Transcript
Speaker: Hello and welcome. My name is Klaus Schinkel of Edison Group. I'm joined by Lukas Zeringer, CEO of Planet 2050. Welcome Lukas. Great to be with you Klaus. We're here today at the Frankfurt School of Finance and Management. We have been talking at the Sustainable Investment Conference about the transition from c o two offset to investable carbon assets. Before we go more deeply into that topic, can you start by explaining our viewers what you do at Planet 2050?
Speaker: Yeah, so Planet 2050 is aiming to enable and finance a new generation of carbon projects that have the possibility to reduce emissions or capture carbon dioxide and remove it permanently.
Speaker: You see, there's a lot of growing demand for this type of assets by companies and governments because there are new regulations, new policies, and also companies need better tools to go to their climate and net zero targets.
Speaker: However, there is a lack of financial providers that deeply understand the market, that can provide new sources of capital to help finance this project, get started and scale, and also that can give investment opportunities access to any types of investors. And that's exactly what we do at Planet.
Speaker: Concretely speaking, what we do is we source and originate projects alone or with our partners. We bring them to our carbon fairness platform where we analyze them with due diligence, risk assessment.
Speaker: We select the best project with proper monitoring and understanding of the risks. and ah plan the investment proposal with them to either acquire the carbon credits with prepayment, we resell the carbon credit in the market, or we take equity participation in the project developer or the companies themselves.
Speaker: That way we provide capital and certainty of revenue with carbon credits and carbon removal as a currency of exchange. So in a way we are working as a green asset manager or a carbon bank if you want with a technology touch.
Speaker: The central message of your presentation was the evolution from CO2 offset to investable carbon assets. What exactly is changing? I think the carbon markets overall are entering a new stage of maturity. Now we have price discovery, we have new standards and methodologies which are science-based.
Speaker: We have new verification protocol to ensure that the impact is there, tons have been avoided or removed. And that's simply something that didn't really exist in a market that was mainly on the voluntary nature back then.
Speaker: ah For example, the EU Commission has proposed just two months ago to integrate permanent removals, which is one of the types of carbon assets we're working with, into the ETS, the Emission Trading Scheme, which is the biggest carbon market in the world.
Speaker: This means that 50 billion euros may be added to this market, which has already brought cumulative average growth of 320% over the past four years.
Speaker: So we believe with institutional ah you know participation and new standards and quality, better guidance for companies as well to act, it's a perfect time to participate.
Speaker: Some people have raised issues about inconsistent quality, lack of transparency, or that companies use this ah to substitute their own emission reductions.
Speaker: What do you respond to that? yeah Does the market have a fundamental problem? I believe that quality and transparency should be the cornerstone of a well-functioning carbon market. And it's true that there has been a lot of issues with quality, with difficulty sometimes to verify the impact on projects that are far away around the globe.
Speaker: and frankly not standards that we're holding to what an investment asset class should be. It's still the case today, not every project has the same quality. That's why you need expertise, you need data points, and you need to do proper risks and due diligence on any types of assets that you're looking at.
Speaker: And that's what we do at Planet 2050. We do have tools that we didn't have in the past. Now we have technologies with real-time or near real-time satellite imagery monitoring. We have IoT sensors that can tell us the temperature in a biochar kiln on the ground.
Speaker: um We have AI algorithms and models that can verify data that has been inputted. And so this is something quite new that helps to provide more transparency. We also have external companies like risk and carbon rating agencies that can give external endorsement to what is quality.
Speaker: And finally, the methodologies themselves and the carbon standard have evolved. While they were maybe sometimes a little bit loose in the past, now methodologies are very strict in what they require to be measured and verified.
Speaker: So that's on the side of the supply, let's say the quality of the project themselves and the underlying credits. ah Moving from the side of the demand, it's true that lot of companies have wrongly used carbon credit in the past.
Speaker: I would say partly because of the lack of guidance. um But the priority needs to remain clear. Carbon credits and removals are not a distraction. It's an additional instrument in the toolkit to get to net zero.
Speaker: To look at a lot of heavy industry, automotive companies, even the aviation sector or marine, there's a lot of emissions that are very hard to abate or at a very high cost.
Speaker: In this case, investing into removal makes sense. And actually, all net-zero companies will have to use removal to fully neutralize all residual emissions they have or those that are simply too hard to abate.
Speaker: Moving to your investment case, can you start by and explaining why where you think that carbon assets may be relevant for European investors? I do believe that carbon assets are the best and most exciting new asset class of our generation compared to you know what maybe emerged 20 or 15 years ago or in the recent years.
Speaker: Why? Because first of all we're doing something good for the planet, which I think now everybody realizes urgently needed. But it's not a philanthropic or grant activity. It's based on market dynamics and a business model that has proven to work and a demand that is now becoming predictable and that is growing.
Speaker: Especially in Europe, we have the most ambitious policy and regulation that comes to support the ecosystem. So for investors that want to look at profitable returns and impact, I do believe that that's a great addition to a portfolio to look into this emerging carbon asset class.
Speaker: Building on that, what specific value are you looking to add at Planet 2050 to investors? to invest us Well, first of all, I think the carbon market is complex. Not every investor understands it properly and understands what are the right investment decisions.
Speaker: Second, it's not accessible. It's mainly for a private class of institutional investors that are well equipped to enter this market. And that's something we want to change. Accessibility, making it simple and making it transparent.
Speaker: The way we chose to do it is by going public with a direct listing. It's a way to open the capital of our company from day one so that everyday investors but also institutional can participate to the adventure and be shareholders of the company.
Speaker: What we're building is a diversified portfolio of assets in order to benefit from the growth segments of different carbon assets but also diversify the risk in the portfolio. And investors get access to this with one share which is Planet 2050.
Speaker: Also, if we look at the climate challenge and the need for carbon finance to scale, we need a market that is liquid, that has the possibility to scale, but also that can hold up to the standard that we need in the carbon market, meaning strong regulation and oversight that offers the capital market.
Speaker: So transparency and openness are also the core in what we do, and we hope it will benefit a lot to investors that join us and eventually to the planet. Luca, thank you very much for the interesting insights and for highlighting the role carbon assets can play in financing the transition.
Speaker: Thank you. Thanks.
