Episode 5, Game Changers and Transition makers: The quest for negative emissions

Elena Lambros:

Hello and welcome to ESG Matters @ Ashurst. I'm Elena Lambros, the Ashurst Risk Advisory, Climate Change and Sustainability partner. Welcome to the latest episode of Game Changers and Transition Makers. In this series, I'll be speaking to entrepreneurs around the globe who are at the forefront of driving the sustainability agenda through innovative business ideas and company start-ups.

In this episode, I'll be joined by Magnus Drewelies, Founder and CEO of Ceezer, a carbon credit procurement platform. Since his university days, Magnus has been obsessed with the voluntary carbon market as a combination of his passions, namely science and technology, to facilitate impact. An expert within the commercial and legal team, Magnus helps translate climate strategies into concrete, secure and optimised transactions backed by years of experience in carbon markets, strategy and ESG laws.

All right, so thanks for joining us today, Magnus. Really delighted to have you on our podcast. I thought it'd be really helpful if you could just outline to everybody a little bit about yourself and your business, like; how did this all come about?

Magnus Drewelies:

Thanks Elena for having me, super excited to be here. I'm Magnus, Founder and CEO of Ceezer. My background is actually in chemistry and business, so I have both an engineering and a business side to it, and I think what always fascinated me from the beginning was about the intersection of technology and, well, business and how businesses can help to distribute innovation, particularly how that can happen in the realm of sustainability, so what role can business play to actually propagate and scale sustainability or even climate-friendly technologies?

And then spent a bunch of my time in consulting working for Boston Consulting Group across the globe, working with really large industrials on their decarbonisation journeys and figured out that a lot of them will need negative emissions beyond their supply chain. That is something that is just an imperative for many, many industries. Over the past years, I think we've seen that there's a lot of problems around how to best engage in that space and how to de-risk this and how to optimise for impact, and that is literally what Ceezer is doing. So Ceezer basically gives large enterprises the tools, data and partners to actually optimise their negative emissions impacts in the world.

Elena Lambros:

I really like the idea of negative emissions, even though negative has always got to me a little bit of a connotation around the word, but I absolutely understand it's needed, because there's so much focus on getting to net-zero, a lot of the businesses will get to negative. So when you say you're focusing on that negative side of it, could you just talk through in what way does your business help them get past their hard decarbonisation journey and reach that ultimate negative emissions? What does that look like?

Magnus Drewelies:

So, essentially companies need to do three things when they look at their carbon footprint and their climate impact. The first is to reliably measure what their actual impact is, and that is something that a lot of companies have done great progress over the past years. There's I think a lot of good tooling around it, and I think increasingly we also see regulation coming in. If you look at the EU with CSRD, but also the proposed climate risk chapter of the SEC in the US, we do see that there's a lot of more pressure of regulators to actually measure, so that is the first thing that companies need to do.

The second thing is they need to decarbonise, and decarbonising your own operations is heavily operational. That requires to change energy sources, to often invest in new assets, to really renew or redo how you've been doing things for a long time. And that is a very long journey, it's a very capital heavy journey and it's quite a risky journey to be quite honest. And I think what we've seen in the past, which is natural, is that not everyone always sticks to their plan, sometimes things might take longer. Also, the macro environment might define how quickly you can actually do this based on the financial envelope you're working on.

And then the last step, and this is where we focus on, is to say, "Well, there's going to be a part that you need to take out beyond your own operations. And that can happen while you're decarbonising, as you're on that journey, but that also is required once you are at the minimum of your own emissions, you'll need to take care of the rest." And this is where what we call negative emissions come in and negative emissions are essentially a verified reduction or removal of CO2 from the atmosphere that you can invest in beyond your own operations.

And we've come out of a time of either or. I think a lot of the discussions over the past years were mostly focusing around; if you do this, don't you actually stop decarbonising? And I think what we see both with our client base, but also I think more globally now, I've just been at COP two weeks ago in Dubai, is that it's really both that we need to do almost at the same time. If we talk net-zero, which I think is a great target for many companies, it's almost impossible to actually get to zero just by decarbonising. There's always going to be residual emissions. And I think for this last really hard to abate part, you need to have reliable technologies that can counteract on the remaining impact that you have on the climate, and this is exactly where we focus on and where we can help enterprises to find the right technologies, but also the right verified reduction units in a sense to purchase and to invest in.

Elena Lambros:

Yeah, I really like that focus around even if you are decarbonising, you can still do more. You don't just have to decarbonise your business and that's it. So that's a really great focus area, as well as obviously meeting net-zero, which is quite challenging for a number of industries. So in terms of thinking about what carbon quality looks like or how you think about that project, there is an awful lot of discussion around making sure that it is actually doing what it says to do, being able to verify it and really feeling comfortable that the quality of that decision making that you've put in place around the investment is there. What sort of things do you look at when you try and address some of those topics?

Magnus Drewelies:

First of all, I think from our perspective, it's important to have that quality conversation and we welcome I think any kind of criticism in a sense or constructive criticism of the market, and I think that's part of why we started Ceezer originally was really to also think about we have to get better at understanding what the actual impact is and how to verify it. At Ceezer, we look at I think over 3.5 million data points on quality in the market. So we have a huge data set that is based on all of these scientific publications. We collaborate a lot with also universities like the ETH Zurich, Berkeley National Climate Lab, Yale University to make sure that we get a strong understanding of what is known currently on the market. We then map that to individual credits and projects. We, in addition, capture over 250 data points for each and every project.

And essentially, I won't go through all of them, but there's a few I think themes that we look at. So the first one is clearly additionality. So, would that effect have happened without carbon finance or without the financing stream of carbon, or would it have happened based on regulation? And if either one of this is true, you should probably not invest in this as an additional reduction or removal. The second part is permanent, so we have to look at the fact; how long will this effect actually prevail? If you look at the very traditional project types, which normally are carbon avoidance, the concept of permanence doesn't really apply, because you're just avoiding something. It's not like it's necessarily coming back, but also there's not a net reduction in carbon in the atmosphere. If you look at removals, however, which is where I think the market needs to go, that is a problem. You have removal effects that could last for 10 years and they might last longer, but you can't really verify it. You might have removal technologies that, well, depending on who you ask might be 1,000 years to 10,000 years of storage. And that really makes a difference.

And what we actually do is we make this really, really transparent and we actually give you that data. We literally will tell you based on both scientific research, but also that particular project methodology and verification method, that's the expected permanence. And then we look at a bunch of other things such as co-benefits or is there anything else happening apart from the climate impact that that credit will do? And I think in the nature-based space, so if you look at afforestation, reforestation or avoided deforestation, there's always a huge component that is social. It's about communities living there. It's about the impact that project or that intervention might have on local communities, because you are potentially changing the way that local population lives, where they get their food sources, their firewood, so this needs to be managed as well. So we also make that transparent and make it comparable.

Now, what's really important is it's a very confusing and still quite fragmented space. So you have a bunch of different registries, different wording for the same projects, different let's say labels depending on the registry or the certifier it goes with. A lot of the work that we do I think as a first step is we really harmonise this. So we really make sure that we map across all different standards worldwide. We work with over, I think, 12 by now, that we give you comparable data, so you can actually make a judgment called based on data, on comparing apples with apples rather than trying to find your way through a maze of different labels and vocabulary. And we really make sure that you can compare it.

Elena Lambros:

So sorry, so just to clarify, is that like if you're reporting on this standard, you can make sure that you are providing them with information that they need to align with that reporting?

Magnus Drewelies:

So, that's also happening in the back, but even before, so if you go and you're trying to think about a portfolio of negative emissions you would want to purchase or to invest in to compensate for your own company's emissions, you have a bunch of different sources. You have compliance systems of course, but then in the voluntary market you have probably around 20 different standards, I think it's probably five big ones, that all run and work with different vocabularies, sometimes different nomenclature. What we can do is we can actually help you compare that and give you a harmonised view on the market. That means that you can compare the impact of a project across all registries, across all standards based on the actual impact data that runs behind it. And that is really important if you think about the tens of thousands of options that you have, trying to find an optimum, you need to source from every potential source and this is what we ultimately allow you to do.

Elena Lambros:

Yeah, that's absolutely incredibly important, and being able to understand the impact of what you're doing I think is also really important. So in terms of with your platform and all of this data and being able to harmonise it and people want to be understanding the decisions that they're making, have you seen a shift in the trend around what people are interested in, or the sort of projects that they want to invest in?

Magnus Drewelies:

We religiously track that, of course. It's really something that I think we are particularly interested in, but also where we started to build this product out with a certain hypothesis in mind. For example, we always said there needs to be a long-term shift to removals from avoidance credits. Avoidance credits are not per se of bad quality. They have just a very different mechanism and effect behind it, and the avoidance effect will not last. We're not going to be able to reach the 1.5 target, most likely also not the 2.0 target without extra removals. So, we always, for example, started in our platform and in the product literally to make it very transparent to each and every customer that we have; what's your share of removal today? And just by pointing out this number, keeping it very present, we've seen that that changes the conversation in organisations, but also helps sustainability teams convince leadership or at least explain to leadership; "Listen, this is where we're not performing well yet, because we might only have 2 to 5% of removals. We potentially need to go to 100%". And this is also something that we see actually in the way that portfolios evolve.

So, what we definitely see is a trend towards removals. We also see a trend towards more long-lasting removals. And what we generally recommend, and we also see really happening already is a shift away from maybe investing in one to two projects that might have a great marketing story to tell, into a really risk optimised portfolio of 5 to 10. Because you're trying to, much like in a stock portfolio, you're trying to diversify the technologies that you'll support, but also really diversify the risk that you're taking, because each and every credit will come with a risk. There's never a 100% guarantee that the effect will be the one that you want to have. So you're trying to mix different geographies, different technologies and different registries together and different standards together in what we call a balanced portfolio approach. And that comes with a great benefit that gives you a bit of freedom to decide on, whatever the financial envelope is that you're working under, you can actually make sure that you mix and match, and for the amount you're able to invest, to get the highest possible impact in by balancing a bit the composition of your portfolio.

Elena Lambros:

Well, that's a great trend to see. I really love that risk optimisation around the portfolio. Sounds like it's really interesting for clients to take on. In terms of then if you think about where you started from and what your hypothesis was and what you wanted to do with the business, what does success look like for you?

Magnus Drewelies:

So, we always said from the very beginning, I think among the first to look at large enterprises as one of the key players in that space. I think you could argue consumers should do it. You could argue it's going to be an SME topic, we felt that a lot of the emissions globally can be actually captured quite well if you look at larger enterprises and their operational footprint. And what is interesting, I think, just from a systemic point of view is they, as a larger enterprise, you own a relatively large share of emissions and you can control it quite well, more than any individual could. As a consumer, you're at the end of the chain, so whatever you purchase, the emissions will already have happened. It's really hard to change that at the point of purchase.

And so we always thought about basically three things. The first being; can we support and help large enterprises to approach this topic with the same rigor as they would approach investment or money? Ultimately, we feel like carbon needs to be as important as financial performance, in a sense. It's probably more important for us, for humanity on a planetary level at this point. So, can we get the right data? Can we get the right tooling in place to lift that conversation away from; let's do something voluntarily in terms of impact, but really think about how can we optimise the impact that we can have as an organisation? I think that's the first thing we wanted to achieve.

The second thing was to say we need to, as I said, we need to get to a balanced portfolio approach, because we need to support, at the same time, almost a collection of different technologies, because everything is really early and quite frankly, I think we don't know yet what will be the best way to do carbon removal long-term, so we need to front load a bit of the financing and make sure that we have all the technologies in place and we look at multiple ways and technologies at the same time to make sure that we come up with the right solutions over the next 10 years, not even actually, it almost needs to happen more quickly.

And the last point is that we wanted to make sure that, as I also said already, the shift to removal is happening. We need to make it really easy, and that is really important. I think it needs to be super, super easy and super clear of where to invest and how to invest in removal, rather than avoidance. And I think luckily, I think these were the three things we set out to do. Luckily, I think we do see it in our customer base. We work with a bunch of really global enterprises, really large businesses, which I think is exactly the right way to approach it. And all of these things, like portfolio approach, shift to removal, making sure this is becoming an investment decision rather than only a marketing decision, is something that we can luckily observe already today.

Elena Lambros:

Yeah, that's excellent. And I really like that really disciplined approach around carbon, similar to an investment approach. I think that's really important. So then in this podcast, we really focus on what changing the game is, and it sounds like you are definitely doing that through Ceezer, but what would be the key to reimagining the current system that you think in terms of getting that next level change?

Magnus Drewelies:

Yeah, so I think we're coming out of a very fragmented space, and I think it's been really hard for enterprises to understand the impact that they might be having, but also to really convey what they're doing. So, if you think about only a few years ago, the company would, if at all, invest in a single project, probably very old standards, they would know the vintage year, they would know when that trend was actually created. I think we should move to, and I think we can see regulation kicking in there as well, is to have a mature approach to this and to see the VCM, the voluntary carbon market, but also beyond value chain mitigation, any shape or form as one necessary component, which it already is. I think there is a really heavy scientific consensus on this, which means that you need to really include it into your carbon budget early on.

And I think so far often it's been, within an organisation, there's often I think this trade-off thought, it is like, "Oh, we have to decarbonise, but if we do that, we shouldn't invest in beyond value chain mitigation or negative emissions." Well, it turns out you have to do both and you have to plan for both. And I think along with many other tools that are out there, and I think a lot of new and really incredible innovation I think that came about over the past years when it comes to tracking your emissions, but also to help you decarbonise, I think it's really tools like Ceezer that help you to do this in a, let's say, data-based and a rational way, but to really make it a conscious investment decision. And I think this will need to happen rather sooner than later. In some parts it's already happening. Ultimately,

I think as I said, the regulation are coming in with companies needing to disclose this down the line and needing to disclose what the composition of your portfolio, what's the decarbonisation that you could do internally, what is the technologies that you use or the credits that you use to take care of the unevadable emission or emissions that haven't been evaded so far, I think that is something that will really drive to a world where this is based on data and full impact.

Elena Lambros:

I agree. I think that real focus on disclosures, accountability, transparency, regulation is really going to see a shift in the market pretty soon. Now, changing track, we always ask people on this podcast; what is your personal commitment to net-zero in the next 12 months? Do you have anything that you have as your goals?

Magnus Drewelies:

Sure. So, although we're a young company, even on a company level we have that discussion, we just had it actually last Friday. So once a year we actually get together, we measure our company footprint, but also every individual's footprint in the company. And we then discuss what is our overall impact and what can we do? And I think-

Elena Lambros:

I love that.

Magnus Drewelies:

Yeah. So we actually started to implement almost like an internal cap-and-trade system, meaning we give ourselves a budget that includes the company footprint, but also everyone's individual footprint, so we start to actually make trade-offs. So if you want to go to a conference for work, that might mean that I can try to do something in my private life that reduces my footprint to reach the limit or keep under our targets in a sense. And on a company level, I think we've already done a lot, so of course we only use renewable energy, we don't purchase meat, we never have a meat at any company dinners or company catering. And the heaviest part for us is indeed travel. And that is something that remains being super, super hard to just avoid completely. That said, we did make a rule around really only attending events in person when it's absolutely necessary, or when there's a factual reason for us to be there in person, like joining a panel or needing to be there to run a workshop or something like that.

And it goes similarly, I think, for the private footprint. So, clearly we're trying to fly less. I think that's also, for me personally, that's probably the biggest part of my footprint would probably be travel as well. And apart from clearly removing it at the end of the year, which we do for each and everyone's individual footprint, but also our company footprint, my personal commitment is to definitely further reduce that. And the other part is very small, but we basically public transport pass that we provide to each and every employee, so that we don't have to use any cabs. I'm definitely trying use that more as well over the next year.

Elena Lambros:

Well, that's really good commitments for the next year and what you've done with the team. So you definitely inspired me to think about how our team can put something like that in place. I think that's great.

Magnus Drewelies:

Yeah.

Elena Lambros:

Its actually very cool. And then finally-

Magnus Drewelies:

Happy to share our template.

Elena Lambros:

Yeah, thank you. Finally, if you could provide listeners with one action to take away, what would it be?

Magnus Drewelies:

I think on an enterprise level, I think we need to face the fact that decarbonisation is hard. It's complicated, I think most know, but we need to plan for a future where we might not make all of the decarbonisation targets on time. And that is quite frankly the reality for most enterprises that I've seen. When I worked with enterprises to set decarbonisation paths and to find those pathways, hardly ever does it happen on time. It is ultra expensive. It takes a lot of time, it takes a lot of work, it requires really rewiring sometimes core processes that have been around for 50 years or more.

And I think the key takeaway, I think on an enterprise level should always be to think about the impact that you need to ensure you have cannot be altered based on your own decarbonisation performance. So you need to make sure that you have a system in place to do your contributions. If you have SPTs, make those target. If you have an net-zero target, make that target independently from how well operations perform, not because I don't think they should perform well, but I think because there's just always a real risk this is being delayed. And I think if we don't have one thing right now, it's time. I think we're all talking about 2030 like it's 10 to 15 years away. It's not, it's basically really only six years left.

Elena Lambros:

It's pretty close. Yeah.

Magnus Drewelies:

It's pretty close. And we are both on a global policy level, but also really on a, I think, if you look at on an enterprise level, we're still very far away, I think, from where we were hoping to be around 10 years ago. And I think making sure that that is not becoming an arbitrary spend, but to think about it like a strategic investment or an investment in your license to operate, I think is the right approach. And I think this is what I would urge everyone to do is think about; how can your business be successful in the net-zero future? And I think this will guide a lot of decisions in a better way.

Elena Lambros:

Yeah. No, thank you for that. And thanks for those final thoughts. I'll leave it there, but thanks so much for joining us. I really appreciate it.

Magnus Drewelies:

Thank you.

Elena Lambros:

Thank you for listening. I hope you found this episode both worthwhile and insightful. To learn more about our podcasts, visit ashurst.com/podcasts. This Game Changers and Transition Makers mini-series follows on from our 30 for Net-Zero 30 series, and I would encourage you to click on the link in the show notes to find out more. To ensure you don't miss any future episodes, subscribe now via Apple Podcasts, Spotify, or wherever you listen to your podcasts. And while you're there, please feel free to leave a rating or a review. In the meantime, thanks again for listening and goodbye for now.