Resources

• Key Carbon
• UNFCCC Article 6 Overview
• Guest Column by Luke Leslie: Article 6 agreement will transform carbon markets as we know them
• Navigating the American Carbon World Conference
• International Emissions Trading Association (IETA)
• Climate Week NYC
• Book recommendations: Net Zero by Dieter Helm, Cornerstones by Benedict Macdonald

Host and Guest

Climate Rising Host: Professor Mike Toffel, Faculty Chair, Business & Environment Initiative (LinkedIn)

Guest: Luke Leslie, Co-Founder & CEO, Key Carbon (LinkedIn)

Transcript

Editor's Note: The following was prepared by a machine algorithm, and may not perfectly reflect the audio file of the interview.

Mike Toffel:

Luke, thank you so much for joining us here on Climate Rising.

Luke Leslie:

Thanks very much for having me.

Mike Toffel:

So, Luke, I wonder if we can begin with just a brief introduction and how you ended up as an investor in the voluntary carbon market space.

Luke Leslie:

So, my name is Luke Leslie. I'm a co-founder and the CEO of a company called Key Carbon. We are one of the largest investors in the voluntary carbon market for high integrity products. I started off my career 20 years ago in the carbon markets working at a management consultancy called Accenture. And it was at the very beginning of the carbon markets in Europe. I followed it ever since, but it was 2020 when I moved to Mauritius with my family during COVID. And it was while being there and reflecting on the visible impacts of climate change that I decided to co-found Key Carbon in 2021 with my co-founder Eric Zurin.

Mike Toffel:

Okay, wow. What was it that you saw in Mauritius that led you to that decision?

Luke Leslie:

Well, I have a picture behind me which is of an island in the north of Mauritius, and we used to swim a lot out there. And the coral reefs in Mauritius have been hugely degraded over the last decade. And you can see it when you swim, there's a lot of bleaching, a lot of coral bleaching, and a lot of the marine life has disappeared. So, you see it every day when you live on the water.

Mike Toffel:

So once one has that realization that climate change is perhaps more real than even they thought, or they see its manifestations, there's lots of stories of people being inspired to jump into the climate change space in one way or another, whether it be on developing new technologies or on working in operating company that's trying to figure out how to decarbonize, perhaps going into an energy transition company. And you decided to focus both on finance and focus on the voluntary carbon market. So how did you come to that conclusion?

Luke Leslie:

Well, when I was at Accenture, one of the things I did was I wrote a model on the forest factory. It was called the forest factory. That was how you value a forest, not just for the stump value, but also for the value of carbon sequestration, for the biomass value, and the landed value as well. That was an invention. It was patented by Accenture. I co-authored that with two others. And so, I've always been interested in carbon crediting, carbon sequestration element. I then, the rest of my career followed a finance path. I was an investment banker; I worked in private equity. And so, what I'm really doing now at Key Carbon is combining my interests in the value of forests and the value of the broader voluntary carbon market, but also my skill sets, which were developed in structuring and particularly financial structuring.

Mike Toffel:

Got it. Now, this is part of the broader landscape of what people refer to as climate finance. And there's different targets for that finance, different things they're investing in. And there's different types of financial services organizations, whether they're private equity or venture capitalists or angel investors or banks. I wonder if you can just help set the stage of what people mean when they refer to climate finance and then sort of where your organization fits into that landscape.

Luke Leslie:

Yes, it's a good question. The starting point for me is what does climate finance mean? To me, it's financing the pathway to net zero. The estimated cost of doing that by McKinsey is $9 trillion a year. So, it requires a substantial amount of capital. Now there's two parts to that. There's reducing emissions as far as you can and then neutralizing what's left.

Key carbon operates in that second part. Now I'd also look at it in terms of a matrix of where do investors play. On the one hand, you could look at the stage of investment. So, you've mentioned venture capital. They would typically come in for early-stage opportunities. And then the likes of private equity would be interested in profitable companies, particularly the buyout funds, that are a bit more developed.

On the other side of the matrix, you could look at different investment instruments. the ones that are particularly well-known would-be equity and debt. And then in between those two, you've got lots of hybrid structures, which have features of both. We call structured finance. That's where key carbon operates.

Mike Toffel:

Got it. Okay. So, let's dive in a little deeper into understanding Key Carbon as an organization. So, you mentioned that right now it's a major player, one of the largest financiers in the carbon market, particularly on what you're referring to as high integrity carbon projects, which yield carbon credits.

Let’s begin: whose money are you managing? So, is this self-funded or is this, you have investors? And then what I want to hear next about is where do you get the ideas? Are people pitching to you? Are you out there sourcing them? So, both how you're getting money and then how you're spending it.

Luke Leslie:

So, our money comes from institutional investors. They're mostly North Americans. So, the likes of a Canadian pension fund is one of our early investors. We have other large institutions, including private equity, and some strategic investors, such as the Marex Group, which is listed in New York. So, we attract all sorts of different types of money because this is something that's interesting not only for those seeking a financial return, but for those operating within this market for the purpose of trading the credits, or perhaps because it has strategic value to some groups. They're going to have to buy carbon credits themselves one day.

Mike Toffel:

Got it. So that's where the money comes from. And then how do you go about sourcing projects?

Luke Leslie:

Yeah, just taking a step back here because I think the classic way of investing in the voluntary carbon market is very different from what we do. So, in the past, the voluntary carbon market was what it says on the tin, it was voluntary. And it had a very weak use case. So, you would have a company that would purchase a credit and then they would make a claim, a claim that they were offsetting emissions. It was a voluntary thing to do.

Now, quite a few of those companies that were doing this are exposed to risks of accusations of greenwashing. And the link through the shareholder value was quite tenuous. So that was a tricky market. It still exists today, but it's a market that we believe is in decline. So, what we're interested in is the pre-compliance market. It's essentially the voluntary market that is being incorporated into compliance regimes around the world.

So, I think that's the starting point. So, we're not looking at the entire voluntary market. We're looking at parts of the voluntary market that are being qualified and regulated by governments around the world, as an example. So that's the starting point. within that part of the voluntary market, we're interested in projects that have a competitive advantage against other projects.

Now this is really interesting because some of these compliance markets are open and some of them are closed. The open markets are sourcing credits from different countries in the world where you have comparative advantage. So, an example of that is if you're planting trees in the wet tropics, you can sequester three to four times as much carbon as if you're planting those trees in the dry tropics. And the further north you go, the more productive it is. So, you naturally will favor certain types of projects in certain jurisdictions. Then within certain jurisdictions, you're finding that credits are having to compete with other credits. So regenerative agriculture now has to be competitive against tree planting or blue carbon.

So, it becomes very interesting. The way we do this is to build our own cost curves across the industry, and we're interested in financing the lower cost parts of the market that can produce the same amount of impact. So, this is really about efficient allocation of capital.

Mike Toffel:

It sounds really interesting. Can you give some examples of where we're seeing these pre-compliance credits emerging? So these are emerging or even perhaps recently passed legislation that's sort of being phased in that, as I understand it, is allowing a portion of the decarbonization requirements on the regulated entities to be achieved through what have formerly been called voluntary carbon market credits, but in this case, I guess they're going to need a new name. Maybe they're like compliance eligible credits. And this is outside of existing regimes that like in Europe where there's the ETS that allows trading between countries that is in a sense a form of credits as well. You're talking about different regulatory regimes. Can you give us a couple of examples?

Luke Leslie:

Yeah, so one example would be Singapore. So, in Singapore, there is a carbon tax. The carbon tax applies to anyone who any company that operates in Singapore that produces emissions, they'll pay a tax. In Singapore, they have linked that market to the voluntary market by saying that 5 % of that tax can be offset through buying certain types of voluntary carbon market credits.

For those buyers, this is a very strong use case because if they can purchase a voluntary credit, which costs less than the carbon tax, which next year is going to be $34 US a ton, then they're going to do that and they're going to try and buy it at the lowest cost possible in order to make the biggest savings. So, there's a direct linkage through shareholder value. These markets are cropping up everywhere. South Africa is another example. And we expect the EU to also start incorporating credits from the VCM.

Mike Toffel:

Got it. So now Singapore, given my familiarity with Singapore, I’m gotta bet a lot that that's an open market because the land available in Singapore is pretty constrained. First of all, is that correct?

Luke Leslie:

You're absolutely right.

Mike Toffel:

And then South Africa, is that an open market or a closed market?

Luke Leslie:

It's a closed market. You can only buy certain carbon credits that are produced within South Africa. We expect the same within the EU for it to be a closed market. This becomes really interesting from an investment standpoint because the competition becomes closed. So, you need to be at the bottom of the cost curve within the EU or within South Africa. But in Singapore, you need to compete. You need to be looking at cost curves at multiple jurisdictions.

Mike Toffel:

Got it. And each of these jurisdictions, because these are emerging through national or perhaps multilateral in the EU case law, the rules of what qualifies, I'm suspecting, are going to be kind of country specific.

Luke Leslie:

Yeah, so there's this very interesting paradox at the moment where you have this convergence on the claim side. So, what constitutes a high integrity credit? So, there is this emerging consensus as to what good quality credit is, but you have this divergence on the market side of things. So, the way that Singapore sets up its market is different to South Africa. It's going to be different to how the EU incorporates carbon credits. And each of these countries will determine what carbon credit qualifies for their compliance markets.

Mike Toffel:

Very interesting. This is the target of your investments. You're trying to find what are voluntary - sorry, I guess I can't even call them voluntary - what are projects that are going to spin off carbon credits that will be eligible for use by companies in these countries where the use of these credits is increasingly being allowed either to offset taxes or offset caps or so on. So that's your target.

Then let me come to the question about sourcing. So now that you know what the criteria are, you're basically using the criteria, you're inheriting the criteria from these regulatory schemes. And the world is your oyster. some cases, South Africa, in some cases maybe within the EU or Singapore, you could go anywhere. So that still leaves a lot of opportunities. So, are you going out there seeking developers to engage in this or are developers coming to you? Is there a matching place where at a conference people do a bake-off and then there's a bunch of investors in the audience like you see on TV? How does this market actually work? How do developers meet up with investors?

Luke Leslie:

The best analogy I have for the VCM today is that it's like the advent of the automotive industry, which was an artisan industry when it first kicked off. So, it had a proliferation of small players, mostly operating at high cost, and it took for Ford and then General Motors to come in and really professionalize the industry, bring down the costs, standardize the products, and that's what we're trying to do here.

We're trying to find and finance the forward of the VCM. Mostly that is us reaching out to groups. We do our own analysis. Everyone is benchmarked within the categories that we focus on. And we will have lots of meetings in order to refine those benchmarks. But we ultimately only have a couple of targets within certain categories. So, I can give you an example of this.

We look to the clean cooking market. We've always been convinced by the necessity to finance clean cooking around the world. Almost a billion people in sub-Saharan Africa are still using dirty fuel to cook. About four million people a year die prematurely from breathing in household fumes. But also, the carbon impact is significant. So, what we did was we looked at all the different products out there. You've got lots of different types of cook stoves, for example. They perform differently. So, they have different levels of thermal efficiency, and they are last different lengths of time. So, we were really interested in who can generate the most credits, the most impact on the product that they produce and who can also manufacture these products at a competitive cost. For us, there was really one group that was head and shoulders above the rest called Burn Manufacturing, a big part of their business had been B2B sales. They'd been selling cook stoves to other groups who had then been putting out carbon projects.

So, what we did was to set up a new carbon developer together called Global Cookstoves. We committed $50 million into that entity in order to roll out clean cooking across Africa at affordable prices. As a result, we've reached 7.5 million people so far and counting in terms of people who use our cook stoves. But also, we're able to sell these carbon credits into the likes of Singapore. This is what we expect to be doing from next year. And these are competitive sources of supply.

Mike Toffel:

So, let's talk more about this cooking stove example. So, you referred to the technological superiority of this particular manufacturer's design, which is certainly important. But the other pieces around cook stoves projects that generate carbon credits that have generated some concern, to be sure what you referred to with the health benefits as a huge either referred to as co-benefit or maybe even the primary benefit with carbon being the co-benefit, a huge dual benefit of reducing greenhouse gas emissions and improving the health of the users of these cook stoves. And that's primarily, as you had alluded to, because conventional cooking technologies use a lot of wood often in a very inefficient way. And so, it's a very smoky combustion and children are especially vulnerable to that in their homes. And so that's all for the good, a really exciting development.

The concerns of these projects that I'm aware of, above and beyond the technology when it's new, how efficient it is, are these actually being used? Are they being maintained? And how do you keep track of all that? And also, there's potentially a rebound effect, which is for the same wood, you can now say cook two meals, which is the theory, but also maybe for the same wood, you can have two burners and cook a more elaborate meal.

And so, people are able to get more nutrition, so that's certainly a benefit, but maybe the carbon benefits aren't as intensive as people thought. So this is all sorts of infrastructure around technology. So how in your due diligence or design process do you address these types of, and maybe I'm missing some of the other concerns as well, but those are the ones I've read about. How do you sort of accommodate those in order to generate, as you refer to, high integrity carbon credits?

Luke Leslie:

Yeah, well, there's certainly been a lot of criticism of the clean cook stove sector, quite justifiably. So, you've had pretty lax former standards and methodologies around how to generate carbon credit.

And one of the big debates that I think is possibly one of the most consequential is around this concept of FNRB, which stands for the Fraction of Non-renewable Biomass. And what this relates to is how much of the forest that was cut down was going to regenerate anyway and is this factored into models. And so, it led to a lot of over-crediting. But also, as you say, it was pretty weak on the ability to monitor and report the reality on the ground.

These methodologies have been, and the registries that produce them, this is very old standard, have produced some very, very stringent updated methodologies, which for most developers in the clean cook stove market are not viable. We believe that the vast majority of developers do not have a product that can move onto these stringent methodologies and generate credits for a price that they can sell out of profit.

It’s a really interesting time for clean cooking. There's going to be very significant cutbacks to supply. I'll give you an example of this. FNRB is a factoring of the emissions reductions that you get. Many developers use 90%. The default rate now is 30%. But there's also a lot better technology which is coming in. So, there's better modeling. There's a kind of dynamic baseline modeling. And for our electric stoves, can actually measure, these are metered stoves, you can measure the impact that they're having.

Mike Toffel:

Wow, interesting. So just to summarize what I'm hearing: these more stringent standards are allowing maybe a third of the credits to be generated from a project than they used to. This addresses the over-crediting issue that you were talking about. So, if it was in the old world, this project was going to create 9 million credits. Now it would create 3 million credits to say, let's be more real about the number.

That certainly reduces the risk to the buyers of a scandal later on emerging saying like, you thought you reduced a thousand metric tons through these credits, but actually, you know, our calculations are, it's a third of that. So, we could see that going a long way. And then the other piece you mentioned is this technological innovation of monitoring. Is this an internet of things type technology?

Luke Leslie:

That's exactly right. It’s an Internet of Things technology. You can add on this ability to measure exactly what's going on a per-stove basis. The cost is about an extra $6 a stove to do that. So, it's very affordable. And we find that most investors now require it. They want to know exactly the benefit that these stoves have.

So, this is the future. It's all the future is - its digital MRV and it's the stringent methodologies. And what we're the good news is what we're finding is that countries like Singapore are also saying we only want those credits as well.

Mike Toffel:

MRV being Monitoring, Reporting, and Verification. I have got my acronyms right in this space. Really interesting. So that's an example of one where you worked to kindly develop the project with a developer in order to generate the right standard, in order to adopt the right standards and practices to meet your requirements. So, at the end of the day, it would generate high-quality credits that would meet the regulatory requirements, which is the market you're pursuing. What are some examples of types of projects that you've been pitched to that you've passed on?

Luke Leslie:

Most projects we pass on because we're only interested in that sweet spot at the bottom of the cost curve for projects that, you know, need to be scalable. So, we're not interested in just a project-by-project basis approach. You know, clean cooking, you can scale across borders. Regenerative agriculture, you can scale across borders as well. So, we're big fans of that. We've planted 3.75 million mangroves, we love blue carbon again, but what you find in, take blue carbon as an example, is that the survival rates are very low.

So, what we typically see when we look at how projects are performed is that the survival rates are around 40%. So, when you factor that in, you need to be really careful about where you plant. So, one thing that we saw time and again was that coastal dynamics had a big impact. You find that these coastlines change a lot. And mangroves that are planted in one year, in 15 years’ time, are flooded and the carbon's been released back into the atmosphere. So, it takes a lot for us to enter into a partnership, but once we do, we back that partnership with a lot of money.

Mike Toffel:

So, when you've referred to blue carbon, you just describe what that means for those who aren't familiar with that phrase?

Luke Leslie:

Yes, blue carbon is reforestation in the intertidal zone. So, it's linked to the oceans. Mangroves are the most significant part of the blue carbon opportunity. And mangroves are amazing. They're amazing trees. They grow very fast. They sequester a lot of carbon. But also, they have terrific co-benefits to biodiversity. And also, for communities that live nearby, protect against storm surges and they're good things to do anyway. So, what we like about mangroves is that for reforestation, it's among the lowest cost projects that you can implement, but it has particularly high co-benefits as well.

Mike Toffel:

Got it. So, and you mentioned, there's this risk of what proportion will survive in 10 or 15 years? What are the requirements that you insist upon as an investor to ensure that part of high integrity is to have provisions in place to both monitor and provide a backstop should those types of reversals or durability concerns arise down the road?

What are the types of requirements you impose on the projects you're investing in to make sure that 10 or 15 years from now, the people to whom you've sold these credits don't come back to you saying, hey, this is invalid.

Luke Leslie:

Yeah, just to give the blue carbon investment as an example, we do a huge amount of due diligence upfront. So, we run the time lapses, we do lot of the modelling in-house. So, we care a lot about, first of all, the setting up of the project and its longevity when you look at all sorts of variables. But one of the most important pieces is the community, because if the community doesn't support the project and looks after it, the project's not going to work. So, the way that we funded that project was that we paid for everything. We paid for all the planting, but also a third of our investment we gave straight to community program so that they could start planting alternative sources of firewood, they could have some clean cooking to chop down less trees, and so on. We also share the carbon credits on a 50-50 basis with the community. So, they are very, very aligned with us in nurturing that project and safeguarding it. So those are the kind of things we look at to make sure that these projects last for long term.

Mike Toffel:

Got it, very interesting. So, aligning incentives essentially with those who might otherwise pose a risk to the project. Let's get them embedded in their success rather than its failure. Interesting. So, you had mentioned something just a moment ago that reminded me of a question I wanted to ask you, which is how you actually get paid. So, you have so far mentioned two players in the development of these projects, you as the investor and the developer. Who's doing the work on the ground usually. So how do each of you make money from the project? How does that work?

Luke Leslie:

So, we provide all the money to fund it. So, we are the sole financing party. And in return for the developer operating it, they will typically, but not always, take a share of the carbon credits with us. So, in the case of Burn, carbon credits will be issued. They'll be issued some to Burn, some to us. We will then sell those credits to companies or organizations that are looking to either make a financial benefit such as these compliance markets, or it'll be in the voluntary carbon market where these companies are making claims. So, we get paid by those end buyers and then we reinvest all the proceeds back into new projects. Everything's reinvested back in.

Mike Toffel:

Got it. And so, when you're selling these credits, we've talked on earlier episodes to folks who are trying to create their own brand around curation of high-quality carbon. We spoke to Rubicon Carbon, for example, that's doing that. And then there's other approaches like carbon credit rating agencies that buyers often will hire or subscribe to their services to get their third-party assessment of the due diligence as part of their due diligence. Are you pursuing either of those or both of those strategies? How do you convince your buyers that these are of the integrity that you're describing?

Luke Leslie:

So, we are interested in the carbon credit ratings agencies because of the buyers, but the buyer’s reliance on them. So, a lot of buyers increasingly want just to have that sign off that these credits have been through a filter, and it provides them with a degree of protection should someone say that these were in fact not good credits. Now we make our investments independently of the ratings agencies, but we do like to know that they will look favorably upon these projects. Now, I think it's been interesting for them in the last two, three years because the focus has been very much on integrity. It'll be interesting to see what happens to those business models as we move into these compliance markets where governments are the arbiter of quality and to see what role they play in those emerging markets.

Mike Toffel:

Yeah. So, when will governments weigh in on a project's validity for use in their compliance market? that, will they make a claim at the beginning of the project if you give them all the documents and say, here's what our intention is? And they would say, yes, if you follow all those protocols, it will qualify. Or do they wait till the end when the project is actually already signed and sealed and passed to the registry and verification process? And you have all the documents signed off and then you apply for eligibility or is there a two-stage process? How does that work?

Luke Leslie:

So, it happens upfront. So, you need to both be on the list of the host country and also of the buying country. So, it needs to be approved of the project.

Mike Toffel:

I see. So that dramatically de-risks the investment for you because before you even spend all that money, maybe you need to do some spending to get the paperwork in line to develop the proposal. But before you put in the big money, hopefully the governments will have already signed off to say, yes, if you do all this, then it'll be valid. That's what you're saying.

Luke Leslie:

Yes, it's pretty clear as to what's in and what's out. Just back to the ratings agencies, I believe my understanding is that they are also helping quite a lot of these governments at the moment put these policies in place as well. So, they are playing an important role in the market today.

Mike Toffel:

Got it. Super interesting. So, is this the main way you've talked about focusing on these pre-compliance markets and on the lowest cost within those categories, most efficient? Is that how you're differentiating from other investors, whereas other investors cast a much wider net? Or are there other ways in which you're differentiating?

Luke Leslie:

So those are the three. So, it's the pre-compliance market, its scalability. So, it's really important that we can build these suppliers of high integrity credits, but who are doing it efficiently. We're trying to avoid capital destruction, which is what we've seen historically in the VCM. There's been money flying all over the place into projects that lots of them are now stranded. There are no buyers for those credits and they're not making it into compliance markets.

We’re very thoughtful about how you build up supplies that companies actually need, companies and countries actually need. So that's our focus. think that if it's not uncharitable to say this, the financing companies within the VCM were also not that dissimilar to those of the automotive industry when it started up as well. I think it was a bit hit and miss. There were quite a lot of structures that didn't work. The VCM is full of risk. It's still a very risky sector to invest in. There's lots of unknowns. There's lots of in terms of the market that you sell into, there's not a known price yet, particularly in the historical VCM. And so, I think there's been a bit of a shake-out in terms of the types of instruments that are being applied, but also the strategies, where people, and what kind of projects people are funding. My view is that if you're not in this pre-compliance market, the outlook's not great. You're going to see prices decline every year for the coming years.

Mike Toffel:

And so what's the strategic moat you're building to compete with other investors as this market emerges? Presumably more eyes will be on this. And so, it might become a more crowded space with other investors coming to the idea that the three criteria that you've used to differentiate are attractive.

So then, but you'll hopefully have been down something of a learning curve by then. You'll have relationships, for example. You'll have some expertise in overseeing these types of projects, helping to design them even. Is that a durable moat or are there other ways that you're imagining kind of staying ahead of the game?

Luke Leslie:

Yeah, it's, I would say it's similar to most that are built in the mining industry or the oil and gas industry, because if you have an asset that is geologically more favorable than another, you're going to be down at bottom of the cost curve. Your margins are always supported by the marginal cost of production. Okay. So, if you have mangrove concessions in Myanmar or parts of Indonesia, you're going to be much more profitable, should I say, you'll be able to compete with mangrove concessions in Mexico, which are just much more expensive. So that is durable. These credit types are going to be competing with each other. So, if you're in, I'll give you another example, regenerative agriculture in Europe, that is a much more efficient way to remove carbon from the atmosphere than planting trees in Europe. It's just costless. So, we believe we're building a moat by virtue of where we sit on the cost curve. There's also a big first mover advantage. Don't forget, this market shouldn't be around for too long if we're doing it right. This is a temporary solution. Ultimately, we need to get to geological net zero. So there comes a point in time where it doesn't make a ton of sense for other groups to come in and build out assembly lines of cook stoves across Africa. It's going to take them time to develop a product which competes and it's going to take them time to roll out assembly lines. It's fine, this market is a temporary market.

Mike Toffel:

So, let's just play that out a little bit. So, I think what you're saying is it's temporary because once the projects get developed and scaled to become somewhat, and you go up the cost curve, just supposing you're choosing the cheapest ones now and then only left will be the next slightly more expensive ones and so on. And at some point, that marginal cost of abatement and the development of the carving credit will switch back to saying it's actually cheaper for companies to decarbonize in-house than to rely on the carbon credits. Is that what you're saying?

Luke Leslie:

So, what I'm saying is that there is going to be a tail for emissions reductions. So, you're not going to be able to cement down to zero emissions, not in the near term. There's lots of industries where that's going to be problematic. So, you have a period where you can use natural capital sinks. The planting of trees is the easiest one for people to understand. But if you keep on emitting fossil fuels through burning, you eventually run out of land to keep on neutralizing it, right? So, you're going to, you can do this, but you can't do it forever. So, at some point in time, we need to have, whether it's carbon capture and storage or direct air capture, you know, that needs to then take over for a solution that is more permanent. So, this is a great solution, but it is time-bound. I mean, the other great thing about it is that it's all these other co-benefits that we've touched on: the ability to restore huge tracts of land for the benefit of biodiversity. It's a great thing to be able to do, but we're going to reach a point in time where direct air capture, carbon capture and storage are going to have to step up.

Mike Toffel:

Got it. Got it. Great. Well, let's look ahead. So, we've already been talking a bit about the emerging trends in the compliance market and how it overlaps with the voluntary market. What else have you excited in the next few years? Are there technology or other policies or other market trends that you're looking forward to in your space or hazards that we should be aware of?

Luke Leslie:

So, look, I think we are at the beginning of mass adoption within the voluntary carbon market, which is really exciting for us because we live and breathe it. This is something we spend all our time looking at different ways that you can invest in projects that are worthwhile. So, we're beginning to see interest from all sorts of places that we've never seen before. So that's one thing. So, I think we're at a tipping point where funds will really begin to flow into this market. We're really interested in biodiversity. It was actually a core part of our DNA when we set up Key Carbon. We think that the biodiversity market will kindly slipstream the carbon market. We'll see it beginning to develop. And there's increasingly different ways to monitor biodiversity. So, whether it's eDNA or ground acoustics, we find it hard at the moment to implement those in some of the countries that we're operating in today, but we are shortly closing some investments into Europe, and we're really excited about trialing some of these technologies out so that we can incorporate nature into what we do.

Mike Toffel:

So, Luke, for those interested in learning more about climate finance what advice do you have for them? What resources should they look at? What conferences should they attend? Newsletters, internships, know, whatever it is that's on your mind.

Luke Leslie:

Well, the first thing I'll say is that this is a market that needs brilliant people. It's an important thing that we're all striving for. But it's also really rewarding. It's at the intersection of science that's moving quickly, but also new technologies and purpose. I'd really encourage those who are interested in it to spend some time.

First, there are conferences which are very accessible. The big one is in New York for Climate Week in the last week of September. That's a great place to immerse yourself in the world of climate change and meet lots of interesting people. And I'd also recommend some books. Think of Net Zero by Dieter Helm, he's a professor at Oxford. That's a great place to start. And I also love Benedict MacDonald's book Cornerstones. I think that's a good book to read too. We're also happy if anyone wants to get in touch with us and talk about their interests, we'd happy to do that as well.

Mike Toffel:

Great. Those are very helpful tips. I'm unfamiliar with both of those books, so I'm going to read them as well. Great. Well, Luke, it's been a real pleasure talking to you. Thank you for giving us a 101 on climate finance in the carbon credit space and for sharing your vision of your organizations and where the world is going in this space. Very interesting. So, thank you very much.

Luke Leslie:

Thank you, Mike, it's a pleasure.