The news: Climate Vault Solutions on Tuesday announced its launch and a $9.4 million seed round. The Seattle-based company is the sales and marketing arm of Climate Vault platform, which is a nonprofit initiative created in 2021.
The strategy: Climate Vault takes a somewhat unusual approach to helping companies, organizations and individuals reduce their carbon emissions. Instead of paying for tree plantings or solar installations, Climate Vault buys cap-and-trade carbon pollution permits and “vaults” them so they can’t be used by polluters.
The cap-and-trade markets — which are operated by governments in multiple states and countries — offer a limited number of permits that ratchets down over time. So by purchasing and sitting on the permit, it reduces the amount of pollution allowed.
Washington state this March held its first auction of carbon pollution permits, raising $300 million. Its second auction, held this month, pulled in $500 million. The state did not disclose who participated.
Climate Vault is additionally taking the value of the emissions permits and paying companies deploying carbon removal technology to physically pull carbon from the atmosphere.
The team: If the solution sounds a little heady and out-of-the-box, that could be attributed to the organization’s leadership.
The concept was inspired by co-founder Michael Greenstone, a Milton Friedman Distinguished Service Professor in Economics and director of the Becker Friedman Institute and the interdisciplinary Energy Policy Institute at the University of Chicago. Climate Vault’s other three co-founders are Don Wilson, founder and CEO of the Chicago financial services company DRW; Balaji Srinivasan, DRW’s global head of business development; and Andrew Dailey, managing director of MGI Research.
The co-founders launched the original nonprofit “to fix a broken supply chain in the voluntary carbon offset market and to spur innovation in carbon dioxide removal,” said Greenstone in a statement.
Jason Grant is chief operating officer and president of Climate Vault Solutions. He was previously senior director of product management for Oracle subsidiary NetSuite. Additional new leadership will be announced soon, according to a company spokesperson.
The organization also highlights its “Technology Experts Chamber,” which is chaired by Ernest Moniz, former U.S. Secretary of Energy, and includes five academic leaders who are experts in carbon removal. The chamber provides recommendations on legitimate solutions for carbon removal.
The company has 18 employees and plans to grow to 30 by the end of the year.
Chi-Sea split: The Climate Vault nonprofit will retain its Chicago base, while the for-profit side has its HQ in Seattle.
Several members of the startup’s leadership team are based in Seattle, and the city offers a “proximity to breathtaking natural beauty, combined with a business landscape that prioritizes organizational responsibility, and access to an extremely talented tech staff pool,” said spokesperson Brandy Gaskins by email.
The sector: The area of carbon accounting, emissions tracking and solutions for reducing carbon impacts keeps getting hotter.
There are dozens of companies working in the sector. Pacific Northwest startups include Muir AI; Carbon Direct, which has offices in Seattle and New York; Earth Finance; Ren Energy; and Scope 5, a Seattle-based startup that was recently acquired.
The field presents a difficult and urgent challenge. While thousands of companies and governments have pledged to cut their carbon emissions, outside audits find shortcomings in pollution accounting and initiatives promising to remove carbon. The problems include a lack of transparency and inaccurate estimates around emissions and removal.
The backers: The round was led by the Inclusive Capital Partners Foundation, a private foundation based in San Francisco, with additional investment from King Philanthropies, Valor Siren Ventures and ThirdStream Partners.
