Space Intelligence Brings Rigor To Forest-Based Carbon Credits

Forest-based carbon credits have been met with widespread skepticism over the past few years, with media reports claiming that most of these projects are worthless. Maximizing the atmospheric carbon emissions sequestered by our planet requires that we overcome such doubt, stop deforestation and engage in intelligent reforestation projects.

Realizing the importance of preserving forested ecosystems, I was overjoyed to learn of the work of UK-based Space Intelligence and meet the firm’s co-founder and Chief Scientist, Professor Ed Mitchard.

Many share my enthusiasm—the company raised $7 million in a second round of venture funding from smart-money investors and sealed a deal with a major financial exchange to provide data to underpin billions of dollars’ worth of commodity contracts.

Mitchard and his co-founder, Dr. Murray Collins (who serves as the company’s CEO), met in 2009 while doing scientific fieldwork to quantify the carbon stored by dense tropical forests in Africa.

The legacy technology used in making estimates for carbon credits is terribly inefficient

For years, the only way to estimate the sequestration potential of different ecosystems was to catalog the number and species of trees and measure their girths and heights with tape measures and hand counters, sometimes in remote and dangerous survey areas. Mitchard and Collins guess they have used this method to measure over 25,000 trees during their time in the field.

The enormous expense of manually auditing forest-based carbon credit projects is a main reason why many legacy forest-based carbon credits end up being worth so little, and why financial markets tend to be reluctant to list and trade them.

Mitchard’s solution to this problem was to survey forested areas using satellite image data. He was awarded a doctorate for this novel solution, then hired as a post-doctoral researcher and made a professor at the University of Edinburgh.

A space-age revolution in carbon credits

After the launch of several cutting-edge satellite systems that gather data using synthetic aperture radar (SAR) and light detection and ranging (LIDAR) technology in the twenty-teens, Mitchard had all the data he needed to realize his remote sensing vision.

Mitchard and Collins founded Space Intelligence in 2017 and have been on the leading edge of the aggregation and analysis of the newest generation of satellites’ remote sensing data ever since.

The data Space Intelligence uses is in the public domain, making it relatively cheap. That’s good for Mitchard and Collins’s firm, but also lowers the barrier for competitive entrants, so it isn’t hard to find other firms assessing carbon sequestration potential based on the same data.

Space Intelligence, like its competitors, interprets satellite imagery and estimates carbon sequestration potential by applying machine learning algorithms to standard models for forest-based carbon storage.

Despite the competition, Mitchard believes that he and his colleagues’ long experience analyzing satellite data, paired with a comprehensive understanding of ecological models from years of fieldwork, give his firm a comparative advantage.

Interest from carbon credit buyers and other players in the supply chain

Large companies interested in buying high-quality nature-based carbon credits backed by rigorous verification are showing strong demand for Space Intelligence’s services. Space Intelligence works with clients to remotely map areas against which carbon credits will be sold, together with appropriate reference areas, which are similar in terrain and other ecosystem characteristics but are not protected by deforestation programs.

Space Intelligence then monitors both credit and reference areas and provides buyers with quantitatively rigorous carbon impact valuations of the credits they purchased or are considering for purchase.

The company has also been hired by carbon credit registries—the organizations that specify rules about credit generation, review certification and audit programs, and issue credits to project developers. An important part of this work is the development of baseline data for a given country.

To assess the effects of carbon credit projects, registries must compare the current condition of forested areas to historical baselines. Space Intelligence uses satellite data, which goes back decades, to create baselines against which credit development projects are judged. Space Intelligence has produced baseline data for prominent countries in the carbon credit world, such as Tanzania, Kenya, Indonesia, and Argentina.

I was very excited by Space Intelligence’s recently announced collaboration with Intercontinental Exchange, Inc. (NYSE: ICE). In less than a year, the EU will be implementing deforestation regulations known as EUDR that aim to prevent the import of commodities linked to deforestation.

ICE management wants its internal system to be in a strong competitive position for EUDR compliance testing in “soft” commodities like cocoa and coffee by the time these regulations come into effect. This requires information about baseline forest coverage and changes over time, which Space Intelligence won a competitive tender to supply.

Why carbon credits matter

Tropical forests store over half the world’s above-ground carbon in their vines, trunks, and leaves, representing a massive carbon sink in the terrestrial carbon cycle which must be protected in order to rebalance the planet’s natural carbon system.

You might not think that the 1.5% per year decrease in forested area typical for many African countries is cause for alarm but consider that such a “modest” deforestation rate would destroy 15% of forest biomass in 10 years!

Convincing financial markets of the value of carbon credits could protect forested ecosystems, which are vital to our planet’s carbon cycle and contribute so much to the variety and wonder of life on this lonely blue rock. Space Intelligence is on the leading edge of this essential endeavor. Intelligent investors take note.