🌍 State of the Voluntary Carbon Market (Issue #128)

+ Green hydrogen unicorn. How to bypass willpower. "Profit first" accounting.

Oct 31, 2023

Good morning, folks.

In today’s 2-minute read, we’ll cover these four nuggets below — as delightful as realizing you can use the sauna at the local YMCA instead of building one at home. 🙄

Climate Startups & Investment:

#1 — 🌎 REPORT: State of the Voluntary Carbon Market
#2 — 🏭 FUNDING: $380M Series C for the first unicorn in green hydrogen

Productivity & Leadership:

#3 — 💵 BOOK: Profit First (Why your accountant is lying)
#4 — ⏲️ HABITS: Create default rules (Willpower is not enough)

Onward and upward,

Chris

P.S. Want more? Read 125+ prior newsletter issues here.

#1 — 🌎 REPORT: State of the Voluntary Carbon Market

Despite the negative headlines around low-quality carbon offsets, the voluntary carbon market is not going away.

BloombrgergNEF sees a $1T market by 2037.

Here are three takeaways from the report:

LOWER VOLUME: The market shrank in 2022 due to buyer skepticism and macroeconomic drivers.
POOR GRADES: Among 100s of projects that Carbon Direct has analyzed, < 10% met their quality standards. Most of these are emission reductions and avoidances (e.g., avoided deforestation).
NEW CATEGORY: The volume of higher quality, longer durability carbon removals has grown 5x since 2022. The buyer market is highly concentrated with two buyers (Microsoft, Airbus) accounting for 80%.

#2 — 🏭 FUNDING: $380M Series C for the first unicorn in green hydrogen

Electric Hydrogen has now raised about $600M putting their valuation north of $1B.

(Learn more in my podcast with Raffi, their CEO.)

Great milestone for the sector.

Yet, Canary Media notes that:

“There’s essentially no clean hydrogen produced in the U.S. today…”

But they go on to describe how clean hydrogen will scale:

“The Department of Energy wants to reduce the cost of hydrogen made with renewables from around $5 per kilogram today to $1 per kilogram by 2031…
The federal incentives of up to $3 per kilogram of clean hydrogen included in the IRA were designed to close the cost gap....”

That probably helped my friends at Ambient Fuels get a $250M commitment from Generate Capital to develop hydrogen production projects. 👍

If you’re refining your hydrogen strategy, check out these market maps:

Hydrogen Resource Data, Tools, and Maps (NREL)
Hydrogen Energy Map Tracker (Pillsbury Law)
Green Hydrogen Market Map (Clean Edge)
130+ Tech Companies Developing Hydrogen-Based Clean Energy Solutions (CB Insights)

#3 — 💵 BOOK: Profit First (Why your accountant is lying)

Hopefully, our financial statements show a net profit.

Great!

But where is that money exactly?

We probably spent it. Or maybe distributed it.

This book suggests reorganizing our profit and loss statements:

NORMAL: Sales - Expenses = Profit
NEW: Sales - Profit = Expenses

And then we should immediately move that money to some other bank account. This makes it harder to access and easier to “see our wins.”

The result?

We learn to run/grow the business on what’s left over. (Gasp!)

#4 — ⏲️ HABITS: Create default rules (Willpower is not enough)

“Eventually, everyone loses the battle with willpower. The only question is when.” (Farnum Street)

Willpower is a finite resource.

Even if we squint our eyes really hard, we’ll run out of it.

That’s why default, or automatic, rules are awesome.

Instead of my boy Tim Ferriss deciding which startups (among 100s of pitches) to invest in, he made a new rule — “I’m taking a break from angel investing.”

Instead of deciding how to divide my mornings between deep work and phone calls, I made a rule — "No phone calls before noon.”