Episode 200: David Antonioli, Verra

Mar 14

Today's guest is David Antonioli, CEO of Verra.

Verra is a global leader helping to tackle the world's most intractable environmental and social challenges by developing and managing standards that help the private sector, countries, and civil society achieve ambitious sustainable development and climate action goals. Verra's global standards and frameworks serve as linchpins for channeling finance towards high-impact activities that tackle some of the most pressing environmental issues of our day.

David serves as Chief Executive Officer of Verra, where he oversees all aspects of the organization, including ensuring the financial and operational health of the organization and that the organization's certification programs meet high-quality integrity and transparency standards. Before joining Verra, David joined EcoSecurities in Oxford (UK), where he led a joint venture to develop landfill gas-to-energy projects under the Clean Development Mechanism (CDM). David began his career at ICF Consulting, providing technical advice to Latin American countries developing their GHG inventories, and was a global climate change advisor in Mexico at the United States Agency for International Development (USAID). David holds a Bachelor's degree in Sociology from Princeton University and a Master's in Public Policy from Harvard University.

I was eager to sit down with David to learn more about the offset market and his work at Verra. We dive into a variety of topics, including David's career path to Verra, Verra's approach to offsets, and how Verra measures success. David also walks me through why carbon offsets are controversial, how to assess net-zero commitments when balancing reduction and offsets, and capitalism's role in the climate crisis. This is a fantastic episode if you're looking to understand better the history of carbon offsets, the existing market, and how we can move to a cleaner future.

Enjoy the show!

You can find me on twitter @jjacobs22 or @mcjpod and email at info@mcjcollective.com, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.

Episode recorded March 1st, 2022

In Today's episode, we cover:

An overview of Verra and the work that David does with the company

David's climate journey, when and why he first became concerned about climate change, and what motivates him to tackle this massive problem
The history of carbon offsets
The stakes of climate change and how David thinks about the magnitude of the problem
A discussion on the existing capitalistic system that, in part, caused the climate crisis and whether that system is the economy of the future
How the reductions and offsets play a role in the quality of net-zero commitments and progress
The carbon offset landscape and key stakeholders
The various types of offsets and certification projects existing today
How to incentivize big companies and corporations to care about the quality of offsets
How Verra measures success and quality of offsets
How to create a better offset market
How Verra scales without compromising quality
Verra's mission, vision, and approach
How far the voluntary market can get us to a clean future and the importance of a compliance market
The role of Web3 and AI technology in Verra's future

Jason Jacobs: Hey everyone, Jason here. I am the My Climate Journey show host. Before we get going, I wanted to take a minute and tell you about the My Climate Journey, or MCJ as we call it, membership option. Membership came to be because there were a bunch of people that were listening to the show that weren't just looking for education, but they were longing for a peer group, as well. So we set up a Slack community for those people that's now mushroomed into more than 1,300 members.
There is an application to become a member. It's not an exclusive thing. There's four criteria we screen for, determination to tackle the problem of climate change, ambition to work on the most impactful solution areas, optimism that we can make a dent and we're not wasting our time for trying, and a collaborative spirit. Beyond that, the more diversity, the better.
There's a bunch of great things that have come out of that community, a number of founding teams that have met in there, a number of nonprofits that have been established, a bunch of hiring that's been done, a bunch of companies that have raised capital in there, a bunch of funds that have gotten limited partners or investors for their funds in there, as well as a bunch of events and programming by members and for members, and some opensource projects that are getting actively worked on that hatched in there, as well. At any rate, if you wanna learn more, you can go to myclimatejourney.co, the website, and click the become a member tab at the top. Enjoy the show.
Hello everyone, this is Jason Jacobs and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change, and try to figure out how people like you and I can help. Today's guest is David Antonioli, CEO of Verra. Verra is a global leader in helping to tackle the world's most intractable, environmental and social challenges by developing and managing standards that help the private sector, countries and civil society achieve ambitious sustainable development and climate action goals.
They also happen to be the certification body that's approved s-... about 70% of the offsets that have been purchased in the market today. That is an amazing statistic and offsets are such a lightning-rod issue, such an important topic. Verra is the leading certification body and David is the CEO. Suffice it to say, I'm grateful he took the time to come on the show. We have a great long-form discussion in this episode. There's almost no topic that we didn't cover in this discussion.
I learned a lot from it. I think you will, as well. And my hope is that, in listening to this discussion, it spurs some meaningful and constructive dialogue, helps build more collective understanding and bridges, and fosters more collaboration, which is what MCJ is all about. David, welcome to the show.
David Antonioli: Hi, nice to meet you. We're with you.
Jason Jacobs: Uh, nice to have you. And I, I told you before we started recording, but I feel a lot of pressure on this one actually, because offsets are... and credits and the carbon markets are just such a timely and important topic, especially with, well, the stakes and the timelines and all the big net-zero commitments that [laughs], you know, that these big companies are, are making. And, and Verra is, you know, arguably one of, if not the most important, bodies that kind of sits in the middle of all of this.
And you're the CEO, so there's a lot of people that I know are gonna be in tuning and listening to every word of, of this discussion. And, and I wanna make sure that we give you a chance to, to share your perspective and, and I have so many questions. And I have no doubt that, regardless of where this discussion goes, I'm gonna learn a lot and our listeners will, too. So, so I just wanna start out by saying thank you for making the time to, to come on our little show.
David Antonioli: No, thank you. And I, I really appreciate the opportunity. Hopefully, by the end of this podcast, you and your audience will have a better sense of, you know, what offsets are and how they can actually contribute to the bigger challenge of solving the climate crisis, you know. It is a complicated space, but hopefully we'll try to, try to simplify and crystallize for folks some key elements behind what an offset is or what a real offset is, and what it means and how, how it can actually make a difference.
Jason Jacobs: Sounds great. Well, for starters, what is Verra? Talk a bit about the organization and, and the work that you do.
David Antonioli: Yeah. So we're a standard-setting body. We're a nonprofit organization based in Washington D.C. and our job is to essentially certify good stuff, right? So that means we look at... And we're mostly looking at projects, so projects that are trying to create value by investing in good solutions to a variety of problems. Obviously the problem at hand and our biggest in our, our flagship program is the Verified Carbon Standard Program, the V6 program.
And that program certifies carbon credits or carbon offsets. So we get, as you can imagine, a number of projects wanting to get the certification, because at the end of the day, if they are successful at getting the certification, they'll have a credit that has value in the market that a buyer can then buy. So we're, in many ways, the glue that holds the market together. We sit in between the supply site, which are the project developers, and the investors investing in projects.
And they need to have trust that the rules that they're following actually are gonna generate something of value. And then, on the other side, buyers, the demand side of the equation, they want to buy something that's of value. So they... Looking for again rules and procedures that have integrity and have credibility, and give credibility to the underlying things they're buying. In this particular case, it's carbon credits. In addition to the VCS program, which is again our flagship program, we run a number of other standards-based programs.
Two of them help certify or help projects report their sustainable development benefits. One is the Climate, Community & Biodiversity Standards and that's exclusively for land-based projects, and the other one is the Sustainable Development Verified Impact Standard, but both of these allow projects to be able to report sustainable development outcomes, specifically in kind of audited, certified outcomes. And we also have run the Plastic Waste Reduction Standard, which is a similar take on the carbon credit concept but in the plastic space.
So essentially, it allows people to go out there and pick up waste plastic that would've otherwise ended up in the environment or was already in the environment, collect it, and either recycle it or make sure it gets deposited in a, in a proper landfill. And you can get credit for that as a way to finance the underlying activity of going out there and picking up plastic waste, so that's kind of the organization as a whole. We're built on, you know, rules and procedure.
We're sort of a, a quasi-regulatory body, because most all of our procedures have a regulatory taste to them. So we, we update our rules on a consistent basis, because we have to follow best practices and new, new scientific evidence. And then, we also do public consultations al-... on all major rule changes. So it's a very heavy, you know, process, but in the end of the day, it's what you need to have a system that's trusted by both buyers and sellers of the credits.
Jason Jacobs: And I think I read somewhere, just to give a sense of the scale of Verra, that 70% of the offsets that have been purchased were approved by Verra. Is, is that a true statistic?
David Antonioli: Yeah. It's a pretty significant number. W- we are fortunate to be in a leading position in the market. So you know, there's a number of reasons for that. We have a variety of different project types that we certify, but we also have a very scalable system. And yes, the, the reality is, yeah, we do, we do certify. We have the largest greenhouse gas crediting program in the voluntary carbon market, so I'm not sure that that applies to the, the Clean Development Mechanism, which is the system set up under the Kyoto Protocol. And this will change once the Article 6.4 program gets set up under the UN, but in the volunteer market, we are the leading greenhouse gas crediting standard.
Jason Jacobs: And David, maybe talk a bit about your personal journey. When and how and why did you first become interested in climate change as a problem, and then how did that and your professional life intersect?
David Antonioli: Yeah, great question. I was very fortunate when I was working as a consultant. Back in the days, I worked for ICF Consulting. And when I arrived there, I got recruited by a very good friend of mine, who was doing projects in developing countries, working to provide recovery and recycling equipment for automotive service shops that were handling CFCs, so chlorofluorocarbons, right, so with the... And this was all under the Montreal Protocol, so I was already working in a global agreement kind of a setting.
And so, we were working to develop these projects to work with automotive service shops and refrigeration mechanics to provide equipment so they could actually recover the refrigerant instead of venting it to the atmosphere, and then clean it and use it again, so therefore to reduce demand, but part of my job also involved working with developing countries, particularly in, in Latin America. I was born and raised in Mexico, so I speak Spanish.
So I worked with the Latin American countries, developing their greenhouse gas inventories. So this is the mid '90s. We already knew about climate change, but there was a lot less knowledge about what this was all about, what it meant for the world, even though there were some folks who kind of understood what the long-term impacts of this would be, but countries were starting to grapple with the idea of reporting their greenhouse gas emissions.
So I was lucky enough to support a number of Latin American countries, developing their greenhouse gas inventories. So that was my... how I cut my teeth. I ended up being part of an auditing team that looked at one of the first large-scale emission reduction projects. It was a project that invested in, I think, 2.5 million compact fluorescent replacements for incandescent light bulbs in two cities in Mexico, Guadalajara and Monterrey.
And so, we looked at the environmental impact, so what the greenhouse gas benefits were about, essentially a precursor to looking at what the carbon credits would be. And then, after that, I got a job at USAID, working as a global climate change advisor in Mexico. So that was how I started kind of this whole path, but, you know, the, the inventories were really the way I started cutting my teeth on greenhouse gas emissions and climate change in general.
Jason Jacobs: And the concept of an offset and of essentially while you're doing things that are generating emissions, that you can offset. And yes, ultimately, you need to stop doing those things or doing them in cleaner ways, but in the meantime, you can offset the difference to get to zero essentially. Where did that concept come from, and when and, and how did it first come about?
David Antonioli: Yeah, that's a great question. I think there's been a lot of environmental economics, right, that have been studying this concept. So it first was born... And this is my telling of it. Other folks might have a slightly different version of history, but there was the early years of the Acid Rain Program in the United States where companies were told, "You have to reduce your emissions of sulfur, emissions in your power plants, but you can trade amongst yourselves those permits."
So that was the idea of basically providing an overall limit for an entire industrial sector, in this case power plants burning coal. And then, if you meet that target and you go below, you can actually sell your surplus to someone else, so that was called emissions trading. And then, when the Kyoto Protocol got passed, there was this idea embedded into that, that companies could trade their emissions, but they could also bring in emission reductions from outside of the boundary if you will, of the bubble if you will.
So they were allowed to bring in reductions from, in this case the developing countries, under the Clean Development Mechanism of the Kyoto Protocol, and it was a way to recognize that companies could invest in projects elsewhere to reduce their footprint to the level that they needed to based on the regulation, but also it allowed them to reduce their costs. So there was a cost-saving element, and the idea and the philosophy is that, if you reduce the cost, companies are more willing to actually take on the action.
If you make it really difficult for them, they're gonna fight it tooth and nail. So if you actually provide some flexibility to them, they will actually be more willing to play ball and actually reduce the emissions and not fight the regulation, for example, so much. So that was really the genesis of emissions trading and carbon offsetting, and it really happened in a regulated context, but what started happening in the early 2000s is that companies started to say, "Well, you know what? If the regulated entities..."
And those tended to be the large-point sources, right? Obviously the power plants, certainly in Europe where the Kyoto Protocol was implemented, the cement plants, the refineries, the steel plants. A lot of their... you know, the ecosystem that supported them and that saw these regulations being in place, they said, "Well, actually, we could do this ourselves. We could reduce our emissions," or, "We could try to invest in projects elsewhere."
So it started to become a thing where companies wanted to invest in projects. And so, you know, over time, fast-forward to today, we've come to a point where companies, especially the consumer-facing ones, have essentially a new liability on their books. They have to report their greenhouse gas footprint be-... Once they report that, they have to do something about it and hopefully that means they reduce their internal emissions to the level that they can, but they also can invest in projects beyond and that gets to the net-zero commitments, right?
And I think, if you think about offsetting, if it's used properly, you know, we encourage companies to set a target, a net-zero target, meet that target and go beyond that to reduce the residual emissions. And that's where, I think, the sweet spot is for carbon offsetting, but there's some work that we, in the sector and the industry if you will, still have to do to clarify both what the claims are that companies need to make... So just a good example, right, I was listening to NPR the other day and there was a credit card that got announced.
They said, "Oh, we'll plant a tree and yield zero footprint, and you're good to go," but they didn't really define what zero footprint is. They didn't use the term carbon-neutral, but it's not clear what I get by using this credit card and how many trees they're gonna plant and whether it's really gonna offset my footprint, but there's a lot of doubt and concern about what the claims are that companies are making when they buy an offset and whether they're meeting a target.
If we can clarify that, that will provide a lot more clarity for people wanting to enter the market and you'll be able to know, "Well, if I'm gonna say I'm carbon-neutral, it's gonna mean that I'm doing X, Y and Z." And ideally, we're pushing companies to set a target, a net-zero target, meet that target and offset the residual emissions that... beyond their net-zero target, but they're on a pathway to reaching that net-zero target by 2050.
Jason Jacobs: Now, typically in the flow of these discussions, I would then dig in on Verra's work and where you fit in and offsets, and I actually... I wanna take things in maybe the opposite order that I usually do and start with the big picture. So when I think about the clean energy transition with the caveat, I've been thinking about it a lot, less long than you have, but I think about essentially there's a lot of good that came from the Industrial Revolution but that the externalities of this pollution that gets created as part of this hyper-growth gets pumped up into the atmosphere and there's really no, no cost to that.
So you can just dump up unlimited and not really think about it, and it's made kind of a mess and, and caused us to live not in harmony with the planet that we rely on to support humans and other life forms, and to some degree with each other due to things like, like inequality, and essentially we need to re-architect the global economy to factor in the externalities and be more in harmony with the planet and with each other. So I, I'm gonna stop there just to check. How does that align with your understanding of, of what needs to happen?
David Antonioli: I totally agree, right? It's the typical tragedy of the commons kind of a situation where we pump emissions into the atmosphere. We don't see the immediate effects and, therefore, we don't assume that there's any costs, but, in fact, we're now learning, certainly the IPCC report yesterday made it very clear, that there's some serious consequences, but our economy has been built around these systems that don't incorporate the costs of the greenhouse gas emissions.
And yet, it's had tremendous impacts and consequences for people who are now suffering the consequences of climate change, but nobody's... We need to figure out how we actually put in an economic signal so that we stop generating that many greenhouse gas emissions and we can correct the course of our economy, but I, I would agree that you're, you're absolutely right, that it's all about how we've basically developed as a society without taking into account the consequences of, of greenhouse gas emissions, which are now coming home to roost.
Jason Jacobs: So, so another narrative you... I mean, you hear about the 12 years or 10 years or catastrophic consequences, point of return, and then there's others that say, "Look, it's more of a slider where, where the longer we take, the worse things are gonna get," but worst just means, you know, like a higher probability of extreme events or some more suffering or things like that, but it's a slider. It's not like there's truly gonna be an extinction event and, and those are the stakes. And maybe this is more of a personal question than a Verra view, but, but where, where do you fall as you think about the, the stakes here and the, the magnitude of the problem?
David Antonioli: I think the stakes are pretty big. I worry constantly about threshold points that, you know, okay, fine, the weather today here in Washington D.C., it's what it should be roughly. It's pretty cold, you know. It's around 32 degrees. That's what, what you would expect. But boy, you know, five weeks ago, it was 60 degrees. That was... felt very uncomfortable. And then, you start to think, "Well, what does that mean for everything in our ecosystem? Are the trees going to go through their natural cycle? What about the birds and everything else that supports that?"
I do worry that there are some significant threshold point-of-no-return kind of moments that we would reach. I'm not a scientist, but that's just my personal view. And I think we need to do everything we possibly can to get off this track where we're pumping out so many emissions into the atmosphere. We have to do it. Again, I'm not a scientist. A scientist would be able to provide a bit more clarity, but I think the scientists are saying that, right?
They're saying, "Look, we are in a situation today where we need to significantly draw down, not only stop putting all of that emissions, all of those emissions, into the atmosphere, but we need to start to draw down atmospheric carbon and we're in a pretty dire situation." So yeah, I, I stand with what those folks are saying, that it's a pretty dire situation. We need to do it. It may very well be that it's, it is a bit of a slider, but I do think thee are these things called tipping point, at which point there is a point of no return and things can get pretty bad. I don't think we wanna test that. We've got the technology. We've got the ability to do it. We should just put it into action.
Jason Jacobs: And I, I'm sticking with these big philosophical questions up front for, for some reason, but when you look at our existing system, you know, the one that was responsible for the Industrial Revolution, the system of capitalism and market forces, has that run its course or what role do you think that system should play in the next chapter for the world?
David Antonioli: So you know, I would say that this is an indictment on the capitalist system. I just think the capitalist system is not... Again, if we build into the system we have the right measures to internalize the externality, in this case greenhouse gas emissions, I think we can use the system to ge- get out of it and I think that's really what markets are all about, right? If we can make sure that the markets recognize the value of greenhouse gas emissions or, you know, the cost, if you will, of a greenhouse gas emission into the atmosphere and we price that in, then the system will turn around and start to price and benefit those activities that are not pumping greenhouse gases into the atmosphere.
And that, I think, is really key. I think [laughs], the magnitude of the problem is so big. I think we need markets and we need the capitalist system to get us out, but we need to have it be bounded and directed in a way that actually helps us solve the problem and helps us develop the new technologies we still, we still need to develop to be able to rescale, to scale the solutions that we need going forward.
Jason Jacobs: And th- this might be an over-simplistic view, but it seems like, in order to get there, we need to, one, understand our emissions footprints, both the ones that we're directly responsible for and the ones that have, you know, second or, or third-order consequences, then we need to fix that and put in place cleaner options that, that don't have the same emissions footprints. And then, we need to offset the difference in the meantime but ultimately get there fully, so I'm gonna stop. I said that as a statement, but it's really more of a question. How does that align with how you think about staging and what needs to happen?
David Antonioli: So I think if you go back to the organizing principle behind a science-based targets, right, or net-zero targets, we are at a situation today that is unsustainable. We have to move every company in our economy to a net-zero target and that may be 2050. It may be earlier, but basically we need to start a traje-... a trajectory from today that gets you down to net zero in 2050 or earlier if possible and that means reducing your emissions by 90 to 95% of what they are today over time.
It's not gonna happen tomorrow. Some might be able to do it. That's great, but it will take time. Especially the hard-to-abate sectors will ha-... take time to kind of move down that curve. And then, at some point, I think the view is that, at some point, we will still be pumping out greenhouse gas emissions to the atmosphere, just because it would be impossible to completely wean ourselves from it and that will be roughly five to 10% of total emissions of what they are today.
And for that, we need to be removing greenhouse gases from the atmosphere so that we reach that net-zero balance. That's what net zero's all about. And so, and that will be based on removing, you know, pulling out greenhouse gas, uh, greenhouse gases or carbon from the atmosphere. And so, if we can get the companies of the world to follow that trajectory, that to me is the key. And importantly, where I think offsets can play a critical role is if you think about that area that's...
If you think about curve and how a company goes from, let's say, 100 tons today to five tons in 2050, all the way along that journey, there are going to be what you call residual emissions. So maybe in five years' time, they're at 70. And in 10 years' time, they're at 50, right? At 70 and at 50, you're still emitting 70 emissions, 70 tons, uh, per year, or 50 or whatever that trajectory looks like. But if you can be offsetting that and investing in projects that compensate for that, then we're doing double the good.
We're not only getting on this trajectory, this net-zero trajectory, but we're actually making the problem less difficult to solve in the long run. Because if you're only on that pathway, which is good, it's great. I'm not saying it's not, but if you're only on that pathway, you're still gonna be generating 70 tons per year or 50 tons per year until you get to that stage where you're emitting five or 10 tons. Now, that's a lot of emissions emitted over time.
That's a lot of carbon in the atmosphere, which we'll then have to pull out. So why don't we actually invest today in activities that prevent that carbon from going to the atmosphere and in many cases actually help to strengthen some of the key natural ecosystems that our lives depend on, like forests? We do not want to lose the standing forest today. If we lose the standing forest, we lose a lot of biodiversity. We lose a lot of other very valuable aspects of our, of our world.
So we can invest today in what are called natural climate solutions, right? We can also start to continue to invest in other activities that prevent greenhouse gas emissions from going into the atmosphere. So there's a lot that you can do beyond just being on that trajectory to really help solve the climate crisis.
Jason Jacobs: When you look at these net-zero commitments that these big companies are making, and they have say 2030 targets or 2050 targets, and although it's getting better and there's more accountability, a lot of these, there's not a lot of staging or concrete plans or accountability in between. If I were just trying to look at these companies objectively and f- figure out how serious they are, should I care about the ratio of reduction and offset when I'm assessing the caliber of their net-zero commitment and progress?
David Antonioli: I don't think you wanna look at the ratio. I think what you wanna look at is what the target is, right? I think you want to make sure. I mean, let's take the example I had before, right, where you're emitting 100 tons today. By 2050, you want to be emitting five. So today, maybe it's, it's hard to get to 90, but you have to get there. But maybe if you get... have to get to 80 in let's say 10 years' time, right, you wanna be measuring that company against their target as long as they have a trajectory to get there.
I think that's what we need to expect companies to be account-... That's what we can hold them accountable to, but they have to have that target and they have to be meeting it over time. I think what's, what's gonna be really interesting over the coming years is that we're starting to see the need for proper accounting of how companies are actually developing, implementing and reporting on their targets, and I think that's very exciting.
I'm actually very, very hopeful, because I think you've got initiatives out there like the Voluntary Carbon Markets Integrity Initiative and science-based targets, right, who are basically trying to say, "Okay, here is the process for setting a target." The VCMI, the Voluntary Carbon Markets Integrity Initiative is going to be looking at what sorts of claims companies can make on the back of the credits that they buy, but ideally they're gonna say, "Well, actually you can only make a claim if you have a target and you're meeting your target, or you're close to meeting your target," right, so that you can't just be saying, "Oh, I'm carbon-neutral," without having demonstrated that you have a target and that you're on a trajectory to meeting it.
To me, again that's the key. If we can pair these two, internal reductions by companies, to their footprint, additional action to compensate for the residual emissions, right? That's the sweet spot and that's where we wanna push companies to get to, because that is where, I think, we can have a significant impact on climate change. We can get on that curve. We can stop the problem from getting worse in the long run.
Jason Jacobs: Well, I don't wanna put words in your mouth, but what I think I'm hearing and I'm gonna state it back just to test my understanding, but I think I'm hearing that doing the hard work to decarbonize is optimal but that it's gonna take time no matter what, especially in the hard-to-abate sectors. And in the meantime, it is far better to offset than to do nothing, assuming that the offset is high quality and actually does what it says on the label, correct?
David Antonioli: Yes and no. I mean, I think that second part of what you said is very, is very critical. You've got to make sure that the credits that you're buying are legitimate. That's, of course, that's what we spend all of our time on. There's another initiative, which I'd be remiss not to mention. It's called the Integrity Council for Volunteer Carbon Markets and that's gonna look at all of the main greenhouse gas crediting programs, including the VCS and determine whether what we do actually meets a set of criteria that they've set out, and they're ca-...
They're calling them the core carbon principles, you know. If the credits that a greenhouse gas crediting center meets, sorry, issues meet those criteria, it will be approved and there will be a clarity for buyers as to what kind of credits you can buy that are real, so that's absolutely true. It's really important that we have consistency and clarity in respect of what kinds of credits you can buy, but I think the one thing that I would add is a caveat to your statement is that, yes, we need to offset now, but it shouldn't come as a distraction to doing the hard work of decarbonization, right?
And that's where I think offsets have had a challenge in respect of how they're perceived in the marketplace. People feel like, "Oh, a company's just gonna offset their emissions. They're not gonna do the hard work. And therefore, and they can claim carbon neutrality." I think that's a real risk for the market and we need to make sure that companies are not doing that, that they are doing the hard work to reduce their internal emissions and that they're using offsetting as a final step to reduce their residual emissions. And I think it's true, right?
If companies are only offsetting, I think that doesn't do the service to society, because, you know, we can't offset our way to the solution here. Offsetting's a great thing if done in the right context, if it complements internal reductions by companies. And if we can get to there, like I said before, that to me is a sweet spot.
Jason Jacobs: And when I look at the offset landscape, it, it seems like the key stakeholders, you've got the, the buyers or, you know, the big companies or others or, I mean, it could individuals for that matter, but that are looking to offset their emissions in, in some form. You've got the project developers who are actually producing the projects that could be potential offsets or credits. You've got the brokers, and then you've got the certification bodies in the middle. Did I miss any big ones or is that the landscape?
David Antonioli: Yeah, that's, that's essentially it, right? On the project developer side, you've got a lot of investors, right? So you've got a project developer, but the project developer has to get money from somewhere to be able to invest in that project. So you've got a lot of folks providing early investment into those projects. Now, that can be in the form of, "I'm gonna get some credits at the end of it," or it could just be investment as a business practice.
And then, then there's, you know, on the, on the buy side, I think you're starting to see, you know, you've got the, the intermediaries, which are, like you said, the brokers. You're starting to see more and more exchanges, more formalized systems to manage the secondary market and that's getting increasingly sophisticated. So I think you've got the, the right kind of categories, but both of those are starting to get more sophisticated, because the market's evolving and it's getting bigger, and it's attracting a lot more players.
Jason Jacobs: And historically, what are the key buckets in terms of types of offsets, and then what trends are you seeing in terms of the types of potential offsets? And, and what I mean there is, you know, could be avoidance. It could be removal. It... Like, what types of projects are out there, and then are the certification bodies like Verra... Is it one size fits all, that you can certify any kind of project or, or is it that certain kinds of certification bodies are better for certain kinds of projects?
David Antonioli: Yeah, it's a great question. There's a few in there. Let me try to take them [crosstalk 00:31:33]-
Jason Jacobs: I do that. I, I, I wanna get better at asking one question at a time, but my mind... you know. It's just-
David Antonioli: [laughs].
Jason Jacobs: I'm like a kid in a candy store. I can't control myself [laughs].
David Antonioli: Yeah. I'll, I'll try to answer those. To the first part of the question, there are a variety of different credits out there. I mean, if you think about the trajectory of markets, what we've seen in our system is that, in the early days of the VCS program, the majority of the credits and the projects in the system were renewable energy projects and that's because, at the time, renewables weren't common. And so, we credited a lot of them, but in 2019, we decided...
We said, "Actually, we don't believe that grid-connected, you know, larger-scale renewable energy projects are additional." And that... I'll try not to add lingo to the, to the podcast here, but that is the one, uh... If you bear with me, I will introduce that concept, because it's really key to carbon markets. And essentially, by a project being additional means that it wouldn't have happened without carbon finance. And because you're gonna use that outcome of that project to offset another emission, you really have to demonstrate that carbon was a key driver in making that project happen.
So in 2019, we decided that grid-connected renewables were no longer additional, because basically they can stand on their own. Now, we still allow them in least-developed countries because the conditions there are particularly challenging, but all other countries, we don't allow them anymore. So we no longer credit renewable energy projects in most countries and that means that that project type has now started to be a lot less important, certainly in what we certify.
Now, back in 2010, one of the big innovations that we did was to support and bring into the carbon markets natural climate solutions, so forest conservation, forest restoration. Now, we're starting to see a lot of work in the agricultural sector. So we really thought that these systems could leverage carbon finance to actually achieve some important goals and the way it's played out is that... So, so we, we address some of the key challenges that people have in respect of these credits, and so I'll mention two of them.
One of them is permanence, so the idea of being, if you plant a tree or you conserve a tree, that tree can catch fire. It can be cut down and the carbon stored in that tree can end up in the atmosphere, right? So that's a risk that all of those projects face. What we did is set up a system to create a rule that would require projects to set aside a certain percentage of the reductions they achieve. Now, imagine, you know, plant 100 trees.
You have to set a certain percentage of that carbon you've stored into what we call a buffer account. And so, that buffer account, we can call on it whenever a project that does suffer a reversal, meaning that the trees get cut down, we can back it up and make sure that the credits that are in the market are legitimate. So it essentially works as an insurance pool. And as a project developer, you have to pay into that pool, percentage of, of reductions that you achieve.
And so, that was a way to address the permanence issue and it's worked really well, and so we've seen quite a number of projects that are conserving forests. Now, with the drive towards more removals, we're starting to get a lot of interest in removals projects. The other challenge we addressed was the issue of leakage and this plays out particularly in respect of forest conservation. The fear was, "Oh, if you protect a patch of forest here, well, the drivers of deforestation are just gonna go next door."
So there's actually a set of rules that requires projects to measure leakage in the leakage belt around their project and to discount it from the emissions reductions that they achieved. So we were able to put in place systems and rules to address these concerns, and we were able to bring these credits into the market and make them fungible with everything else in the system. And that, I think, is a real value, that basically, at the end of the day, when you have a VCU, which is what we issue, a verified carbon unit, it counts for a ton of greenhouse gas emission, whether it's the reduction or removal.
So there's a number of different project types. Those are very popular now, the nature-based solutions. We're starting to see a lot more in what's called the blue carbon space. So you know, areas, you know, budding sea and land, so mangrove restoration, mangrove conservation. That's a couple of, you know, very interesting project types being developed there. We're starting to see some more work in tidal wetlands, so kind of the wetlands ocean blue carbon is a very exciting space.
And there's now an increasing interest in removals, as I mentioned before, because I think, in 2050, we will have to have a huge store of removals projects happening. So we're starting to see some interesting moves, movements, in terms of a direct or capture some technological removals. And so, to answer the last part of your question, I think one of the things that ICVCM is going to do, ag- again that's the Integrity Council for Volunteer Carbon Markets, is to set up a system where you can label or identify what kind of credits you're getting.
So is it a removal or is it a reduction? Is it a nature-based solution or is it a technological solution? Do you have sustainable development reporting as part of that? So you'll be able to kind of identify what kind of projects they are so that you can best identify and meet your needs as a buyer, so a lot of companies prefer projects that are protecting forests or a lot of companies may prefer more technological solutions. So you'll be able to identify what those are and be able to choose the ones that you want.
Jason Jacobs: Uh-huh [affirmative]. When it comes to purchasing, if I'm a big company and I've got a net-zero commitment, I just wanna be able to say that I'm making as much progress as I can towards that commitment. So if quality, for example, isn't factored in to how I'm doing against that commitment, I'm just gonna go for the lowest cost, because then my dollars or whatever unit of currency I use stretches the furthest, and I can show the most progress and look like a hero, and my stock price gets reflected and I get my bonus. And, and the cycle continues. What incentive do these big companies have to care about quality? And if they don't, how do we get them to care more?
David Antonioli: So that's a great question and I think that's really again part of why the ICVCM is going to be so important, because it's gonna make sure that the credits that it blesses meet a certain threshold of quality and that means that, as a company, yeah, you might be... you know. You might just end up buying credits that meet that criteria and, you know, that's down to the company and what kind of claims they wanna make. Now, the threshold, my, my guess, is gonna be pretty high and pretty rigorous.
So I think people should feel comfortable that, once they're buying those credits, they should feel, you know, very happy with that. And in the end, you'll be able to make a claim that you're actually, you know, meeting your target and you're offsetting with these, but the key thing there, I think, is also that this has to be part of a package, right? If you are only offsetting, then, you know, people will wonder, "Well, why didn't you do any internal reductions?"
I think we need to hold companies to account to those internal reductions that they've set out... set a path for. First of all, obviously they need to set a pathway for achieving that net-zero target and they need to be demonstrating again that they're actually meeting that target. And beyond that, then they're offsetting. And I think, once you've met that and you've, you have a target, you're meeting it and you buy credits, you know, I think the concern about price won't be so much, because you'll have this system under the ICVCM that'll bless the credits that are legitimate, but companies will always have an incentive to align their interests along with the project types, right?
So for example, again I, I mentioned it before. Companies want to have project types that resonate with either their, their staff or their clients or their consumers, and there's a number of different ways that you can slice that, but I think what we've seen in the, in the volunteer market actually, which is interesting, is that we've seen companies be very concerned about quality, because it is their reputation on the line. So they will have a strong interest in making sure that the actual credits that they're running are legitimate, but again once you have the system set up by the ICVCM, it'll be clear.
Now, there's a balance there, right? The ICVCM is trying to create a market that's more scalable and that's bigger to drive more finance to it, but that does come with a little bit more of, of knowing that this is the list of credits I can buy and I'm good to go. So there's a balance between, you know, volume and scale and the, the detailed due diligence that companies have been doing, but which quite frankly is pretty difficult. Not all companies are going to go to that level of due diligence, because it's very costly.
It's very, it's very time-consuming. And if you know that someone's already done that and there's a list of credits you can buy, then I think that'll be good for the market, because it will allow it to scale and it will allow, you know, companies to enter the market with a lot more confidence.
Jason Jacobs: Uh-huh [affirmative]. I know your... And correct me if I'm wrong, but part of your stated value proposition is that, by being the certification body, you're also certifying the quality of the offset, correct?
David Antonioli: Correct.
Jason Jacobs: So one question I have is, internally, do you measure what your batting average is of your assessments versus the realities and what percentage you have misses, and is that something you track and goal yourselves on trying to improve over time?
David Antonioli: So I'm not quite sure what you mean. Like, well, I mean, we have a rigorous process to check all the projects [crosstalk 00:41:02]-
Jason Jacobs: I can clarify. So for example, when some studies come out that say that some of the offsets that you certify aren't quality, right, you know, some of the... you know, whether it's nature-based or, or otherwise. I've heard, you know, you or, or some of your staff reply that those are statistical anomalies and that, you know, no one's gonna bat 1,000, but overall, you know, "We deliver what we say we're gonna deliver." And, and I guess what I'm asking is, do you track internally anything quantitative that shows, you know, that backs up that statement essentially?
David Antonioli: I think the way to answer your question is, you know, we have a set of rules and all projects that get approved have to follow those rules. Now, yeah, there may be some studies that come out and say, "Actually, that project didn't work," but they may apply a whole different assessment approach. So a good example here is forest conservation, right? And there has been a couple of reports out there that said, "Oh, actually the baselines that have been put forth by projects using the VCS standard are not legitimate. They're inflated and they're generating too many credits."
Well, and they're using, uh, kind of a, a different way of assessing how you create that baseline. So sorry to kind of dive into the, the devil here in the details, but I think it's worth it to answer your question. In order to create a baseline, you have to create a counterfactual, because if you're gonna conserve a forest, you have to have some way of measuring what would've happened without the project, right? The way our rules are set out is you have to, currently, is you have to set out a clear set of procedures.
You have to identify areas that are similar in terrain, similar in proximity to roads. There's a whole list of criteria and projects follow that to create... Find a reference area is what it's called and then create the baseline for the project area. The criticism that we've gotten, people have said, "Oh, actually the reference area was wrong. If you pick this different reference area, you get a different emissions rate." Well, of course you do, right [laughs]?
That makes sense if you pick an entirely different area, then, you know, you're gonna get a different number. And you know, that's just part of what we do. We need to make sure that the rules that we set out are clear, they're consistent and they're informed by science. Now, on this very issue, we are currently revising how we establish the baseline and the reason is, and this goes back maybe to m-... one of my earliest comments, right, a- as a standard, we need to make sure that we're following the latest scientific evidence, the latest best practices and the latest, you know, government regulatory activities.
So in this particular case, governments, back in 2010, governments weren't doing much at all about deforestation and it was pretty much like that's why we actually invested so much effort in making sure that we could actually drive carbon finance to the sector, but roll the videotape forward to today, governments are now starting to engage in forest conservation and one of the things they're doing is they're coming up with what are called jurisdictional baselines.
That's a baseline for a jurisdiction. That's most likely a state. Sometimes it's a country, but it's looking at the deforestation rate across the country or, or a state. And that's great, because we can now use that and use that as the basis for setting out the baseline for an individual project, right? If we allocate that baseline down to the project level, we can have confidence that it's not gonna be bigger than the whole pie and that it's based on kind of this government-level set of information.
Now, that's what we're moving towards and we're requiring projects who got developed in the early days. We're requiring them to use these new rules and I think that's all part of the, the approach where we need to recognize that this market is constantly evolving. Our rules have to be dynamic. They have to change with the circumstances and again we have to have a regulatory approach where we say, "Okay, guys, here's the new approach. Here are the new rules, what they're gonna look like."
We do a consultation. We get the feedback, and then we provide the new rules and we give people a grace period to fall into those rules, but it's not like someone's gonna come say, "Oh, your projects are wrong. Throw them out the window." That would never work, because, A, we'd be undermining a lot of early investment that was done in good faith and we need to be conscious of the fact that we, as a standard, need to keep our rules updated over time so that projects can be brought along and continue to do the good work that they're doing, but to think of the world as being black and white, I think, is just not helpful.
And I think, you know, there will be studies out there that say, you know, "You missed the beat," whatever. That's fine. We take all of that information and incorporate it into our rules as we go forward to make sure that our rules going forward are legitimate and follow again best practices, scientific evidence. And the, the point about regulatory developments was really important. The very first question we ask a project is, "Are you required by regulation?"
Now, if the answer is yes, you can imagine that we can say, "Okay, sorry, you can't get carbon credits, because it's gonna happen anyway," right? That's the concept of additionality. But if the answer is no, then carbon finance can play a role and that's the space we operate in, but as countries start to implement their obligations under the Paris Agreement, there will be more and more sectors of their economies that they will start to regulate.
And that question we ask, "Are you required? Is this project required by regulation?" will hopefully over time become yes and we will have a smaller scope for activity in some of the existing project types that currently, you know, fair game for carbon, but over time those might actually get reduced.
Jason Jacobs: I mean, there's probably more than two camps, but for simplicity purposes, there's two camps of people. There's people that say, "The offset markets are broken and we need a different system." And there's a second group of people that say, "The offset markets are broken and we need to fix the existing system." So I wanna break that down into two parts, first the statement the offset markets are broken. Agree or disagree?
David Antonioli: I disagree. I don't think they're broken. They work very well. I think the market is full of transparency. I mean, I was talking to some investors the other day and I explained to them what's in our registry, and they looked at it and they were like... you know. I showed them what's in our registry, which is fully available to anybody in the public. You can find out anything you want on any project. You can find the project description. You can find the reports from the auditors.
You can find the attestations that project developers make. You can find so much information in this space, which folks are really not accustomed to. So that's A, the information that's there. The process is very thorough and complete and rigorous, and so to say that the car-... offset market is broken, I think, is wrong. Does it need to improve? Yes, and where I think it needs to improve are two main areas. One is it needs to provide a clear sense to the market as to what counts as a legitimate credit, because right now there's a number of different offsetting systems out there that some of which are and some of which are not that legitimate.
I would argue that, you know, the VCS along with the gold standard of the Climate Action Reserve, the American Carbon Registry and some of the major greenhouse gas crediting programs are all legitimate. They all have the fundamental elements of a program, which includes standard rules on who can audit, rules for developing accounting methodologies and a transparent registry. I could go into deeper on those. P- pretty much that's what you need to look for and I think that's what the ICVCM will be looking for.
Now, where I do think the carbon markets, the offset market, needs more help, because actually I think that the supply side is pretty rigorous already, is on the demand side on the claims. Right now, there really isn't much to say as to what really a carbon-neutral claim, or a climate-neutral or climate-compensated claim, looks like, right? I mean, um, you know, um, the Super Bowl. I was hearing on NPR or some place like, "Oh," you know. I can't remember the beer, but, "We're, we're gonna be the first carbon-neutral beer."
Well, what does that mean? Do you have a target, science-based target? Do you have a net-zero target? Are you meeting it? Are you compensating the rest? I mean, nobody really has yet defined wha-... the claim side of it and I do think that that's a part of the market that needs a lot of attention. And I think, you know, back to that initiative, the Voluntary Carbon Markets Integrity Initiative, once that plays through, if they're able to create that clarity for what a legitimate carbon offsetting claim is, you know, they will define the terms and what it needs, but if we can get clarity on that, that will be really important.
And I think that will address a lot of concerns people have about the market, but it's not broken. It's working fine. It can be improved for sure, but I think it, it's working. It's working very well, but I wouldn't give it an A, right? I'd give it maybe a B at this stage, but we need, we need to work on getting it up to an A.
Jason Jacobs: Uh-huh [affirmative]. When you look at the organizations like a carbon plan or like a carbon direct, and I'm sure there's others, why do you think they feel the need to exist? And I'd also just love to get your perspective on what role they're playing and whether... how much and, and whether they're adding value to the marketplace.
David Antonioli: So I don't know exactly. I've got a lot of carbon organizations, you know, in my mind here.
Jason Jacobs: Let me ask a more general question. Organizations out there digging in on the quality of on a project-by-project basis of carbon removal projects as an example or organizations that are holding the hands of big companies to helping them run their RP processes and suss out purchasing decisions around their portfolio of carbon removal project purchases.
David Antonioli: Yeah, I'm no-... I think they're, they're planning a good role in the marketplace and I think they actually are filling a space that's needed, because companies making big offset purchases are wondering, "Well, what do I do? There's all these choices out there. How do I know which is legitimate?" So I think that's part of the challenge that we have. My hope is that, once the ICVCM has... provides that clarity, that you'll have less of a need for companies, for everybody, to be doing this, but I think there will be an important role that they will play, because companies will want to have that due diligence.
And maybe they'll say, "Oh, maybe there's these 15 projects that I really like and they're all approved by the ICVCM, but I wanna dig in deeper. I wanna understand them better. I wanna know which ones are really providing the kinds of benefits that I need." So I think this is a... I see it as a reflection of an increasing sophistication of the market and the fact that large buyers are wanting to really get the credits that they really want, and they can identify and that resonate with whether it's their staff, their, their stakeholders, whatever.
And I think that's a good thing, but I think the need for that will fall as we have more clarity from the ICVCM as to what really counts as a carbon credit and maybe, but we'll see what that... how that plays out, but I think ultimately, you know, I'm hoping that the ICVCM will provide that clarity that will give companies more confidence to enter the market, but I think they'll still be able and there'll still be an important role for companies that are looking at individual project types and comparing them across for a variety of other criteria.
Jason Jacobs: Uh-huh [affirmative]. Anecdotally, I've, I've heard from some project developers that are more focused on technological innovation, that their sense is that certification bodies like Verra are better equipped on the avoidance side, but because the technological innovation requires different skillsets to assess that, it's been harder to push new projects through. What's your response to that? Do you agree, disagree? What, what color can you add for, for that topic?
David Antonioli: In order to get a project, you need to have an accounting methodology developed, right, or protocol. That's how... That's w- what some people use, so you have to have the rules set out, what sort of data you're gonna gather, how you're gonna determine that the project is additional and you have to have the templates for the data, all that stuff. That's how you account for the carbon, so developing a methodology is not... You don't... It's not like just add some water and off it goes, right?
Y-... It requires a fair bit of time and effort, so we are seeing a number of methodologies being submitted to our system, but it has to go through a process, right? It has to be reviewed by our staff. It has to be reviewed by an independent auditor. It has to go through a 30-day public consultation. It has to go through a public consultation, right? So it's got to have a process, so there's a lot of projects out there that are looking to get carbon finance, but you have...
The first step is you have to get and approved methodology that applies to your project. So you know, and we're seeing lots of that. I don't, I don't know what exactly you're hearing, but I do know that there's a number of different new methodologies being proposed on your system and that will see a lot of these new technological and removal types of activities available at some point. I mean, I can't guarantee that they will be approved. They've got to go through the process, but it's a complicated process, right? We need to apply the rigor we traditionally have been applying to make sure that the end product is legitimate.
Jason Jacobs: Yeah, no. And I'm hearing the tension as you're talking through it, because on the one hand, you know, you're getting pushed by me and by the marketplace for better quality, better quality, better quality. And on the other, you know, you're being pushed by the marketplace to not be a bottleneck and to scale. So how do you scale without compromising quality and can you scale without compromising quality, or does the pie need to look more evenly distributed than 70% of all offsets getting approved by Verra in order to support what's needed in the marketplace?
David Antonioli: Yeah, that's a good question. You kind of, you know, pinpointed kind of one of, one of my pain points right now, right, which is like, "Oh my God, we've got loads and loads of projects coming through the door." And we are doing a number of things. I mean, the first thing is we're just hiring like crazy. We've grown from a 20-to-25-person operation to more than 80 or 90 today, and we're gonna continue that growth pattern for the next year.
So we're looking at having easily more than 100 by middle of this year and moving u- up the volume in terms of, you know, folks looking at projects, so one is hiring. Obviously, it's training, making sure that the project documentation that we get in the door is of high quality, which means working more closely with the auditors. A lot of times, we end up catching stuff that the auditors miss. If we can improve what the auditors are doing, we can start to create that, that system that enables us to, to do the final check and just only catch final things.
We need to work on that, but the other thing we're doing is building out our IT systems, both to track projects but also to digitalize the entire project development process and the MRV in the long run. So if you can imagine what happens today, you prepare documents, PDF. You submit it. Someone has to go through it, check, you know, all the different sections. And then, at some point, it gets approved by the auditor. It comes to us. We check again.
And then, at some point, it gets uploaded, but that's a fairly inefficient and somewhat antiquated process. So what we're trying to do is we actually have a working group on this, is try to get the methodologies automated or digitalized. So you will then, instead of submitting a PDF document, you will submit all your do-... all, all of your information through an electronic platform. That means putting those methodologies on an electronic platform. You'll submit the information. It'll be much more readily available. It'll be much more immediate and we'll be able to search for things more... better, right?
So it will make the data availability much stronger on a registry and that will then play its way through the assessment and the approval process. And then, at some point, we'll also have the MRV being supported by digital technology. So if you think about, you know, a meter on a land-flow gas project, that you can imagine how you could actually have a meter sending a message through a system that says, "I've captured so much gas. It's been measured. We have such concentrations of greenhouse gases. We've applied this instruction of technology. We've distributed 99% of the methane and, therefore, we can turn it into a credit."
And then, that would then simplify that whole process and you'd be able to get the issuance much more quickly. That's the kind of thing we're trying to include in our registry and the whole functionality. That, I think, is gonna allow us to move a lot more projects through the system, you know, once we add the staff, you know, make sure the auditors are doing their job and that we make sure that we have the IT systems to support that, but that's kind of wha-... That's high level what we're trying to do to make sure that we handle all of the volume that's coming through.
Jason Jacobs: So we talked before about big-company incentives around net-zero commitments and what things they need to get pushed on and stuff like that. I wanna take that same lens when we look at Verra for a moment where you talk about you need to keep up with the demand and needing to scale your systems and processes, and in order to do that, it takes resource. In order to take resource, it takes people and it takes budget. And in order to get budget as a nonprofit, it takes funding.
So I'd love to understand better incentives and what it takes to make sure that you have the capital that you need from a donor standpoint and what incentives you set out internally to drive the behavior that's desired from the team and across the organization.
David Antonioli: Yeah, no, great question. So we have a fairly straightforward funding system. We generate our, our revenues by applying fees to users of the system. So if you want to register a project, you have to pay us a fee. That ends up being a deposit or a credit against your issuance fee. Once you start to issue credits, then you pay us a fee and it's a flat fee. It reduces for volumes, because, you know, once you start to generate large volumes, then we don't need to be generating that much revenue for big volumes.
So there's a sliding scale and that, that's what keeps the lights on. So we're fortunate that we have a system that actually is self-regulating and, you know, the incentive is, if we end up doing bad-quality work, eventually those issuance requests will dry up. So we have a strong incentive and, you know, re- reinforces through our internal management systems that we need to make sure that the credits that we're sharing are, are high quality and that we're providing a, kind of, a thorough review of all the projects in the system.
And we provide internal trainings, you know, oversight, and there's... You can imagine there's a set of hierarchy decisions that get made as, as the project goes through the system, but, you know, it's about making sure that the... again that the whole system is working, not only from the auditors but also our internal systems are built to make sure that we're, we're providing kind of... that we're issuing credits that are of high quality.
Jason Jacobs: When you look at the scale that's required, a lot of that, I think, and correct me if I'm wrong, is predicated around the voluntary market continuing to grow the way that it has been or even accelerating. How far do you think the voluntary market can take us? Um, how important is the compliance market and what will it take to get compliance to play a bigger role, if you believe that it should?
David Antonioli: So I do believe that it should and I think, in many ways... you know. When I first started this job, back to kind of a personal story when I took it in 2008, I literally thought this was a five-year job. I thought, you know, "The markets will be regulated, you know. The Obama administration will actually, you know, pass climate change legislation and, you know, the voluntary markets will be a thing of history and we'll be able to turn the lights out, close the door, declare victory and move on."
Unfortunately, that has not happened. The governments of the world have not stepped up at the rate and the level that we need, so I am a strong, strong believer that we need comprehensive, regulated greenhouse gas controls throughout the economy and the faster that happens, the better. We are not about trying to create this big organization that's actually gonna, you know, exist forever, just because governments aren't doing their job.
And going back to another point I made, if you can imagine, if governments actually step up and start to regulate a greater part of their economies, you start to reduce the scope for voluntary action. So there's a natural kind of decline in the work that we do, built in, if we actually get on top of the problem, and that's great. I mean, we totally welcome that. We're fully supportive of that. We don't want to, you know, offsetting be this thing that you keep doing forever, yeah, with the caveat though that, even when we get to 2050, we are gonna have to have removals, because we are most likely not gonna be able to wean ourselves completely off of carbon, off of greenhouse gas emissions.
So we will need a mechanism and a system to account for the reductions that are, th-... for the emissions that we're gonna be removing from the atmosphere through removal systems. So you know, I think the reduction kind of projects, they have a limited timeframe, but we're not there yet. We still have a huge problem on our hands. Companies are... Again back to that example we had, we have a lot of companies at, at 100 or 95 when they should be down to 10 or five by 2050.
So we have a huge volume of reductions to achieve between now and then, and those can be either avoided emissions or they can be removals, but in the long run, we have still a need for removal. So I think, you know, there's still quite a bit of activity that organizations like Verra can do to foster investment in emission reduction activities between now and maybe, what, five, 10 years, but hopefully soon enough, those reduction activities will start to get reduced, start to fall off the map, if you will, because countries will actually begin to start to regulate those sectors and there'll be fewer opportunities, and that's a welcomed thing.
Jason Jacobs: And j- just a couple other random ones that I think are important that we haven't hit yet, and I know we're, we're starting to run long, but one is just around technology. When you talk about manual processes and automation and scale, I can't help but look at trends around remote sensing, satellites, AI, things like that. Are those interest areas for you? Are there specific gaps? Do you have a wishlist? And when you do go to embrace technology, if you do, do you have more of a partner approach or, or a build it in house? Ho- how do you think about that and what message do you have for, you know, for third parties out there that might be working on different potential pieces of this puzzle?
David Antonioli: Yes, that's absolutely a huge priority for us, right? So the more we can use and leverage those technologies, the better. We've not had a single-partner approach to our work. We've tended to work with a variety of partners, and we kind of let 1,000 flowers bloom and let people use whatever works up there, you know. We try to think of the world in a way that we'll set the rules. If you can meet the rules, then that's great and there may be different approaches and different technologies that people can use.
So we're not, we're not likely to kind of bless a single system, a single technology. For example, our methodologies, they are technology-agnostic, right, or they're, they're proprietary. They're not proprietary. You can't say, "Oh, I'll develop a methodology where you have to use my technology." We would never accept that. You can say, "We used a methodology. We used this kind of technology and ours is one of them, but we're not the only one," or, you know, "Anybody else can come up with a technology that's, that meets these criteria."
So we, we tend to provide a framer, like a set of rules that allows a variety of players to operate and to access it. And in the case of technology, you know, AI and that kind of stuff, you know, we'll set the rules for what is allowed and that would allow different players to come up with different, you know, mousetraps and, and, and they can then figure out which is the... The market can then figure out which is the best one, but we try not to kind of choose winners in that sense. We try to set the rules and let the market sort itself out.
Jason Jacobs: And then, similar question around Web3. So as players like Toucan or KlimaDAO or, or others emerge, how much are you thinking about that area? How are you thinking about that area? Is it an opportunity? Is it a threat? Is it a distraction? Any color you can add around Web3 and trends, and what relevance it has for, for the Verra world would be super interesting to me and I know others, as well.
David Antonioli: Yeah, I mean, those are, those are kind of exciting, new developments. I think our view is that, right now, folks need to be careful about what this is enabling and, you know, make sure that kind of wi- with the systems that you're using actually have, have some level of transparency and clarity, and are actually doing the right thing. It's early days. I think we're trying to figure out exactly how to be a, a partner and a, a catalyst for more investment in this market, but we need to make sure that it's all done in the right way.
Um, so you know, it's, it's early days. I d-... I don't know too much about... I can't speak too much about it yet, because I don't know much about it, but, for example, we did put out a note, you know, back at the end of last year saying, "Hey, you know, these are all very exciting things that are great for innovation, but hey, just be careful and make sure you're doing the right thing. And you know, we may have more on that later, but for now, we're saying, 'Well, you know, just be careful what you're signing up to. Check it, make sure it's doing what it says it is, make sure that it's being transparent and make sure that the end result is good.'"
Jason Jacobs: Uh-huh [affirmative]. And looking forward, what are the key priorities internally for Verra over the next eight, 12 or 24 months?
David Antonioli: I think for us, it's to be able to manage the huge influx of project requests that are coming in the door and queries and account openings. You can imagine, so I think we are in the process of upgrading all of our internal technology tracking systems so that we can actually, you know, manage the workload and, and there's the digitalizing of the whole project cycle. I'd like to see that start to, basically, start to have an impact and, and start to have some examples of how this could work.
That to me is really important, because it's gonna help with the workload. And I think there's also an element there of making sure that we're as transparent as possible with the stakeholders, because, you know, we get stakeholders. They call up and say, "Hey, where's my project? How come I haven't heard back from you?" I'd like to have some system that provides some clarity and transparency to that process, and that we train, you know, all of our, our existing and growing staff.
In fact, at least we, we can provide the support to the market, but to me it's really about that. There's a few other kind of internal changes we're making to the design of the organization. So you know, we're looking to hire a managing director and that, that job is out, you know, posted publicly and we need to have someone. We're looking for someone who can help us integrate the different parts of the organization and allow me to do some of the other work, because I can't be external-facing doing this kind of stuff, working with a board and managing the details of the organization.
So you know, there's some interesting internal changes that we're doing. We're looking for a chief communications officer, for example. So you know, there's some changes we're doing, because we're growing from a small organization where, you know, we all knew each other. We all could know what was going on, because we... It was a pretty small group of people to now where we're going to be more than 100 people. We need to have much more kind of clear business processes to make sure that we're all in touch, that we're actually processing things properly but that we're all keeping up to date on kind of what's, what's happening.
And that required systems and kind of, you know, operational exc- excellence that we need to, we need to build out. So that, I would, uh, I would say our priorities are, "Let's make sure that we actually build out the organization," that we build out the ability to kind of respond to all the projects, but we're also embracing all these new technologies, whether it's from the digitalizing the methodologies to kind of doing the whole digitalizing and automating all of the, the project flow through the project review and approval process but also the MRV, which you mentioned.
Jason Jacobs: Uh-huh [affirmative]. And then, what about stuff that's outside of your control? If you could wave your magic wand and change one thing that's outside of the scope of your control that would most accelerate your progress and the broader progress towards the mission of the organization, what would you change and how would you change it?
David Antonioli: One magic wand? How many waves do I get?
Jason Jacobs: I mean, if you have more than one at the tip of the tongue, let's hear them.
David Antonioli: So the first one would be let's get governments to step up. That would be number one. That would actually solve the problem and, in fact, it might mean that we could reduce our operations, and that would be fine with me. I mean, I fundamentally believe that, if governments stepped up to the level that we need, you know, there may not be such a need for the volunteer market and that would be fine with me. So that would be one, number one. One, number two, considering that that's not very likely to happen is I think we need clarity in respect of the claims that are made.
I really think this is important and this market has now existed for roughly 20 years, and there's still confusion about what carbon neutrality is, what compensating my footprint means, et cetera. And that is a really, really critical thing. I think as, as soon as we have clarity on that, I think people will start to identify, you know, what it is that company's really doing. And I think part of that sub-wand, if you will, is we need to have systems to enable companies not only to make and set their, their net-zero targets but a way for them to report against those targets.
Those really don't exist today in a very incipient stage, so I would like to see that happen, because that's gonna allow us to be able to separate the companies that are really on the track making that progress, making those commitments and making that progress from the ones that aren't, and I think that's critical. That's where offsetting will really have tremendous value. And then, yeah, those, those would be the ones I would say.
I mean, a third one would be this idea of, you know, what the ICVCM is doing, which is set out what the legitimate and the, the carbon credits that are real, that hold water, that are real. I think that will help the market a lot.
Jason Jacobs: And who do you wanna hear from, if anybody, and how can listeners be helpful to you and to Verra?
David Antonioli: For me, you know, understanding what people are hearing and seeing and perceiving in the market is really important, especially now that we're kind of all pretty much at home. It's hard to get a sense of what the real zeitgeist is out there on this. I mean, I, I do understand that there's a fair bit of concern and, yeah, concern about the market. I mean, your question, I thought, was interesting. Like, you know, is the market broken?
There's probably a lot of people who feel that. I'd be curious to hear from people, if they really do believe that it's broken or if the changes that are being made make sense. So that to me, I'd be curious to hear, you know, whether the things that I wave, that I wave that magic wand for, if those make sense. I mean, that's my perspective. I'd be curious to know if that kind of resonates with people.
Jason Jacobs: Yeah. So typically, I end this by saying, "Any parting words?" but I actually wanna ask something more targeted in this case and, and that is, for the people out there that say, "Offsets are just a distraction that enable people to just status quo, business as usual and keep right on admitting, and they need to go. They're in the way and they're not just neutral. They're actively harmful," what do you say to those people?
David Antonioli: I... First of all is I hear you and I think that, if offsets are done as the only solution, I wouldn't necessarily disagree too much. I mean, if, if we are only offsetting, we're not gonna solve the problem. So offsets have to be part of a bigger solution. They have to be part of a company that is picking up a target, working to meet that target. And then, if you are then offsetting, then it can really be a game-changer, because we're gonna prevent a lot of bad stuff from going into the atmosphere.
We could actually help preserve a lot of beautiful, pristine natural ecosystems, which are very valuable beyond the whole carbon space. And it would make that, that job long-term a lot easier, because we won't have to remove as much greenhouse gases from the atmosphere. So I think offsets, you know, on their own, as an only solution, aren't gonna work and I would agree with you, but I don't think that's the case. I think there's an opportunity to really leverage this carbon finance and bring it to provide finance for stuff that wouldn't have happened that's gonna help us do a number of things that are important for, for the world.
Jason Jacobs: Great. Well, David, this has been amazing. This discussion did not disappoint, and I'm sure it's gonna spur a bunch of interesting and valuable dialogue, too. And, and one hope we have, both for this discussion and just for MCJ in general, is that it breaks down barriers and helps humanize people that, that might, you know, be behind faceless organizations. And as you said in this world of Zoom work and everything, I think that's important, and also just clear up misconceptions and start to build bridges so, uh, that foster more collaboration, since a lot of the people that are out squabbling actually have the same goals at the end of the day. And, and if they could work more closely together, then we all win.
David Antonioli: Yeah, no. Uh, I, I agree and thank you very much. It's been a, it's been a real pleasure. It's been a great conversation. Thanks for all your good, pointed and challenging questions. I appreciate it.
Jason Jacobs: Okay, thank you for coming on the show.
David Antonioli: Take it easy. Have a nice day.
Jason Jacobs: Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. No, that is .co, not .com. Someday we'll get the .com, but right now, .co. You can also find me on Twitter at JJacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.

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Episode 200: David Antonioli, Verra

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