Does the world need another carbon offsetting platform?

Michelle You argues that her new startup, Supercritical, can actually make a difference.

By Sarah Drumm

Supercritical cofounders, Michelle You and Aaron Randall

There’s a hot new carbon offsetting platform on the block. 

Supercritical has raised £2m pre-seed funding to build out its platform, which launches today and gives startups access to cutting-edge technologies such as carbon capture and bio-oil sequestration

The company’s founders — Michelle You and Aaron Randall — are a well-connected pair in the European tech scene. Randall is a roving CTO with stints at concert discovery company Songkick and edtech platform Lingumi. You, meanwhile, cofounded Songkick, and more recently served as a venture partner at London VC firm LocalGlobe. 

As well as convincing You’s former employer to lead the round, Supercritical’s investors include European tech royalty like Wise’s Taavet Hinrikus, Entrepreneur First’s Alice Bentinck and Bulb’s Amit Gudka. The business has already onboarded a handful of buzzy UK tech startups as customers, including what3words and Tide.

So far, so exciting. But does the world need yet another carbon offsetting platform?

Carbon offsets generate huge sums of money. By 2030, McKinsey estimates that the market for carbon credits will hit a whopping $50bn — a 15-fold increase from today’s levels.

The carbon offsetting cash grab

Carbon offsetting platforms have had no problem wooing VCs of late. As businesses and governments set increasingly ambitious targets for achieving climate neutral status, such platforms are expected to seriously cash in.

Between April and June, more than $19m of VC money poured into European carbon tracking startups, including a $7.8m raise by Sylvera, which vets carbon offsetting solutions, a $3m Series A raised by Plan A and French carbon-tracking startup Sweep’s $5m funding round. 

In June, UK business Ecologi raised $5.7m for its carbon offsetting subscription service, while across the pond, Atlanta-based carbon measurement and offsetting startup Cloverly raised $2.1m in July.

You says it took just one month for Supercritical to raise its £2m round. 

But the buzz surrounding these businesses has not come without criticism. Some argue that offsetting allows companies to simply write cheques and put off actually adapting their businesses for a low-carbon future.

Meanwhile, the reliability of offsets themselves has long been questioned. In 2017, an EU study found that 85% of offsets were used to fund transitions — such as the shift towards renewable energy — that would have happened regardless, meaning no real reduction was made. A more recent study by the Guardian and Greenpeace’s investigative arm Unearthed criticised the flawed assumptions used to estimate the impact of offsetting schemes. 

To avoid these pitfalls, You says Supercritical will exclusively focus on carbon removal schemes — from tree planting to more nascent technologies like carbon capture and bio-oil sequestration — and avoid the types of popular offsetting schemes which “essentially pay others to avoid emitting carbon”.

“I don’t think we need another carbon offsetting platform that sells the same conventional offsets that actually don’t do anything, and trick people into believing they are acting on their responsibility,” You says, explaining that schemes which fund eco cookstoves or the construction of solar farms are simply piggybacking on shifts already taking place. “With carbon removal, it’s very straightforward. No one else is paying for this tonne of carbon to be removed — you’re paying for it, and you can substantiate it with paperwork. The philosophical concept is very different.”

Such schemes do come at a higher price point, though. While the average carbon offsetting scheme costs $5 per tonne of CO2 removed, You says Supercritical’s early customers are currently paying £150 per tonne on average.

By taking a sector-specific approach, the hope is Supercritical can also collect data that will help startups benchmark themselves against their competitors, to see how they’re doing when it comes to actually reducing their emissions. 

Carbon removal’s chicken and egg problem

Carbon offsets generate huge sums of money. By 2030, McKinsey estimates that the market for carbon credits will hit a whopping $50bn — a 15-fold increase from today’s levels.

You says that by diverting some funds towards early-stage technologies, carbon offsetting platforms could serve as “market makers” for the types of so-called ‘silver-bullet’ carbon capture technologies currently being developed by startups.

This approach is not without its risks either. Take Swiss carbon capture firm Climeworks. Despite raising over $100m in funding, it is yet to turn a profit and there are concerns it may not be able to scale up (and bring costs down) quickly enough to make a difference in the fight against climate change.

“They’re focusing on their main business, which is to make this technology work, test it and scale it,” says You. The hope is that Supercritical can prove “there is a market, and help them get that robust business model they need.”

Growth hacking the climate fight

To do that, Supercritical will need to gain a critical mass of customers itself. You’s connections have certainly got the business off to a good start, and she has a proven track record of bringing customers on board — having grown Songkick to 20 million monthly unique users before she left the business in 2017.

“The climate movement needs a good growth hacker with excellent communication,” she says. “There’s so many acronyms, so much jargon. It’s really hard without being knee deep into it to know what to do.”

The £2m funding will be used to build out Supercritical’s team and perfect its positioning as an expert partner for tech firms that want to do their bit in the fight against climate change, but aren’t sure what that is. Supercritical is currently hiring a Climate Lead who will, among other responsibilities, be tasked with translating complicated climate science for tech founders.

By taking a sector-specific approach, the thinking is that Supercritical can also collect data that will help startups benchmark themselves against their competitors, to see how they’re doing when it comes to actually reducing their overall emissions. 

“That creates a data moat,” You says. “The better our benchmarking is, the better advice we can give to our customers.”

Sarah Drumm covers sustainability at Sifted, and heads up our new sustainability-focused newsletter Sustain. You can sign up here. She tweets from @sarah_drumm

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Cristian Parrino
Cristian Parrino

Investing in real carbon removal through natural (as long as indigenous life and original biodiversity of local land is preserved) and technological approaches is the right way to go for offsetting. As long as offsetting is viewed as a transitional approach since ultimately, it’s important to bring emissions to zero in the first place. Offsetting cannot become the excuse to continue business as usual.