Peninsula climate firm’s global deal highlights domestic policy challenges

The company acts as a marketplace, connecting individuals and organizations all over the world — from farmers in South America to multinational automakers — to buy and sell carbon removal credits.

Earlier this month, the company inked a deal with the Mongolian government and Japanese-based Mitsubishi, which is expected to remove about 1.3 million tons of carbon from the atmosphere each year. The project targets about 3 million acres of Mongolian grassland — which could increase to 20 million in the next six years — and will, in turn, help the automaker comply with its home country’s emission reduction regulations. The agreement makes it the largest compliance-based carbon removal project that is also compliance based, Moorthy said, meaning it stems from a legal mandate.

“Most of the compliance projects are currently avoidance or emission reduction projects … so there are not that many compliance carbon removal projects right now, but we will start seeing a growing number,” he said.

But despite being based in a state that’s relatively amenable to environmental concerns — and one whose agricultural output rivals many nations’ — replicating such a deal in California has been one of the steepest hills to climb.

That’s partially because services like Boomitra’s are not eligible to participate in the state’s cap-and-trade program at the moment, which is required only among the state’s major emitters, such as oil refineries and natural gas power plants. And compared to places like the European Union, a lack of federally-mandated emission reduction policies means most carbon-focused initiatives are buoyed largely by companies’ voluntary commitments.

“It’s a confusing scenario in the United States, because people are just going to wait and watch for the election to see what actually happens,” Moorthy said. “There’s no such hold-back in Europe. … Even in California, the big investors writing the checks are just on the sidelines because they want to see what happens in the election.”

Boomitra still does quite well in the Bay Area, though, selling the credits to many regionally-based firms, including technology companies, many of which have ramped up their environmental, social and governance goals in the last several years. And the AI arms race has proved lucrative, as the industry is investing heavily in carbon removal or emissions reduction programs as a result of increased electricity consumption.

“Tech companies were already buying carbon credits, but with the current AI boom they suddenly had to 5x or 10x their approaches so it's ramped up dramatically compared to what it was before,” Moorthy said.

In March, Google announced its commitment to buy $35 million in carbon removal credits, and a 2023 PricewaterhouseCoopers report showed that, despite an overall two-year decline in climate technology investment, carbon capture and removal technology bucked the trend.

Without predictable policy direction, however, scaling up in Boomitra’s home state could mean playing the long game.

“What we are doing in Mongolia and Japan is what we want to do in California someday, [which is] that farmers will be able to participate in compliance credits, not just the voluntary ones that tech companies are buying, but credits that are required by law.”

alyse@smdailyjournal.com

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