This startup is helping Microsoft and others figure out how to cut their carbon footprint

People cannot see or smell carbon dioxide or methane. But saving the Earth from the worst effects of a warmer world requires us to identify the sources of these climate pollutants and prevent their emissions. And leading technology companies and other corporations have in recent years drawn up plans to do just that.

Done right, the difficult task is to accurately tally tons of emissions and figure out how to decarbonise while still being profitable.

Consulting and investment company Direct carbon is helping businesses create these greener paths, most notably by supporting Microsoft planning to become carbon negative by the end of the decade. Other publicly disclosed customers include Alaska Airlines and Shopify.

CEO Jonathan Goldberg launched Carbon Direct in New York in 2019. The company employs about 70 people globally, with plans to nearly double it next year.

While the startup has helped develop tailored carbon-cutting plans for large corporate clients, it is also working to develop tools for broader use. Product Manager Dana Margason, formerly of marketing analytics firm Tune, is building a second, engineering-focused office in Seattle.

In addition to advising companies on shrinking their carbon footprints, Carbon Direct also invests in startups that are removing carbon from the atmosphere or removing carbon from industrial processes.

We caught up with Goldberg and Margason to learn more about Carbon Direct and pursue decarbonisation. Question and answer edited for clarity and length.

GeekWire: Where are you investing and can you get good returns in what could be a risky sector?

Goldberg: We only invest in things that remove CO2 from the atmosphere, convert CO2 into useful products, capture CO2 from the point of emission or manage CO2 infrastructure.

We have no problem underwriting deals in space with more than acceptable commercial returns. So we deal specifically with financial parameters, and we have a scientific team of 50 people – the majority of our team – with deep expertise in the technical aspects of investing in CO2.

GW: How do you help companies come up with a carbon-cutting strategy?

Margason: We’re diving into the specific daily choices companies have to make. Assuming employee travel is a large part of my emissions, should I reduce employee travel? What is the impact of that? Should I work with different airlines? Should I Invest in Sustainable Aviation Fuels? What will be best for my business? How do I present this decision to the board, to my stakeholders? So those are the real choices companies are making.

One interesting thing that a lead scientist at Carbon Direct through Columbia University has developed is the “equilibrium cost of carbon removal,” which is essentially a tool to figure out — like with a decision. Investment decision – What is the biggest ROI from a climate perspective a decision to make. So we’re trying to build that into our products.

GW: How big is the carbon management sector?

Goldberg: There are 1.6 trillion tons of CO2 in the atmosphere. If you say the price of carbon, whether it’s the social cost of carbon or whatever metric you want it to be, is $100, that’s $160 trillion that needs to be managed.

Our address market is unfortunately large. It would be better if it was small.

GW: How do you judge carbon commitments from non-customers as legitimate or empty promises?

Goldberg: Specific goals with immediate or intermediate timeframes are always helpful. Saying we’re going to be carbon neutral by 2050, when I retire, that doesn’t particularly help. But, [saying] we’re going to start by buying a million tons of carbon credits, we’re using this framework, we’re working on this as a roadmap to 2030 when we look forward to these six parts of the supply chain Ours becomes decarbonized, that’s treatable.

Massive commitments with no timeframe, no real calculation make me skeptical.

GW: Could Microsoft, which is a super-profitable company and has one of its more specific, transparent and aggressive carbon-cutting plans, be a role model for others?

Goldberg: I think it’s beneficial to use these early motivations as a template for what can be done and also as a template for rules that can be created to help people.

The other thing that I really like that Microsoft is doing, or other customers are doing this too, is that they are reducing costs not only in carbon removal, but in other areas… Customers are buying natural gas. Is aviation sustainable with today’s high prices? [for example] is performing a service to other companies, who can purchase at a lower cost in the future. That’s the problem.