From farms to financial markets: how an Aussie startup is helping companies meet growing demand for high-quality carbon credits

Ian Jones and Hamish Macdonald first met through their joint passion for developing startups into fully fledged companies. In 2018, they teamed up with software engineer Sara Saeidi to tackle what they saw as the next big shift in capital markets – climate action.

They knew that more companies were seeking ways to improve sustainability and accurately report on their efforts, in line with environmental, social and governance (ESG) standards. They also knew carbon credits were becoming an increasingly popular solution for organisations to offset their carbon footprint.

“We were looking at how we could position ourselves most effectively in that space,” says Jones. “We’d seen a report revealing that almost 20 per cent of global CO₂ emissions were caused by agricultural practices such as tilling and ploughing soil. We were shocked, and nobody was talking about it.

“We had also read an Intergovernmental Panel on Climate Change report, which said soil carbon sequestration offered the fastest, most cost-effective and highest-volume way of removing carbon from the atmosphere.”

Jones says the trio was struck by the fact that while some agricultural practices were harming the environment, there wasn’t wider adoption of sustainable methods to enable soil carbon sequestration and, in turn, carbon credit generation.

“After 100 to 150 years of tilling and ploughing, most of the carbon in the soil is now up in the atmosphere,” he explains. “But if farmers stop tilling and ploughing soil, and adopt sustainable farming practices like cover crops and using no-tillage equipment, it reverses the process and carbon goes from the atmosphere back into the soil. It’s completely natural and all powered by sunlight.”

The problem was that farmers weren’t being incentivised enough to regenerate their land and turn sustainability efforts into high-integrity carbon credits, according to Jones. Instead, the cost of measuring and verifying increased soil carbon was proving a high barrier to entering regulated and voluntary carbon markets.

As Jones points out, poor regulation and governance of voluntary carbon markets can also result in a lack of transparency around the quality of some carbon credit schemes. That means companies who purchase carbon credits on voluntary markets are at risk of potentially overstating their carbon offsetting achievements.

“So, we decided to solve these problems,” he says.

Taking soil carbon measurement, recording and verification to new levels

Jones, Macdonald and Saeidi founded Carbon Asset Solutions (CAS) in 2018. Since then, the startup has licensed patented technology from the United States Department of Agriculture that measures sequestered soil carbon in a fast, precise and cost-effective way.

These measurements are then verified and converted into carbon credits that farmers can sell on carbon markets all over the world. Each credit is equivalent to one metric tonne of carbon dioxide removed from the atmosphere and stored in the soil.

“This is what corporations want – a high-integrity carbon credit,” says Jones, who is also CAS’s Chair. “That flows capital into the hands of farmers and rural communities. Farmers have a financial incentive, so they get better at it, and it’s just this virtuous cycle.”

Jones says CAS’s digital measurement, reporting  and verification (MRV) solution – the first of its kind globally – is fully transparent.

“A buyer can see all the way down the digital chain of custody,” he explains. “And that’s where the Microsoft architecture comes in.”

CAS relies on several Microsoft services to help power its MRV solution. These include Azure confidential computing, which secures sensitive data while it’s being processed in the cloud. They also include Azure DevOps and the .NET Framework, which Saeidi and her team use for software development and data management.

As part of ongoing efforts to boost the integrity of carbon credits, CAS also recently partnered with Microsoft’s new Environmental Credit Service (ECS). The service, which is part of the Microsoft Cloud for Sustainability and currently in limited public preview, is designed to speed up, simplify and help secure the origination process for carbon credits. It also provides transparency across the credit lifecycle and empowers participants to scale up carbon credit supply to meet rising demand.

CAS has signed on as a supplier and a registry for the ECS to onboard and list validated and verified claims by soil carbon sequestration projects, and help ensure that promised outcomes materialise.

“Through our integration with the ECS, we list all CAS’s projects on the service. Buyers can look at the projects listed and gain access to all the documentation related to each one,” says Saeidi, who is also Chief Operating Officer at CAS.

Seeking further growth Down Under

CAS has achieved incredible growth in its relatively short existence. The company has already commenced commercial operations in the United States and Canada, and will expand its operations to Australia in June 2023, starting with Queensland and New South Wales.

Australia presents a golden opportunity for the startup to grow its operations, with The University of Sydney Institute of Agriculture estimating that 541 million tonnes of carbon could potentially be sequestered in to topsoil of Australian croplands. This figure is equivalent to 18 years of annual CO₂ emissions from the country’s agricultural sector and 20 per cent of total national emissions.

“We have a lot of interest from rural operators here in Australia who are looking for a better solution than under the Australian Government’s Emissions Reduction Fund,” says Jones.