Jason Rubottom With Cloverly

Intro: [00:00:04] Broadcasting live from the Business RadioX Studios in Atlanta, Georgia. It’s time for Atlanta Business Radio. Brought to you by on pay. Atlanta’s New standard in payroll. Now, here’s your host.

Lee Kantor: [00:00:24] Lee Kantor here another episode of Atlanta Business Radio, and this is going to be a good one. But before we get started, it’s important to recognize our sponsor, Onpay. Without them, we couldn’t be sharing these important stories. Today on Atlanta Business Radio, we have Jason Rubottom with Cloverly. Welcome, Jason. Thank you for having me. I’m so excited to learn what you’re up to. Tell us about Cloverly how you serving folks.

Jason Rubottom: [00:00:48] Yeah, Cloverly is a venture backed climate tech company in Atlanta. We’re basically a platform for climate action that allows any company or consumer to take climate action through carbon removal.

Lee Kantor: [00:01:04] For people who aren’t familiar with this concept, can you share a little bit about this carbon credit marketplace? Like, what does it mean? How does it work?

Jason Rubottom: [00:01:14] Yeah, sure. So a carbon credit sometimes used synonymously with carbon removal or carbon offset. It’s basically a mechanism to fight climate change. And essentially a carbon credit is the removal or avoidance of CO2 from the atmosphere in order to compensate for emissions somewhere else. So basically they’re typically for example, there would be a company like a Fortune 500 and they have sustainability goals and they’re trying to address that through different means, one of which is decarbonization, renewable energy, fleet, electrification. Et cetera. But even with all of that, they still will have a significant amount of unavoidable emissions that still have to be addressed, or else we won’t come anywhere near the goals laid out in the Paris Agreement for climate change. And so in that case, the corporate would effectively be willing to pay another party to remove or sequester CO2 from the atmosphere. So there are different ways to do that. Different parties that would do that for them. And one example is tree planting trees absorb carbon from the atmosphere. Another example could be there are lots of human engineered solutions such as direct air capture, and in that case, there’s literally a machine sucking CO2 out of the atmosphere and storing it underground permanently. And so that’s what a carbon credit is. And the reason that’s important is if you look at the what’s needed to solve climate change, look ahead to the year 2050, in a net zero world that we have to get to, about 80% of that has to come from decarbonization. Examples that I mentioned a minute ago. However, that still requires 20% of the solution to come from carbon removal. That’s about a billion tons of CO2 per year. So it’s a massive amount. And so we have to scale to that from a market today where it’s a lot less than that. But that’s a very critical role in the fight against climate change. And that’s how Cloverly fits in, is we’re a platform that facilitates that climate action through carbon credits.

Lee Kantor: [00:03:23] So now let me see if I understand this. There’s on one side of the ledger are people that are creating a lot of carbon, right? There’s a lot of CO2 being emitted in a variety of ways in a lot of organizations. And then on the other side of the ledger are people that are doing things to remove carbon dioxide. And so obviously, we wouldn’t be having this problem if there were more people on the side of the ledger removing carbon dioxide. And that’s just not the case right now.

Jason Rubottom: [00:03:56] Yeah, that’s that’s correct. We there there are so many emissions and so many unavoidable emissions today. Much of this is unfortunately, that we’re past the point where we can just start to reduce our emissions through decarbonization. There’s already too much CO2 in the atmosphere, so it has to be removed. But also you look at decarbonization, things like renewable energy and fleet electrification that will take several decades to get there. And so even again, in a net zero world year 20, 50, 20% of that still will require carbon removal because even then we’ll still have some unavoidable emissions. And so that’s kind of how this all fits together.

Lee Kantor: [00:04:40] So now on the side of the ledger that the people that are emitting a lot of CO2, they have to pay a fine or a fee to these people to encourage them to remove more. Is that where the fee is going?

Jason Rubottom: [00:04:58] Yeah, the buyer, let’s say it’s a corporate and it could also be the corporate customers who could even be consumers and they could empower the consumers to take action. For example, in e-commerce, letting the consumer opt in to make their shipment carbon neutral might only cost them $0.02, for example. But that kind of starts with the corporate and the corporate will have a net zero goal. For example, there’s an exponential growth in the number of companies out there with net zero goals, and for almost all of them, they can’t reach net zero without carbon credits as a part of that. And so they will effectively buy a carbon credit, which is effectively paying someone called a project developer like a tree planter, to go in and implement that project that removes the CO2 and there’s a lot of science behind it and things like the type of tree and the soil composition and there’s a whole science to it. And they get that verified by an independent third party that those claims are accurate about the CO2 removal. Et cetera. And then the corporate who paid them for that effectively gets a claim that they almost like proof verification that they contributed to this amount of carbon removed from the atmosphere. And that is that is a part of their overall net zero goal. Another illustration of that would be in many countries, especially in Europe, there’s actually a carbon tax. And so companies are literally taxed on their carbon emissions and so that encourages them to decarbonize and just avoid emissions in general. However, again, they still have lots of unavoidable emissions and so it is often more cost effective for them to buy carbon credits. In other words, pay a project developer a carbon credits, pay them to remove that carbon out of the atmosphere for them rather than paying the carbon tax itself.

Lee Kantor: [00:07:01] But I’m still confused now. The one I understand people are emitting too much CO2 and say in my organization I’m emitting a million CO2 units and I say, You know what? I want them all to be kind of zeroed out in this ledger. If I say I’m going to pay whatever I got to pay. And to get on the other side of the ledger, is that money actually removing that a million units of CO2 or is it just going to these people that at some future time, a million my a million units will be removed?

Jason Rubottom: [00:07:40] It’s going to projects where the CO2 has actually been removed. So an example would be with direct air capture. This machine sucks CO2 out of the air and then stores it underground permanently or for at least a thousand years. And then a third party independent party comes and verifies that that has happened and that the claims are accurate and specifically the amount of CO2 that has been removed. It’s not until that point it’s officially verified that then the corporate can buy that from them. So yes, at that point it has already been done and it’s verified that the claims are accurate, that it’s going to be stored away for the amount of time that it’s claimed.

Lee Kantor: [00:08:26] But if everybody that’s emitting too much says I’m going to pay today, is there enough resources to remove all of the CO2 that’s being emitted today?

Jason Rubottom: [00:08:40] No, not even close. Frankly, we have a we have a a really significant challenge across the board for for climate change. There’s there is no silver bullet, unfortunately, whether it’s you look at these other levers we have like renewable energy and electrification of fleets and eliminating waste, etcetera, we need really need all of them. None of them will come even close to solving the whole problem. And so carbon credits is just one piece of that, that solution.

Lee Kantor: [00:09:14] But if if everybody who was emitting too much said, I’m going to pay my carbon credits to get to zero, that wouldn’t it would be impossible.

Jason Rubottom: [00:09:26] In today’s market. Yes. So, for example, today’s market, there’s about $1 billion worth in carbon credits purchased annually. And that is a directional reflection of how much supply is available. It’s a reflection of how much capacity there is in the market. However, based on all the forecasts, this market is expected to be at least 50 billion by the year 2030 and 1 trillion by the year 2050. And so that is the kind of scale that is literally needed for us to reach the goals laid out in the Paris Agreement regarding climate change. But I will say that’s not that unique to carbon credits. That’s the kind of scale that we need to reach across the board. You know, things like fleet electrification or renewable energy. That’s the kind of scale we need across all of climate tech.

Lee Kantor: [00:10:24] Now, is there kind of exponential growth in the side of the ledger that’s removing the CO two? Is there as much effort and startup excitement in on that side to just come up with new innovative ways to remove more and more CO2?

Jason Rubottom: [00:10:43] Yeah, there is. It’s quite exciting, actually. There’s. There’s an incredible amount of investment going into this space to invest into projects that are removing CO2 and many different technologies from direct air capture to biochar and utilizing the ocean and seaweed. Lots of different technologies and governments are providing significant incentives and tax credits and subsidies across many different countries. Even the recent, you know, IRA, the Inflation Reduction Act in the US incorporated some of that for direct air capture. So there is a lot of that actually. Yes.

Lee Kantor: [00:11:24] Now when a carbon carbon credit is purchased, does any of the money go to those startups or those innovators that are actually removing the CO2?

Jason Rubottom: [00:11:36] It does. Yeah. It’s the, the generally they’re called the project developer who’s effectively removing that CO2 and creating the carbon credit, if you will, the carbon offset. And so yes, they are the ones that are getting paid directly on that.

Lee Kantor: [00:11:52] So that’s so every kind of dollar that’s invested in carbon credits is going to someone who’s whose mission is to solve the problem and remove the CO2.

Jason Rubottom: [00:12:06] It would come from them or through an intermediary.

Jason Rubottom: [00:12:11] That’s that’s helping you think about the the buyer side of the market. There are many, many different types of buyers, whether it be based on company size or geography or industry. They’ll have different needs. And even think about buyer size all the way down to mid-market and small and medium sized businesses and even consumers. It’s effectively a really significant and nuanced market. So each of those different markets of buyers will have their own needs. And so there are many ways in which they need to be served. And so there will be different like in other industries, you’d often think of them as like there could be a marketplace or a value added reseller, so there will be many of those helping the project developers serve the end buyer.

Lee Kantor: [00:13:05] And then Clover Lee’s place in this marketplace is kind of to help facilitate and move those carbon credits to the people who need them.

Jason Rubottom: [00:13:15] Yeah, that’s correct. So you think about the the carbon credit market and it has it’s very early immature market and it has some pretty significant challenges that have to be overcome in order for it to scale and really make the the impact that is needed and expected. It’s a highly opaque and fragmented market near impossible for someone to just go identify what projects are out there for me to contribute to. What are the details? What’s the true impact of it? How much does it cost? How much can I trust this? And it’s almost like e-commerce in 1990 where it didn’t really exist and it needed a lot of digital infrastructure to be built for it to scale. And so these are the problems that cloverleaf solving as, as a marketplace we’re bringing, we’re making it digital connecting buyers and sellers, using software to connect them and surface data so that buyers can access everything available and provide transparency to them about all the project information so they know what the most meaningful projects are and and the prices and build trust allow them to take action. And also to do this very easily. Because today a buyer historically would it would feel like searching for a needle in a haystack if they were searching for carbon credits. And so those are the things that we’re solving for as a marketplace.

Lee Kantor: [00:14:47] And so the way it would work, a company on either side of the ledger just goes to cloverly. And if they are looking to buy the credits, then they say, okay, I have. Or is there a tool that lets me know first how many credits I need? Is there any type of way to kind of guesstimate or get a good idea of how many, how much carbon I’m emitting? Because it may not be obvious to the eye. You may not have like a manufacturing plant that smokes bellowing outside you like you mentioned e-commerce companies like they you know, it could an e-commerce company in today’s world could be somebody sitting in their basement you know selling stuff on eBay. But but the shipping, I guess, would create the emissions that needed to be offset.

Jason Rubottom: [00:15:36] Yeah, that’s a great point. And yeah, so I’ll break it down by supply and then demand the two sides of a marketplace.

Jason Rubottom: [00:15:44] On the supply side. We this, this.

Jason Rubottom: [00:15:47] Side of the marketplace is fairly typical in the sense that we allow suppliers, these project developers, to list their projects and all the project information right there for the buyers to evaluate, etcetera, and to be able to purchase. And the other thing we do that’s perhaps atypical for a marketplace is we provide this layer of quality curation because not all projects have the same level of impact per se. So there’s this, there’s this issue of quality and trust. So we brought in in-house.

Jason Rubottom: [00:16:23] Climate science.

Jason Rubottom: [00:16:23] Expertise and evaluated the quality of of these projects about 7500 globally. And we effectively provide quality curation and we’re providing less than 10% of the projects globally because we vet and select the ones that are of highest quality. But that’s the supply side, mostly typical for a marketplace. The demand side is where it gets nuanced, but there are two main ways in which a customer on the on the demand side of the marketplace could could utilize Cloverly one is a direct purchase where a head of sustainability or a head of ESG for a corporate can come directly to cloverly and purchase a portfolio of carbon credits, high quality, diversified across different geographies or technologies. Et cetera. And then the second product is any company can utilize Cloverly software to embed climate action into their product. So that could be an e-commerce company building cloverly into their checkout and enabling carbon neutral shipping and checkout. It could be in travel such as carbon neutral flights, it could be other forms of shipping like B2B shipping. It could be lots of financial products such as credit cards, allowing.

Jason Rubottom: [00:17:49] The credit card holders, whether it’s.

Jason Rubottom: [00:17:51] Consumers or even businesses, to estimate their carbon footprint from their credit card transactions and then allow them to take action, contribute to carbon removal. And yes, to your point, we provide calculations for for those. But we also a lot of this is it’s enablement and making this accessible for for companies depending on their situation. So many companies to your point have have a different third party calculate their entire footprint whether that’s a consultant or a software company which is called carbon accounting software. And then whoever does that for them, whoever does the carbon accounting for them, would then partner with Cloverly for them to offset some of their unavoidable emissions. And in that case, they can actually bring our technology, integrate us into their application so that their customer, some company can see their carbon footprint and have all this advice on how they can decarbonize, reduce their emissions. And then also right there is a page where they can purchase offsets. So it’s sort of a seamless experience.

Lee Kantor: [00:18:59] Now, what is kind of the ballpark like what is a carbon credit cost and how like like you mentioned how you calculate it, But like is it a huge number for all these companies Like like is there a way to give us an idea of of how much money we’re talking about when it comes to offsetting carbon credits for a different types of industries?

Jason Rubottom: [00:19:22] Yeah. Yeah. So a carbon.

Jason Rubottom: [00:19:24] Credit is.

Jason Rubottom: [00:19:25] Sold in units of.

Jason Rubottom: [00:19:28] One metric ton.

Jason Rubottom: [00:19:30] And so they’re sold in terms of a price per metric ton. That’s the price per credit. And there’s a wide range anywhere from roughly $5 per metric ton to $1,000 per metric ton. The reason there’s such a wide range is.

Jason Rubottom: [00:19:49] There are actually a few different reasons.

Jason Rubottom: [00:19:50] The biggest is that. The in the range of 50 to $1000 per metric ton is the human engineered solutions that are early stage, such as the direct air capture, and they play a really significant role in the solution long term. But they’re new now and they haven’t scaled yet. And so just like.

Jason Rubottom: [00:20:14] Anything, they.

Jason Rubottom: [00:20:15] Lack those economies of scale and they haven’t brought the cost curve down. But these are choosing to invest at least some of their money into those types of carbon credits. One, because they still are they’re of the highest quality because they’re definitely, unequivocally removing the carbon from the atmosphere, there’s no question there. But also they’re permanent rather than only removing the carbon for 50 years, for example. So they’re of the highest quality. That’s one reason many corporates would still buy that. But the second reason is that they want to.

Jason Rubottom: [00:20:50] Support.

Jason Rubottom: [00:20:51] These emerging technologies. Now because when, let’s say, think about roughly the year 2030.

Jason Rubottom: [00:20:58] Which is when a lot of these corporates.

Jason Rubottom: [00:21:00] Net zero commitments begin to come into play, they they will not be even close to decarbonize yet. And so they’re going to have a heavy dependance on carbon removal and therefore we need to start scaling that now and then that scale will help bring down that price to something that’s more viable. So that’s why you see such a wide range of costs of carbon credits and why many companies still invest in the more expensive ones.

Lee Kantor: [00:21:28] But is it a ton? A lot? Like, what is that like?

Jason Rubottom: [00:21:35] Yeah, for for perspective, the.

Jason Rubottom: [00:21:38] Average American average American’s own.

Jason Rubottom: [00:21:44] Individual carbon footprint is about 15 tons per year.

Lee Kantor: [00:21:49] So like a little over a ton a month.

Jason Rubottom: [00:21:53] Yeah.

Lee Kantor: [00:21:55] And so if individuals want to do this, can they do this? Can they buy their ton a month from you?

Jason Rubottom: [00:22:04] Yeah, they could buy it. Not directly from Clovelly, but from.

Jason Rubottom: [00:22:08] Clovelly partners, for example.

Jason Rubottom: [00:22:11] Their credit card. We’re already live in a bit of a soft launch that’s not being publicly promoted yet, but.

Jason Rubottom: [00:22:20] We’re.

Jason Rubottom: [00:22:21] Already live through a product offering that’s available to 24 million card members in the US and that will become much more visible over time at the very recent launch. But you will see, we will all see in the next couple of years this will become almost ubiquitous. All of us will be able to see our own carbon footprints through our credit card transactions. So that’s a common one. And then those other examples I mentioned, like e-commerce and flights, we’re going to see a significant number of options for that as consumers all around us on a day to day basis. And in those cases, that’s the second product of the two that I mentioned for Cloverleaf’s demand side of its marketplace, where we provide that software that allows the company to offer that to their customers and they basically build that into their product or their customer experience.

Lee Kantor: [00:23:12] So what do you need more of right now? How can we help? Do you need you know, you’ve got to fill both sides of the marketplace, obviously.

Jason Rubottom: [00:23:22] Yeah, I think.

Jason Rubottom: [00:23:25] The biggest thing is companies taking action now. It doesn’t have to be everything. It’s progress over over perfection and start trying something. Whether it be providing an offering to your customers and or start contributing to carbon removal toward your own sustainability goals and have a plan. Again, progress over perfection and start thinking about multiyear commitments because we do have to start now. I think that’s the biggest thing as a company that’s growing in a market.

Jason Rubottom: [00:24:03] That has to.

Jason Rubottom: [00:24:04] Scale really fast. Naturally, our our biggest constraint is just hiring a large number of really, really talented people as quickly as possible, which is frankly going quite well. But if there’s any folks out there who are passionate about climate making a difference, then we are hiring, hiring a lot. And feel free to check that out@cloverlay.com.

Lee Kantor: [00:24:29] So with cloverleaf.com, that’s the best way to get ahold of you or somebody on your team if somebody wants to learn more. Yeah. Well, Jason, thank you so much for sharing your story today. You’re doing such important work and we appreciate you.

Jason Rubottom: [00:24:44] Yeah. Thank you for having me.

Lee Kantor: [00:24:46] All right. This is Lee Kantor. We’ll see you all next time on Atlanta Business Radio.