reforestation project in the Amazon in 2000 (left) and 2019 (right). The increasing green in the image on the right represents the regrowth of native species in previous cattle fields. Pachama analyzes the change of the satellite images and uses their AI technology to quantify the carbon stock growing on the property.

Pachama’s AI and satellite data are used to verify carbon credits, which corporations then purchase to offset their carbon emissions. Pachama’s technology generates data that is more precise, credible, and transparent, thereby enhancing the confidence of businesses purchasing carbon credits to reach their net-zero goals.

Pachama Market

The market value of carbon credits varies depending on the type of credit and the market in which it is traded. The global compliance carbon credits traded in 2021 had a market value of approximately €760 billion, or $851 billion, up 164% from the previous year. The voluntary carbon market value topped $2 billion in 2022, with the pricing of these credits ranging from $1.08 to $2.26 per credit.

The price of one carbon credit can vary from a few cents per metric ton of CO₂ emissions to $15/mtCO₂e or even $20/mtCO₂e. The price fluctuates depending on demand and supply but generally ranges from $40 to $80 per metric ton. The market for carbon credits could be worth upward of $50 billion by 2030 and more than $50 billion by 2050. The market value of carbon credits is expected to increase as more companies seek to offset their emissions and meet their net-zero targets.

Pachama Products

Pachama’s main product is high-quality carbon credits for forest conservation and restoration. They provide organizations and individuals with a platform to create new forest carbon projects. Pachama helps them to meet their sustainability goals by investing in high-quality carbon credits for forest conservation and restoration.

Pachama's carbon credits trading platform — Pachama’s carbon credits trading platform.

Pachama has evaluated more than 150 forest carbon projects in 14 countries to help identify the highest quality projects. Each project is carefully vetted by Pachama’s technology and forest scientists to make sure customer’s investment reduces carbon, protects wildlife and supports local communities.

Pachama is building the marketplace for forest carbon credits to standardize verification and efficiently connect supply and demand.