Diego C. Azagil of Pachama and Gustav Alstomer from YC discuss Diego's background and his journey leading up to starting Pachama. Pachama aims to use technology to solve climate change by focusing on reforestation and forest conservation. They address the challenges of funding and certification in the carbon market and the lack of credibility in forest projects. Pachama seeks to overcome these challenges and make reforestation a more viable solution to climate change.

- The use of remote sensing and artificial intelligence is being employed to monitor and verify carbon levels in forests, improving the credibility and transparency of carbon offset projects.
- A marketplace is being created to directly connect buyers with forest restoration and conservation projects, bypassing brokers and middlemen.
- The platform provides detailed information on the location of projects, satellite images, and descriptions of co-benefits such as biodiversity and job generation.
- The cost of offsetting carbon emissions for companies can be relatively low, with prices ranging between $5 and $20 per ton of carbon credits.
- The potential for reforestation is significant, with about 1 billion hectares available for restoration, which could draw down about 200 gigatons of carbon, equivalent to two-thirds of emissions since the Industrial Revolution.
- Lack of trust in carbon offsets in the past was due to a lack of transparency and data, which this platform aims to address by providing a digital asset that can be traced and monitored.

- The need for more transparency and technology tools in carbon registries to ensure accurate accounting
- The issue of national contributions to the Paris Agreement and the need to account for private projects within forest carbon capture
- Four types of forest projects: forest conservation, improved forest management, reforestation, and afforestation
- The benefits of sustainable logging and the sustainability of wood as a material
- Incentives for farmers and timber industry to create monocultures and the importance of biodiversity in forest projects
- Use of technology, such as deep learning and LiDAR data, to analyze forests and estimate carbon capture
- Challenges in data collection and the potential for using NASA's Jedi program for global expansion
- The company is less than a year old and has scaled up quickly, but there are bottlenecks to faster growth.

- The company has onboarded 10 forest projects in the US and Brazil, with potential big companies interested in purchasing carbon offsets.
- The main buyers of carbon offsets are corporations, particularly those in regulated industries like energy and transportation.
- There is also a growing voluntary market of companies, especially technology companies, that prioritize sustainability and carbon neutrality.
- Airlines like Delta and United have already started offsetting emissions and offering customers the option to do the same.
- Employees, customers, and investors in Silicon Valley are demanding action on climate change, including offsetting emissions.
- The future of the market will involve governments regulating industries, voluntary actions by companies, and individual consumers making choices.
- The company had a successful fundraising experience, attracting top investors who recognized the potential value creation in addressing climate change.
- Educating investors about carbon credits and solutions was necessary, but there is significant interest in climate change startups.
- Advice for software engineers interested in working on climate change includes applying to companies like Pajama, starting their own companies, or seeking opportunities in big companies, governments, or non-profit organizations.
- Areas where software is needed in climate change solutions include AI plus optimization of shipments, travel, nuclear plants, smart cities, and electric grids.

- The speaker discusses various applications of AI, such as optimizing shipments, travel, safety of nuclear plants, smart cities, and efficient agriculture.
- They emphasize the importance of conducting thorough research and seeking advice from experts before starting a company.
- The speaker believes that more regulations should be implemented to incentivize companies to transition away from fossil fuels and offset their emissions.
- They have learned the importance of partnerships with registries, the need for education and content strategy, and the potential of remote sensing and data analysis in understanding ecosystems.
- Agroforestry and permaculture are seen as promising methods for sustainable agriculture.

- Pachama is a company using technology to address climate change through reforestation and forest conservation.
- They are using remote sensing and AI to monitor and verify carbon levels in forests, improving credibility.
- Pachama is creating a marketplace to directly connect buyers with forest projects, bypassing middlemen.
- The platform provides detailed information on project locations, satellite images, and co-benefits.
- Carbon offset prices range from $5 to $20 per ton, and there is potential for significant reforestation.
- Lack of transparency in the past has hindered trust in carbon offsets, but this platform aims to address that.
- There is a need for more transparency and technology in carbon registries.
- Different types of forest projects include conservation, management, reforestation, and afforestation.
- Sustainable logging and biodiversity are important considerations in forest projects.
- Technology like deep learning and LiDAR data can analyze forests and estimate carbon capture.
- Pachama has onboarded 10 forest projects and attracted interest from big companies.
- The main buyers of carbon offsets are corporations, including technology companies.
- Airlines like Delta and United are already offsetting emissions.
- The market for carbon offsets will involve government regulations, voluntary actions, and consumer choices.
- Pachama has successfully fundraised and there is interest in climate change startups.
- Software engineers can contribute to climate change solutions in various areas.
- Thorough research and expert advice are important before starting a climate change company.
- More regulations should incentivize companies to transition away from fossil fuels and offset emissions.
- Partnerships with registries, education, and data analysis are important for understanding ecosystems.
- Agroforestry and permaculture are promising methods for sustainable agriculture.

Azagil of Pachama from the Winter 19 batch and Gustav Alstomer, who is a partner at YC.

So today we're here to talk about Diego's company.

So I met Diego probably about a year and a half ago now.

And our paths crossed in sort of like the interest for carbon removal.

I don't know if you call it French science anymore, a French sort of like area.

But it certainly crossed in the area of trying to solve climate change and how you can use technology to solve climate change.

And it's something that we at YC have spent quite a bit of time on.

Back in, about A year ago, we released a carbon request for startup, carbon removal request for startup, which is a way for us to inspire people that work on new companies what to work on.

And we presented a bunch of ideas there of things that people can work on.

Diego has a very interesting approach to his company and love to hear more.

But he is, this is not his first company.

So maybe before we get into Parchama, tell us about your background.

Like you've been funded, you've funded a couple of different companies in the past.

Maybe what's the journey, how you got here today?

Let's see, I grew up in Argentina, in the north of Argentina, always surrounded by nature, where I'm from.

It's, you know, the Yungas, which is the last tip of the Amazon type rain forest in the north of Argentina.

And then I had this big curiosity to travel the world.

Argentina is so far away from everything that, you know, I wanted to travel and see.

So after finishing school, I got a scholarship to do a master's in Barcelona, moved from Argentina to Barcelona, took advantage to travel as a backpacker all across Europe.

And then that journey led me to New York City to do an internship.

And there I decided to start a company, which was kind of insane because at the time I was broke, I didn't speak good English, I didn't know anybody in the US and I had no idea how to start a startup.

But I did it and the first startup was trying to solve the problem that I had at the time as a backpacker.

So we built a mobile app to book hostels and bed and breakfast.

And at the beginning it was really hard because I had no idea, but eventually we raised some capital and eventually we sold the company to a company called Student Universe that sold discounted flights for students.

After, right after that, I went to Argentina to visit my family and I lost a suitcase on the trip.

And that led to the next idea, which was how come there is no suitcases that you can track?

And with a friend in New York, we decided to launch a crowdfunding campaign and started BlueSmart, which is a company with which we applied to Y Combinator and got selected in winter 15.

And building a hardware company was a completely new adventure for me, really difficult.

Did you have any background building hardware before?

My co-founder told me he had been to China sourcing merchandising, but I had never been to China.

And we moved after, right after YC, we moved to Hong Kong.

We opened an office there and we started, you know, going to Shenzhen every week.

We raised a lot of capital thanks to YC and thanks to the attraction that we were having, you know, we're selling a lot of our products.

And, you know, grew the team to over 60 people.

And everything was going great, although always with a lot of challenges, like every Harvard company, up until the airlines decided to buy lithium-ion batteries because the Samsung phones were getting on fire on airplanes, which is something you cannot expect as a startup to be, you know, have your products banned by airlines.

Yeah, I mean, the vision was to use technology to make travel better.

But there wasn't like this grand vision to improve the world, to be honest.

you the first company to like embed a battery in a suitcase or?

And now it's sort of like standard, every single

Yeah, a lot of other great companies came afterwards, bringing innovation to Laggage.

Which, by the way, to me the biggest lessons that I got from that startup was that you can introduce a new idea into the world and this idea can spread as a meme, and then you have a new category in the planet.

A conversation in a coffee shop in New York City can turn into a multi-hundred million dollar category.

And I was like, wow, okay, we have that power.

Why don't we put it to good use to solve 1 of the biggest problems that humanity faces today.

So anyways, that company ended up in this very difficult situation.

We were able to sell the assets of the company, the technology and the IP, but the company didn't end in a good exit.

So after that, I decided to take some time off, did a lot of soul searching, went with my 2 brothers to the Amazon rainforest, spent some time with some native communities there, got incredibly inspired by the power of nature, and also got incredibly heartbroken seeing deforestation happening there in the border of the Amazon and civilization.

Then move here to the Santa Cruz Mountains, where I live now among the redwoods, and from there started researching and thinking what I was going to do next.

And climate change and the environmental crisis was my biggest concern.

And at the same time, I had this inspiration by the forest where I had been.

And reading a book, I discovered or I learned the potential that reforestation and forest conservation has to capture carbon at scale in the planet, and is 1 of the most important solutions to climate change that nobody is talking about at the time.

And so then that led me to research, you know, how technology could enable that solution.

And I decided to come back to the road, even though I was, you know, quite, you know, still, I guess, broken by the previous experience, but I was like, okay, everything I learned, I need to put it at the service of this, which I think is the biggest problem of our generation.

And then I went and I talked to you and you received me and I drew in a whiteboard the idea and you told me, this is a really good idea, go for it.

And I can tell you what the idea is now with that introduction.

But that's the background of how I got to Pachama.

I mean, there's a lot of people have ideas on how to solve climate change.

I believe that technology will be absolutely the core of solving it.

Like most big problems humanity have faced in the past, technology have somewhat helped solve.

So maybe tell me about Pachama, what does it do?

Sounds like a good idea to plant trees, but like in what way do you change that?

So the first question that we asked was, okay, if reforestation and forest conservation is such a big solution and such an easy solution, we know how to plant trees, why we're not doing it?

And the answer to that is, okay, somebody has to pay for that.

There is no economic incentive to do it today.

And the mechanism that was created by the United Nations to create an incentive to drive solutions to climate change is carbon markets.

Carbon markets work in the following way.

The companies and organizations that are emitting CO2 into the atmosphere should take responsibility for those emissions and should compensate those emissions.

And the way to do it is through an instrument that was created called carbon credits that are given to projects that reduce emissions or recapture carbon from the atmosphere.

Now that's a market that had some growth at the beginning and then after the financial crisis kind of crash, but after the Paris Agreement, the market is growing again.

And according to the World Bank, last year over $80 billion went into carbon market initiatives around the world.

And yet, when you look at the percentage of that funding that is going to forest conservation and restoration, it's less than 2%.

So, then the question that we ask is, okay, why that's the case?

And we learned that There were 2 problems.

Number 1, if you want to certify a forest project today, let's say that you want to plant trees, you have a land and you want to do reforestation or do forest conservation, you have to do a certification process that takes 2 years and it costs between $100,000 and $400,000 because you have to get auditors sent to your field to count trees and measure the size of the trees every certain period of time.

So as a result, there aren't that many projects.

In the US, there are less than 50 projects that got certification for carbon credits.

And the only projects are very large projects.

On the other hand, buyers of carbon offsets, in a way, stayed away from forests because of a lot of lack of credibility about the projects.

You know, how do I know that someone is planting a tree?

How do I know that the calculation's been correct?

How do I know I'm not going to get in trouble if there is a problem in the project?

It's not common, but it happened sometimes.

And there were people that took advantage of carbon credits because they're such an abstract concept.

And there were some problems with projects in which illegal deforestation happened, maybe, you know, not under the awareness or control of the project developers, but something that happened and were problems in the past.

Was the problems related to it was hard to track things, or was the problems related to that the system was broken?

Yeah, hard to track, hard to process that information in real time.

It's just sort of like a technology problem, not an intentional problem in the most part.

So here's where we come with a technological solution to all these problems.

First, we are using the latest on remote sensing and artificial intelligence to do verification and monitoring of how much carbon is there on a forest and how much carbon the forest is going to capture.

Remote sensing includes satellite images, LiDAR data, and any form of data that can be collected remotely and then analyzed with algorithms.

And then we use machine learning algorithms, and I can go later into specifics of how we do it, to analyze those data points of the forest.

And you can be incredibly precise today at estimating carbon storage and carbon capture by forest.

So those tools will help facilitate the certification of projects.

They increase the credibility of the projects.

They allow for constant monitoring and they bring whole new transparency and efficiency to the onboarding of new projects.

And then the second part of what we're doing is we are trying to connect the parts in a more direct way.

Because today companies that want to purchase carbon offsets, they generally have to go to brokers.

The brokers get their credits from a trader, the trader maybe from a retailer, the retailer from a lot of middlemen along the way.

And if we are going to be onboarding these projects and doing this data analysis, why don't we connect directly the projects with the buyers?

So in a way, we're building a marketplace as well that allows for companies and organizations that want to offset their carbon emissions to directly access trustworthy carbon credits coming from forest restoration and conservation around the world.

And your platform allows me to know exactly what forest that I am, where the carbon credits is stored?

Exactly, you can enter the platform, You can see different projects around the world.

You can see satellite images that get updated on a frequent basis.

You can see how everything was tested, a description of the co-benefits.

Because by the way, 1 important thing about forest is that not only they capture carbon, but they are holders of biodiversity, wildlife, water conservation, community impacts, you know, job generation.

So it's a very holistic solution to many ecological problems.

And all that is described on the way that we display the projects on our platform.

So I think 1 thing that might be interesting to kind of give this a little context is to talk about magnitudes.

So for an average, I mean, we don't have to talk about specific customers, but for an average company, How much land are we talking?

How much carbon are they trying to offset?

Yeah, so it's a good question because there are many companies that are, for the first time, evaluating becoming carbon neutral, offsetting their emissions.

And it turns out that it's not that expensive.

It turns out that for certain companies, for example, service companies or software companies, their emissions are mainly the electricity consumption in their offices and their travels of their employees.

There is an estimation that for a company like that, it's about 6 tons per employee per year, the emission.

And today, prices of carbon credits range between 5 and $20.

So it's not a lot of money to completely- Per ton?

offset an employee in all of its emissions, it's 50 bucks

Between 50 and $150 per employee per year for a service company at that price level.

And how much land is that, just for context?

So let's see, 1 hectare of land of full grown forest contains about 200 tons.

Now, the carbon crates get issue in terms of how much additional carbon a forest project captures.

There are different type of projects I can explain, but yeah, we have projects that, it's interesting the question because we want to start presenting this as, you know, by offsetting your emissions, you are protecting 10 soccer fields of forest, right?

And we have, in fact, we're working on presenting trenches so companies can choose, okay, I want to participate in this trench that is gonna offset even beyond our footprint and focus on the protection that we're doing and not just on the carbon offsetting.

So that's the typically the unit that people are using to measure carbon emissions.

The world is emitting 35 or 40 gigatons a year.

Can you talk about just like the opportunity of foresting?

Because I remember there's a venture firm, Bill Gates investment firm, Big 3 Ant Ventures.

They say they would only invest in things that have a minimum opportunity of, I think it's like 1 gigaton or 1 and a half gigaton or half a percent.

means that everything you have to go after has to be really large.

Yeah, so there was a paper published recently by a university in Switzerland that did an estimation of the potential for reforestation and the numbers are like this.

There is about 1 billion hectares in the planet that are available for forest restoration without competing with agriculture.

In that land, you can plant about a trillion trees, and that trillion trees has the potential to draw down about 200 gigatons of carbon, not of CO2, of carbon.

That is about two-thirds of the emissions that we put in the atmosphere since the Industrial Revolution.

So we're talking about probably the most meaningful solution.

And this is discounting, not counting forest conservation, which is the standing forest that we have today, especially the rainforest that capture a lot of carbon, right, in Amazon, in Borneo, in Congo, that we should stop deforesting right now because these forests continue to capture carbon over their entire lifetime.

And the main problem that's missing is that the incentives aren't there.

Is it the incentives aren't, that don't exist or they're not available to most of those landowners?

Exactly, they're not available because, you know, the carbon market, you know, the flow of capital going to carbon markets is growing.

50% year over year since the Paris Agreement.

And we hope that we'll continue to grow as more regulations come into place.

For example, all the airlines starting in 2021 will have to offset their emissions.

And we are talking about 160 million tons per year

So the demand for carbon offsets will continue to grow.

And our intention is to make it easier for that funding to go to reforestation and forest conservation, and in the future, other nature-based solutions, because beyond forest, there is what's called blue carbon, which is restoring coral reefs and kelp forest and mangrove forests in waters.

There is regenerative agriculture, which is another form of land-based carbon capture, and so forth, right?

So, we hope that in the next few decades, hundreds of billions of dollars will go to solving climate change, as we realize the importance of this and the urgency.

And there will be a need for a platform that transparently, efficiently, and effectively transfer that capital to the right solutions, and we hope to be that platform.

Maybe we can dive in on the trust question.

So there's a history of people not fully trusting carbon offsets.

And sort of like, what is the difference between a carbon offset and a carbon credit?

And how do you make sure that you build and trust in your system so that we can change that narrative?

Yeah, I mean, the reason people didn't trust them is because lack of transparency and lack of data, right?

It was a very paper trail type of industry.

We're trying to make it a digital asset in which you can trace digitally everything from how a credit was issued, how it was calculated, how it's monitored, and how it's traded.

That should happen online, like every other industry that received the internet treatment,

So kind of like Airbnb, you can go and find every single place around the world, and as a homeowner or landowner, I can figure out what the value of my land is on the carbon markets.

So the lack of trust was because of lack of transparency and data and information.

And just a specific question, how do you make sure that something isn't double counted?

How do you make sure the Salman isn't on your platform and another platform at the same time?

Yeah, well, there are these registries and the registries are in a way cross accounted, but there's definitely a need for more transparency tools and more technology tools, frankly, for these registries to assure that everything is uniquely accounted.

There is also the issue of the national contributions to the commitments towards the Paris Agreement, in which a country can claim the carbon capture for forest

maybe inside of that land, there is a particular private project that also got carbon credits.

So you have to assure that you account for that.

And again, it's just about data and making the data accessible and standardized.

So 1 follow up question is, what's the difference between reforestation, afforestation, and also once a common concern people have about forest capture and carbon is that forest eventually die or eventually burn or whatever natural costs of carbon being re-emitted into the atmosphere.

Yeah, so, okay, there are 4 type of forest projects and more probably, but there is forest conservation, which is you have a standing forest, and what you do is you commit not to cut it down.

That's what's needed in the Amazon rainforest, for example, right?

We need to pay people not to cut down the forest because there is an alternative that is cutting down the forest to do cattle ranching or to do agriculture and that's a big economic pressure on the Amazon rainforest.

Secondly, there is what's called improved forest management.

That's very common here in North America.

These are forests in which timber logging was done, and basically a commitment is to do a more regenerative type of harvesting in which you harvest every couple of decades, you replant trees, you re-enrich the forest.

And you can continue harvesting timber, but with a more sustainable practice.

Number 3 is reforestation, and it's just planting trees in a place where there used to be a forest in the past.

And afforestation is to plant trees in a place where there wasn't a forest in the past.

So you had to prepare the soil, it's like basically decertifying, or sort of like converting a desert into a place where a forest can exist.

And we kind of, you know, don't need to go there because there's a lot of, you know, places available for restoration.

But at some point we could, you know, we have an engineering capacity to, you know, geoengineering and modify, you know, environments, you know, so powerfully as we did with civilization, we could, you know, easily forest, you know, for example, I don't know, the Sahara Desert even.

So, in terms of differences between these methods, Are there certain benefits to log sustainably?

For instance, like, is a new tree giving off more or like capturing more than an old tree?

But all growth forest continue to capture carbon.

The Borneo forest that has millions of years continues to capture carbon.

And while a forest, like every living ecosystem and organism dies out and regenerates.

And when a tree dies out, yes, it releases some carbon.

The net result is actually carbon capture.

And there is a lot of data that supports that claim.

That being said, wood is a very sustainable material, way more sustainable than concrete or other materials, so we should continue having tree plantations and harvesting for wood generation.

And I think that doing improved forest management on timber areas is an important practice in which we are optimizing for both, for carbon capture and for wood production.

So to that end, a question Gustav had written down, sometimes are the incentives misaligned in the sense that farmers just want to create monocultures of crops, like, hey, here, I can generate the most lumber with this type of tree.

Yeah, yeah, that's been the case, definitely, in agriculture and in the timber industry.

And hopefully this creates an incentive not to do that.

You know, in an improved forest management, biodiversity is tested as well.

So, and you know, with data we can, like for example, with remote sensing data, with satellite images, we can determine markers of biodiversity that then can be accounted into the system.

So as a buyer of carbon, is that a choice I have to say, I want to make sure that the forest that I buy to capture carbon is diverse, have biodiversity?

Is that a choice I make, or is that a choice that you make on your platform?

GARAN I mean, right now, the protocols that are out there to issue current credits have tests for biodiversity.

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Diego Saez Gil - How Pachama Uses Tech to Solve Climate Change