Tech company dClimate, which is backed by investors including U.S. billionaire Mark Cuban, has agreed to work with the Democratic Republic of Congo on a $1 billion carbon initiative, Bloomberg reported Tuesday.
The startup, which uses open data tools and emerging technologies like AI and blockchain to address pressing climate issues, has signed a preliminary deal with the Congolese government to generate carbon credits by preventing deforestation in the world’s second-biggest tropical forest.
The plan involves compensating the country for the rights to sequester 100 million tons of carbon dioxide (CO2) or the equivalent over ten years, covering approximately 500,000 hectares (approx. 1.24 million acres) of peatlands.
dClimate will monitor the protected area to demonstrate ongoing deforestation prevention, assist in establishing a carbon credit registry for Congo, and sell the generated credits on the open market.
The initiative aims to tap into Congo’s vast and largely untapped forest resources as a source of carbon credits with an estimated potential value of around $1 billion throughout the ten-year agreement.
Peatlands, in particular, store carbon due to waterlogged conditions preventing full decomposition of organic matter.
However, for these credits to have market and environmental value, dClimate must prove that they are supporting peatland protection that wouldn’t have occurred otherwise, addressing concerns about the principle of additionality.
Congo’s forests are estimated by the World Bank to capture 822 million tons of greenhouse gas annually, potentially translating into billions of dollars in credits if additionality can be demonstrated.
Despite this potential, Congo’s credits currently trade at a mere $5 on the voluntary market due to concerns about the integrity of offset claims.
dClimate anticipates fetching $7 to $10 for its credits, citing its technology and the new registry as factors that will instill confidence in investors regarding the legitimacy of the offsets.
The deal, in negotiation for two years, is seen as a step towards balancing ecological preservation with national growth, Stephanie Mbombo, Congo’s special envoy for the new climate economy, was cited as saying in a statement sent to Bloomberg by dClimate.
Investors like Mark Cuban and Chainlink founder Sergey Nazarov, who are also members of dClimate’s advisory board, are crucial to the project.
The company plans to commence the Congo project in 2024 upon finalizing the contract.