Episode 29 of the Reversing Climate Change podcast. You can listen on Spotify (subscribe there for ad-free), Apple Podcasts, or wherever else you listen. Paid subscribers get the ad-free version right here on the page.
The team at Nori has spent the last several months traveling the world, attending conferences around regenerative farming, agricultural technology, and the soil health movement. And the overarching theme among stakeholders has been the need for a price on carbon. How is Nori working to deliver just that? What methodologies is the platform using to measure and verify carbon removal in soil? And how does the system work to pay farmers for regenerative practices?
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Full Transcript
Unknown speaker: [unclear] listening to the Reversing Climate Change podcast by Nori, first carbon removal marketplace. Here are your hosts Ross Kenyon and Christophe Jospe.
Ross Kenyon: Hey, welcome to the Reversing Climate Change podcast with Nori. I'm Ross Kenyon, here with Christophe Jospe, Paul Gambill, and Alexsandra Guerra. Here at the Nori offices in Seattle, it's my first full week as a Seattle resident. I am very happy to be here. This is your chance to welcome me on the air.
Alexsandra Guerra: It's really weird.
Ross Kenyon: You sound really happy as you say.
Alexsandra Guerra: This is our second take at this and the first time there's my NPR voice. I'm so excited.
Christophe Jospe: Well, I remember like right when you were moving up or driving up, I was like, are you excited? And you're like, "I'm pretty excited."
Ross Kenyon: Oh, I'm stand up? Yeah.
Alexsandra Guerra: I was extremely excited until Ross decided that he needed to have a standing desk and I'm adjacent to him, so it's kind of like he's hovering over me all the time.
Ross Kenyon: It's a way of enforcing dominance. It's a primate activity that I do to you.
Christophe Jospe: Power framing.
Ross Kenyon: Yep. Right, Christophe? I get it. Right? Do you agree? Agree with me now. Go.
Christophe Jospe: I guess I have to agree, but... For our listeners who are tired of this bicker banter, I'd like to say that it's super exciting to have an internal episode because we can talk about the great things we've been doing, some of the events we've been attending and learning, and some of the inner workings on how we're going to make this whole thing work and why we can even say that we're reversing climate change even though we know we're not doing it alone. But we can at least get going with building the first voluntary carbon removal [unclear].
Ross Kenyon: I've been phoning it in the last couple months, so why don't you fill me in on what you're doing?
Christophe Jospe: I've been phoning it in. Where have you been? Just kidding. Yeah, we should start with methodologies where you devote a lot of your time, right? That's where you're digging into the details of that.
Ross Kenyon: Yeah, but what methodologies? What is that? What is a methodology? What a horrible word.
Alexsandra Guerra: Well, I actually don't like it.
Ross Kenyon: Very clinical sounding, don't you think?
Alexsandra Guerra: I think we adopted it because a lot of carbon markets use that term like methodology for waste management or carbon sequestration or agroforestry. So a methodology in Nori means a way of removing carbon dioxide. And the first one that we're focused on is through soils.
We are focused right now on figuring out how do we actually measure and account for carbon removal in soils and how do we get growers to list their projects so that they can get paid for the good work that they're doing.
Christophe Jospe: Alright, so walk us through it. If I am a farmer and I have been doing things with my land that increase the carbon content, what do I have to do to participate in the Nori marketplace?
Alexsandra Guerra: Well, you have to know a little bit about your land and you have to have been doing certain practices to qualify. So the first thing that qualifies anybody to list their projects in the Nori marketplace, whether it be through soils or other methodologies that we do in the future is, are you removing carbon dioxide? The answer is yes, you can list your project. So if the answer is yes and you're a farmer and you're adopting certain practices like regenerative farming, so no-till, cover crops, rotational grazing, then yeah, list your project through Comet Farm, which is a collaborator of ours.
And so you can put your data into Comet Farm and that would provide an estimate of how much CO2 your land is storing over time based on these practices. And then we use that information to estimate how many carbon removal certificates within the Nori marketplace you can provide. And then that's kind of first start of getting involved into Nori to get paid for it.
Ross Kenyon: And these practices, is this the regenerative agriculture practices, how they can start pulling carbon out of the atmosphere and into the soil?
Alexsandra Guerra: Yeah. So the whole idea is that if you change the way that you farm, you will have better yields over time and we'll stop soil erosion. So it's a big deal in the agricultural space. This is not something new. Nori's not coming in and saying like, "Oh my gosh, we're going to..." and convince all these farmers across the nation to adopt these new practices and we have to put a lot of time and effort into that. This soil health practices and soil conservation is a thing. So the NRCS, Natural Resources Conservation within the USDA, they have departments in every state and they're all looking at how do we work with the farmers in their states to adopt these practices because soil erosion and land degradation, huge problem.
And it's weird because people don't really talk about it, but it's going to affect our economies and it's going to affect the agricultural industry in a huge way. And so they've been working at it for decades and we're kind of now running along and behind like, "We're millennials with this blockchain application and we want to bridge the gap for you by trying to—"
Ross Kenyon: This is the line, you find a parade and you run in front of it and act like you're leading it?
Alexsandra Guerra: No, I think we're still running behind it. We're like the last float that's coming around the corner.
Paul Gambill: I kind of feel like we've got a loudspeaker and are yelling through it and are encouraging all these other people to run up to the parade and then suddenly the parade gets like 10 times bigger.
Ross Kenyon: I don't even like the parade analogy. It's a bad one. It's like there's a tent. It made me anxious just thinking about this horrible crowd.
Alexsandra Guerra: Or it's like a music festival. You got lots of tents coming and we're coming in and we're pitching our card.
Ross Kenyon: Let's rain on this parade and just move on to it. Get all the [unclear] ruining.
Christophe Jospe: I am not satisfied with your response because I ask. I am a farmer. I want to get paid using Nori, the Nori marketplace. What do I need to do? And you told me things. Let me make sure I got this right. I need to list my practices into Comet Farm.
Alexsandra Guerra: [unclear] Farm is a great tool that has been funded by the US Department of Agriculture. They've been building models for the last 25 years. It's the best game in town. That's why I really like it, the open source model is able to grab data from NASA and other daily weather data and create, oh no, you're grimacing at me because I'm giving a lot of explanation here. But it's important. I've got a point. And I'll tell you about that.
Christophe Jospe: That's not why I was grimacing, but go ahead.
Alexsandra Guerra: Wonderful. Okay, so—
Christophe Jospe: You have now produced a dynamic carbon stock baseline using Comet Farm. What next? What do I need to do? Farmer.
Alexsandra Guerra: [Nori promotion cut from the transcript. It’s still in the audio, but it no longer applies.] And then you have to do the piece that we're still figuring out, which is verification. So not you as a farmer, you need to contact a verifier and ask them, "Hey, I've got this project listed. Can you please verify my information?" And then that verifier needs to follow a certain protocol or procedure to actually say, "Hey, first of all, yeah, you are the person that you say you are and you do have the rights to list this project on the Nori marketplace. Two, everything that you've entered makes sense. It's accurate. This is good data. You're not lying." Three, is are you actually listing those projects on other sites because you can't be double counting and providing project listing on other marketplaces.
So those kind of the three main criteria that we're looking at. And so when we talk about methodology development, it's more like how do we build out a protocol that verifiers can follow that isn't arduous and complicated and tedious so that it makes the... much easier and then therefore cuts down the cost for the farmer to actually get their project listed.
Christophe Jospe: Okay, so a project now gets listed, the verifier gives it the thumbs up. Now what happens to that project?
Alexsandra Guerra: Once the verifier gives it the thumbs up then the CRCs that were estimated from that baseline, so Comet Farm said okay, you know, your project could generate 10,000 CRCs. Most CRCs get listed in the queue, but some of them go into reserve and some of them get issued to you. And the reason why we have portion and reserve is to ensure that you don't just go and plow your land. I feel like you want to talk about this, Christophe.
Christophe Jospe: I want to jump in. So when you say, just to clarify a little bit, when you list your CRCs in the queue, that means there's a one place where people list a digital instrument. And as they get paid, they get paid for in the top of the queue. And then it gets paid for with a Nori token. And the Nori token goes into two accounts.
Alexsandra Guerra: Yes, thank you. I missed a step. You're totally right. So it goes into a queue and then once a buyer, like some big sustainability advocate company buys your CRCs, your 10,000 CRCs, then you get 10,000 Nori and then a portion of those Nori get issued to you that you can use immediately and then the other get held in reserve. Essentially when you sign the contract with Nori saying you want to list the project, you have to keep your project, the lands listed in that project, under those practices for 10 years. So you can't just go and plow.
So yes, and then they get released certain interval depending on how often you want to get verified. You'd have to pay for those costs for a verifier to come and say, "Okay, yeah, this year you maintain those practices. Go ahead, you get more tokens."
Ross Kenyon: Verifier comes out, do they do a soil sample or do they just check on your practices? Is it random? Do they surprise the farmer ever? Or is the farmer saying, "Come on this day."
Alexsandra Guerra: So there's two different things that are happening in our marketplace. There's verification and then there's auditing. So the verifier is verifying the information that you entered into Comet Farm. And this is done to list your project at the beginning and it's done to maintain your project every year. So every year you're going to get pinged by Nori marketplace being like, "Hey, verify your information is still accurate this year." And this is an agent of the farmer. The farmer hires this verifier. But Nori's just sending out kind of like a reminder like TurboTax, like, "Hey, you know, it's tax season." That's an analogy we could use. And so, hey, you know, it's time for you to update your records. Do that. And then once they do maintain their records, say, "Okay, yeah, this year, again, I've got these practices," a verifier comes out, verifies that. And you go in that cycle every year until the end of your 10 years.
Auditing is something different where they actually would go out to your land and verify some of the practices in person. And that happens, we're still working out, timeline would look like and how that might work.
Ross Kenyon: And that's a surprise.
Alexsandra Guerra: Surprise, I'm here. We would notify them that they are about to go under audit and then we would arrange for that meeting to happen.
Ross Kenyon: And Nori pays for this auditor?
Alexsandra Guerra: Nori does not pay for this auditor.
Ross Kenyon: Who pays for the auditor?
Alexsandra Guerra: The supplier because Nori needs to be out of it, okay? It's like a third party verification and auditing and we really can't be talking to these verifiers and auditors because keep ourselves safe but also so that the farmer is reassured that there's no collusion between Nori people who are verifying auditing, like trying to say, "Oh, you're not doing things correctly," and paying them less in CRCs or Nori token. So we keep this kind of wall between us and the verifiers and the auditors, and all we're trying to do is remind you that you need to do these things.
Christophe Jospe: So then the farmer is a supplier, so the farmer pays for both the verifier and the auditor themselves?
Alexsandra Guerra: Yes.
Paul Gambill: And we make it as easy as possible for them to find those individuals and work hard to pre-list them and white list verifiers who are already in positions of fiduciary responsibility and know a thing or two about setting up carbon offset projects. There is some cost that the buyer pays to the verifier as well. So when the buyer purchases CRCs, they're paying a small transaction fee on top of that. Part of that is Nori's revenue and part of that goes towards the verifier.
Christophe Jospe: [unclear] the logic of making the buyer chip in there too.
Paul Gambill: Buyer is the party who cares most that the carbon dioxide has been removed and has been measured and verified correctly because they're the ones who are purchasing these certificates. And it's most important to the buyer that they have some sort of proof and evidence of that.
Christophe Jospe: Wouldn't it be potentially better or simpler to just have the buyer foot the entire bill for that process? Why do you split it?
Paul Gambill: Part of that is logistic. The verification has to happen at multiple stages because of the verification and auditing that's going on. And it has to happen prior to when the buyer shows up and the Nori model is built in such a way that the buyer should be able to show up and buy carbon removal certificates as soon as they want them. We're eliminating that operational overhead of dealing with that by doing all the measurement and verification up front.
Christophe Jospe: Oh, yeah. That makes sense. OK. So then what happens after that? Is that the entire cycle? Did you already walk us through everything?
Alexsandra Guerra: I think so.
Christophe Jospe: So that's just soil carbon removal through crop practices, agricultural practices.
Alexsandra Guerra: Yeah, and or grazing.
Christophe Jospe: And grazing. That's also being worked on concurrently or it's coming soon.
Alexsandra Guerra: Yeah. So there's a couple of things that we're looking at in terms of the Comet Farm tool and we're trying to figure out what type of data we need and is it going to be sufficient Comet Farm to do as high fidelity estimates on the carbon removal potential for grazing because it's a little different than for cropping.
Christophe Jospe: But they also keep data for grazing, yes?
Alexsandra Guerra: Yeah, they'll take it in as well. Yeah. So we're working that out. And there's pretty much a lot that we're got some question marks on and we want to engage the community help us answer some of these questions.
Christophe Jospe: I'd like to go back to one thing that you mentioned, and I really want to unpack it. And I also want to evoke a collaborator in this whole space with us, Dorn Cox, who made this great comment to us. Dorn is a farmer in New Hampshire, has been doing a lot of really great stuff in the regenerative movement. And when he learned about the Nori model and the two accounts, he was like, wow. You guys came up with something. This is huge. This is great because what this enables is for farmers to get going and do things that they already know are going to put carbon in their soil. And it creates a market incentive to move tokens from a restricted to an unrestricted account, which we didn't really go into yet. Do you unpack that a little bit and kind of talk about how we're thinking about those sorts of things?
Alexsandra Guerra: We covered that a little bit here too. You're asking specifically about—
Ross Kenyon: Farmers will receive some of their payment pretty close to immediately once their CRCs are listed. But we hold on to some of those tokens for 10 years, you said, until the full payout happens.
Alexsandra Guerra: And the whole purpose of that is to ensure that you're not getting rid of your farming practices I mentioned. And also there's some more verification that goes on on our end, like, okay, did we actually remove as much CO2 as we said? And we want to provide that as an assurance to the buyer that they're actually purchasing that many tonnes of CO2 removed over time. So if the estimated carbon removal from a project for a year is actually less than what we projected, then we can take from the reserve and issue that to the buyer or just ensure that somewhere, some way they get carbon removal they paid for.
I saw him at GOAT in New York.
Ross Kenyon: What was that?
Alexsandra Guerra: The GOAT is the Gathering for Open Source Agricultural Technology. And it was kind of like an un-conference, three-day un-conference in Rhinebeck, New York. Super well put together. Great job, guys, at GOAT. And Greg Austic from RSI was there. It was really good. It was just everybody within the ag, but that was open source, some were not, and people behind this whole soil health movement.
And before that, Paul and I were at Regen18, and then after that, I was at another farm. So there's lots of farmers meeting them. And the most common thing I heard was, "We need a price on carbon." Literally every single speaker and panelist at Regen18 said something to the effect of, what we really need is a price on carbon and a way to pay farmers directly for that. Let me back it up. We had Reversapalooza and then we went to Regen18 and then I went to GOAT with Aldyen and then I went to the Vermont soil listening workshop how to measure carbon and soils. So for a week and a half meeting these people.
Every new session, every new meeting, every new person was saying that. And it just felt really nice and validating, like, okay, we're here, we're Nori, hi, like, how can we help you get paid for this? And there's a lot to work out, but there's a lot of need and interest in this, almost everywhere that we go. But we got to figure out some hard questions first in terms of the design and mechanism in the marketplace.
Paul Gambill: I think the whole open and collaborative approach is so important. We could be doing this in a black box and spend two years coming up with some methodology and then say, "Hey, world, check this out." But that's the opposite of how we're doing it. We are doing this in a totally open and collaborative way where we expect that we're getting people's feedback, and the only way we can get people's feedback is by saying, do you want to try this out with us? Do you want to list your CRCs in our marketplace and be an alpha user in this whole design?
I had the great pleasure of participating in the Carbon Farming Innovation Network in Minneapolis last month and that was cool. I learned about a whole new process called tree range chickens. Really great project called the Main Street Project. They basically have chickens on farms and the chickens are open range but also under the trees so it's a form of agroforestry and it's dramatically reducing the input. Basically any livestock grazing is a really quick way to increase the carbon uptake of the soils.
Ross Kenyon: One of the things I learned that I think I got this from Dave Montgomery, grazing animals actually create grassland. People usually think that they just show up and there's already grassland. They just start munching on it, but aren't they oftentimes just generating this just through their actions?
Christophe Jospe: Why are we great? Mind blown.
Ross Kenyon: My intellect is underappreciated in these parts.
Alexsandra Guerra: No, it's not.
Christophe Jospe: Okay, so we were talking about some of the events that we attended. We've learned a lot. We've met some people. We've been validated that, okay, what Nori's building people want and we need to go figure it out. Sort of cut you off and you started talking about the community. And we realized that a big part of this is building a community. And so how are we going to go about doing that?
Alexsandra Guerra: Yeah, well, there's two things, right? There's building a community, which is great. And it provides all these positive rainbow feelings. But there's also what you touched on before, which is how do we get people's input into the things that we're doing? And how do we build a tool that's actually useful? So we are doing alpha testing, which is like usability testing. And some of the people that we've met at these events that I mentioned have been invited and used our platform and given us a lot of information like, what does this digital asset thing mean? This is really confusing to me, right? Because we want to adopt a lean development framework and make sure that we're building a tool that's useful.
But then when it comes to development of the methodology separate from the software platform, we're going to start hosting some webinars this summer. And in a couple weeks, we'll be hosting the first one on July 13th. We'll be hosting a kickoff talking about what we're doing. [Nori promotion cut from the transcript. It’s still in the audio, but it no longer applies.] We'll make sure to invite you, but we'll have webinars focused on the methodology for verifying carbon removal in soils through cropland and grazing.
We'll have one talking about, how does the marketplace really work? What does that actually look like? Just in all the different things that we're considering in the Nori marketplace that we want people's input on. And then we'll also provide you the documentation. You can look at that beforehand. And the idea is that we would just invite people to this and get their feedback and input so that we can build something that really people will want. None of this build it and they will come.
Christophe Jospe: Broad stakeholder engagement.
Alexsandra Guerra: Oh, super jargon-y, Christophe.
Christophe Jospe: I was trying to get some more jargon words in there.
Ross Kenyon: Oh, god, jargon alert. We need a jargon jar. I think this webinar might steal some thunder from the podcast, so I'd like to shut it down. [unclear] that one right in the bud. No. No, thank you.
Alexsandra Guerra: No, well, you can help be part of the webinar.
Ross Kenyon: No, I don't want to do that.
Alexsandra Guerra: I'm just going to pull you in.
Ross Kenyon: That sounds quite useful. I mean, there's a lot of new knowledge that this entire platform requires. I think it's a good way to teach people and help get feedback early on while it's still very easy to change things at this point relatively. Once you're already launched, it seems much more difficult.
Alexsandra Guerra: Yeah.
Ross Kenyon: And so perfect opening. Get in on the ground floor right now, listeners, if you've been listening to us. Seriously, sign up for the webinars and we'd love to hear your input.
Christophe Jospe: You're looking primarily for farmers, people who want to be verifiers and auditors, all of that.
Alexsandra Guerra: All of the things.
Christophe Jospe: All of the things. Anything else?
Alexsandra Guerra: [Nori promotion cut from the transcript. It’s still in the audio, but it no longer applies.]
Ross Kenyon: Now I have to ask too, isn't it backslash?
Alexsandra Guerra: Is it forward slash? The one that goes...
Ross Kenyon: Oh shit. I'm saying the wrong thing for years, it turns out. [Nori promotion cut from the transcript. It’s still in the audio, but it no longer applies.]
Alexsandra Guerra: With, with, with, with.
Christophe Jospe: Plural. Okay, anyways, [unclear] graceful segment, they could not get that wrong.
Ross Kenyon: [Nori promotion cut from the transcript. It’s still in the audio, but it no longer applies.] Head on, apply directly to the forehead, and that's how far we've gone.
Christophe Jospe: So here we are in our new office, your first week in it, Ross. Alexsandra and I used to sit in the same room. We no longer do. Do you miss me?
Alexsandra Guerra: A little bit. I mean, Ross hovers over me, so that's weird.
Christophe Jospe: Well, it's only been a week. Does it really bother you?
Alexsandra Guerra: No, it's okay. I'm just joking about it.
Christophe Jospe: But it's very intentional to have you as part of the product team, and you're now part of the product team. First of all, who's on the product team? How has that grown? What's going on? And like, what are you working on? How are you taking the lean software approach to building things?
Alexsandra Guerra: I just have to say, Nori's product team is amazing. I mean, that might be a little bit biased, but they're so cool. We actually also just hired a junior developer, so welcome Richie. He's on our team now. He's been working with us for a couple of weeks.
Ross Kenyon: I have a computer science question. I wanna know, I've been talking to Richie. He's been helping me out.
Alexsandra Guerra: Yeah.
Ross Kenyon: Like, you're kind of talking about the syntax or the Solidity real quick?
Alexsandra Guerra: He's a good sport. Yeah. Then there's also Jacob who he's just so great. He's a wonderful designer, super good guy to work with. And he's our designer. And then there's Paul too, or Picard.
Christophe Jospe: Our CTO. Come on, you know it's a—
Alexsandra Guerra: And then of course Jaycen who is out of sight yet not out of mind. Sometimes it's actually kind of weird. Like I'll walk in from like getting coffee or just another meeting and I'm talking to Jacob and Paul too. And then Jaycen just from the all-knowing voice from a computer just goes, "Yeah, I think that too." It's like, "Oh, hey, Jaycen, I didn't know you were there." He's just like always on a call with the product team. He's the last person, the last founder that needs to move up to Seattle. We're almost there.
To get to your question, Christophe, the lean methodology for development just means that you take everything that you think will be useful and treat it as an assumption and you want to apply the scientific methodology to this and say, "Okay, this is a hypothesis and I need to test it." So we're doing some research and customer discovery testing and talking to potential verifiers and asking them some questions on some key assumptions. We have a spreadsheet with all these assumptions we've made and who they impact, whether it's a verifier or a farmer.
So through that community engagement piece too, we're kind of learning what are the assumptions that are right, what are the ones that are wrong, and then how do we build a platform that will help address some of the key issues. It's been interesting, like I never actually worked on software before I came from the energy space before working at the utility, but did software projects on the side and did a lot of programming and meetups in LA and now actually getting to work with a really cool team is like, "Whoa, I learn so much from them every day."
Christophe Jospe: Very cool. Yeah, no, and I keep seeing iterations on the product and demos and I think some of our listeners might be very interested in doing a software demo and maybe even we'll have videos out where they can see like what is this thing that Nori's building and like yeah you can check that out also on the webinars that we're having and I think just to throw some more jargon out there there's a feedback loop that we need to incorporate because we're learning things and those things are filtering into the product that we're building.
Alexsandra Guerra: Exactly, yeah.
Ross Kenyon: So really listeners, like if you want to reverse climate change, get in on all this. That's part of the fun of the open source ethos. We very much care about that. Best way to do things too. We don't like to be all siloed off and go in stealth mode for two years. But who knows if anyone wants to work on this thing with you once it's done. It's much more fun to go about it this way.
Alexsandra Guerra: I agree.
Ross Kenyon: Why don't we call it then? I'm sure we could talk a lot more about other things, but let's leave it for another time. I'm sure we'll have you on again before too long.
Alexsandra Guerra: This was great. You guys are doing a great job on the podcast. I love listening to it. I hear good things from friends and family.
Ross Kenyon: Oh yeah, are they listening to it?
Alexsandra Guerra: Yeah, of course.
Ross Kenyon: That's good. Well, thanks for coming and hanging out with us again.
