‘Being The First And Only Carbon Company On The NASDAQ Puts Us In A Leadership Position’ – Sunny Trinh, CEO of DevvStream

'Being The First And Only Carbon Company On The NASDAQ Puts Us In A Leadership Position' - Sunny Trinh, CEO of DevvStream - Carbon Herald
Image: DevvStream

DevvStream is one of the unique companies operating in the carbon credits industry. Focused on projects that reduce emissions through technology, it has become one of the fastest growing players in the sector and is well on its way to scaling its team and operations.

The company has just announced a business combination agreement with Focus Impact Acquisition Corp. – a transaction valuing it at $213 million – that will lead to DevvStream shares being listed on the NASDAQ exchange.

This was one of the topics we talked about with CEO Sunny Trinh, as well as the origins of the company, its blockchain-based approach, how he sees the prospects for technology-based carbon credits and his opinion on the current state of play in the compliance and voluntary carbon markets.

This interview has been edited for brevity.

Can you tell us a bit more about DevvStream and its business model?

I’ll start with the bigger picture. Global climate change is a big issue and in order for us to address it, we have to lower greenhouse gases, with carbon dioxide being the main focus. It’s estimated that by 2030, we’ll need to reduce roughly 23 billion tons CO2 annually. Out of that 23 billion, roughly about 12 and a half billion or so needs to come from carbon credits. This is why carbon credits are so critical, because it creates a bridge for the world to address these issues.

Up to this point the majority of carbon credits have come from nature-based [sources], which are extremely important. You need forestry, the mangroves, and so forth. But there have been studies that nature based will only address up to 20% of the reductions necessary in order for us to meet our net zero goals. The other 80% needs to come from technology.

This is where DevvStream comes in. We focus on technology because that’s our background. My team and I have an engineering background, we have four PhDs on our team and a combination of engineers and physicists. We identify technologies or activities that companies, municipalities, governments and organizations are doing and that are eligible for carbon credits. We help them generate and monetize these credits and by doing that we provide another stream of revenue to help advance them further.

For example, we have a wastewater treatment partner that reduces energy consumption in plants by up to 83%. There’s a cost to do that but with the [emission] reduction you can generate carbon credits that help bridge that gap to encourage municipalities to use this technology.

How did you reach the point at which technology-based credits were your focus? Did you see a bigger market opportunity for them?

It’s more around our background than anything else. As I mentioned, my team and I are all technologists – some come from power generation companies, while I come from semiconductors. We’ve worked with two of the largest distributors of chips in the world, that have millions of B2B customers and the projects there were focused either on renewable energy or energy efficiency technologies, so we already had that network.

I spent a lot of time with the ESG teams for these companies back when it was called corporate social responsibility. I found that these companies were struggling because they couldn’t compete against fossil fuels. They were was just too inexpensive.

Source: DevvStream investor presentation

I’ve always had a passion to help these types of companies to address climate change issues. As I got to know them I realized that carbon credits can be a really interesting vehicle to help bridge that gap. I started talking to them and said: “you know nothing about carbon credits, why don’t we come in and help you generate them and you’d pay us a portion of the credits.” And literally, every single one of them said yes! To them it’s a new stream of revenue that’s going to help advance their technology further.

We are actually starting to work on nature based [credits] and addressing some of the issues with them by using technologies like satellite imaging, LiDAR, computer imaging and AI.

Is there a sector in which DevvStream resides? Do you have any direct competitors?

The majority of project developers and companies that are in the space focus on nature-based because carbon credits have always been around forestry and a few new technologies that have come up like direct air capture. It’s very limited.

For what we do, we don’t see any other competitors at all. Because when we go and talk to these large organizations, there’s nobody else even going in and bidding for it.

DevvStream CEO Sunny Trinh. Image: DevvStream

Here is an example – we engaged with a $2 billion Japanese company called Ryoden, a Mistubishi subsidiary that distributes electronic products like HVAC and EV chargers. I met with them and shared that all their products and activities are eligible for carbon credits. And they knew nothing about that. After our meeting they said they wanted to engage with us because they couldn’t find other alternatives, or that they couldn’t do it themselves.

Your platform relies on blockchain technology provided by Devvio. What is their role in DevvStream’s business model?

Devvio is a sister company and is a significant owner in Devstream. It’s a blockchain company that has the greenest blockchain in the world, the one with the lowest energy consumption. So it really fits this type of application.

The reason we created a platform using blockchain is the lack of transparency in carbon credit markets. A lot of times when an organization goes and buys a carbon credit it’s not always clear how the quantification data is generated. And did the impact it’s saying it had truly happen. At the same time, when carbon credits are being traded and sold, especially from developing nations, brokers will come in and take 90% of the profits, and that’s not transparent.

We’re putting all the data onto the blockchain, so that way everyone can see how the data is generated and quantified and if it created the impact it says it did.

    Relevant: DevvStream Launches First-Ever Blockchain-Based Carbon Offset Program Platform 

    Once the credits are issued you can see all the transactions. [Then] it becomes very clear that the majority of the money is going to the project developers, to help further advance that technology, as opposed to just the middleman.

    The quantification is also extremely important and the technology inherently makes it easier because it’s very precise.

    For nature-nased [credits] without using LiDAR or other technologies it’s always been with models that expect trees to grow at a linear rate. But there is opportunity for overestimation and that’s what is happening with some projects.

    Are there specific carbon accounting standards you adhere to?

    We adhere to ISO 14064-2:2020 and GHG Protocol for quantification purposes. In addition, for each project, we use recognized GHG quantification methodologies from VCS, Gold Standard, ACR, CDM, and more.

    Who do you sell the credits to? Do you work with partners for that?

    We expect to sell to corporations and organizations directly. We recently announced an offtake agreement with a large global energy company for up to 650,000 credits over the next three years. We also work with partners like CBL Xpansiv, so we will be using a combination of both [sales channels].

    DevvStream recently signed up to the Core Carbon Principles benchmark. Is that a prelude to working on voluntary markets, or is your focus on compliance markets?

    We expect to work on both because they are, in our mind, equally important. The reason that we embrace The Core Carbon Principles is that they create a bar that ensures the quality of the credits. All these issues I mentioned are addressed, as well as the impact additionality. It also allows the buyers to have certainty that these aren’t junk credits.

    What’s happening now is that there are companies being sued because they’re buying these junk credits that aren’t creating the [desired] impacts. This helps address a lot of that and we only want to generate the highest quality credits possible.

    What is your sense of the current situation in both the compliance and voluntary market?

    What we’re seeing is that the pricing is very polar. You have your high quality credits and you have your low quality credits. The value of the low quality credits is declining and the value of the high quality credits is increasing. Unfortunately the majority of credits in the market right now are of low quality and they are getting dumped.

    We’ve spoken to quite a few organizations and they’ve commented that there’s just not enough high quality credits out there. There’s a demand for them.

    There is also demand for trade between countries and those will also have a certain level of criteria that need to be met. So when you when you take those types of credits, you’re gonna get a premium over the lower quality.

    Source: DevvStream investor presentation

    As far as the regulatory compliance market, we expect that to increase as well. In Canada, for example, under their OBPS program, the carbon tax is $65 today. We have $15 every year to hit $170 by 2030, so that’s going to provide a steady increase.

    You’ll soon be listed on the NASDAQ. What do you hope that will provide?

    Like any growing company we’re always in a fundraising mode. We are growing significantly with over 140 projects on our pipeline, (at least) seven under contract with a handful more than ready to switch over to contract.

    These projects are very scalable and just one example are building efficiency programs across North America. How many buildings and campuses and hotel chains will this be applicable for? We need additional people to run these programs, we need to really build out our platform. All this requires capital as well.

    Getting on the NASDAQ gives us access to a much larger capital pool than what we have now in Canada. The SPAC route seems to be a very efficient way and part of it is finding the right SPAC.

    Focus Impact, who we’re meging with, have the same goal of creating impact on the world in a positive way. They have a great management team run by Carl Stanton, their CEO. Our management teams just clicked and sometimes you just kind of know when there’s a match.

    [The public listing] gives us access to capital and being the first and the only current carbon company on the NASDAQ puts us in a leadership position as well. It gives us access to a lot of institutions who are looking to invest in companies like us.

    How do you see the role of SMBs in the credit markets going forward? From what I understand they are part of your business model?

    I think they’re critically important because there’s many of them. And it works with our model because we’re able to aggregate activities across even smaller organizations. A small building by itself, it doesn’t warrant a carbon credit project, because it’s just too timely, too expensive. But we can aggregate them and roll them into our program, so there’s almost zero additional costs. And we can turn them on fairly quickly as well. And that’s kind of the beauty of our technology and what we’re able to do.

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