Brazilian startups are creating innovative platforms to enable people and companies to offset their CO² emissions, generating carbon credits that are subsequently directed to environmental projects that protect the Amazon.
Founded in 2020 by Luis Felipe Adaime, Moss is one of them.
Since its launch, Moss has been developing one of the most sophisticated systems for monitoring the Amazon rainforest. Using big data technology and extensive mapping of 16 Brazilian federal government databases, the startup identifies in detail and real-time the areas in danger of deforestation or wildfire in the Amazon. Subsequently, it triggers a series of processes to help save these lands.
“We wanted to help preserve the unique socio-biodiversity in this important region of Brazil and the world. Our projects make it possible for everyone, no matter where they are, to contribute to protecting the Amazon rainforest,” said Moss CEO Luis Felipe Adaime in an interview with Fintech Nexus.
After identifying a territory at environmental risk, the company partners with the landowners to carry out projects and other initiatives that curb forest damage — or, in many cases, reforest the damaged regions.
NFTs and the Amazon
The company also makes non-fungible tokens (or NFTs) that carry small Amazon forest areas’ economic and governance rights on its platform. By purchasing an Amazon NFT, the buyer becomes responsible for preserving a portion of the forest.
A digital property certificate encrypted through the blockchain attests to the authenticity of the forest areas and enables good governance over them. On Moss’ platform, users can digitally monitor their part in each preservation project. And on the other hand, the company keeps track of each protected area, as a kind of guardian, along with local authorities.
“It’s like a green wall that is naturally extending around the area,” Adaime said. “People are coming together for a common purpose, and this will certainly go a long way in saving the Amazon in the future.”
On Moss’ platform, it is also possible to offset CO² emissions with MCO2 — a crypto active created by the startup, whose token is equivalent to a carbon credit, which would correspond to one ton of carbon dioxide gas no longer being emitted into the atmosphere.
Series A funding comes through
In January of this year, Moss received a Series A funding of $10 million U.S. in a round led by SP Ventures and Acre Ventures Partners, with participation from Jive Investments, Flori Ventures (Celo), and The Craftory.
This boosted the growth of the startup, which now has partnerships with several Latin American companies, such as GOL Airlines, Bionexo, iFood, and Arezzo, as well as investment managers from the United States, such as SkyBridge and One River Asset Management.
So far, the company has transacted more than US$ 29 million in conservation projects, which have helped preserve areas equivalent to 1.3 million soccer fields.
In May, the Federal Government published the Decree No. 11,075/2022, better known as the “carbon market decree,” which provides the guidelines for the preparation of Sectoral Plans for Climate Change Mitigation, as well as establishing the “Sinare” (National System for Reducing Greenhouse Gas Emissions) and bringing the possibility of creating a methane gas market.
The decree opened the possibility to nationally start calculating the reduction of greenhouse gas emissions based on ILPF (integrated crop-livestock-forestry), a strategy that has been growing considerably in the country, to promote the recovery of degraded pasture areas through different production systems in the same properties, thus generating carbon credits.
Carbon credit market expanding
Consequently, the carbon credit market is growing exponentially in Brazil — and the focus of the largest investors is on the Amazon. It is estimated that the demand for carbon credits in the South American country is currently $20 million U.S. and is expected to grow to $300 million U.S. by 2030.
Another company that is making a significant impact on this market is Carbonext. With REDD+ (Reducing Emissions from Deforestation and Degradation) carbon credit offset solutions, the company has contributed in the last year to increase by 340% the area of preserved vegetation in the most vulnerable region of the Amazon forest: the Arc of Deforestation. This biodiversity corridor runs from the state of Acre to Pará in northern Brazil.
“The first thing we do is to find an area at risk of imminent deforestation in the Amazon, and subsequently, we develop a preservation project based on a detailed thesis about the risk the particular region has and the importance of environmental protection here,” Felipe Viana, commercial director at Carbonext, commented in an interview with Fintech Nexus. “Our project then goes through two audits before entering into a partnership with the land owners.”
Credoits represent $30 million U.S.
The projects’ Co² credits are issued in partnership with 48 landowners in endangered areas in the Amazon Rainforest. And end consumers or companies that want to offset their emissions can purchase these credits to mitigate their environmental impacts as a complement to the regulated market overseen by the new National System for Greenhouse Gas Emissions Reduction (Sinare).
“The value of negotiating these credits represents about $30 million U.S. in this first semester, and 70% of this value stays in the forest. With the ongoing projects, the perspective is to generate the same amount by the end of the year,” says economist Luciano Corrêa da Fonseca, co-CEO of Carbonext.
In April 2021, the preservation projects under the company’s supervision were preserving a total of 418,000 hectares in Acre and Amazonas, where Carbonext performs, together with the owners of the areas, the management of areas at risk of deforestation. In September this year, including three more projects, the total preserved jumped to 2 million hectares in 12 projects.
“The market has advanced a lot, and our demand is growing exponentially,” said Viana. “We have seen a very large growth in demand for carbon credits in recent years, and this has driven a new movement for environmental protection in Brazil and the rest of Latin America.”
Jorge C. Carrasco is a Contributing Reporter at Fintech Nexus. He reports on fintech, economy, banking, startups, and technology, covering the most impactful stories from a Latin American perspective.
He has contributed to several international publications, such as Foreign Policy, The Spectator Australia, Estadão, Época, Washington Examiner, and Quillette. Originally from Havana, Cuba, he is now based in Brazil.