The company is encouraging rice farmers in India to adopt new techniques to reduce methane and water use. The idea is that the methane and water that they save by embracing innovative practices can be measured and verified, allowing farmers to earn extra income from carbon credits – bought by large companies operating in carbon-intensive sectors that want to offset their emissions.
Mitti Labs recently came out of stealth mode and unveiled five rice projects in India to reduce methane emissions, increase water security and build farmer resilience.
It has now raised $3 million, led by climate venture capital investors such as Lightspeed Venture Partners and Voyager.
US-based Lightspeed, which is focussed on early-stage investments in various sectors, said it was attracted to Mitti Labs thanks to its ability to offer better quality carbon credits.
There have, for example, been many past criticisms concerning the quality and integrity of many carbon credits, as well as how they are often used by companies in ways that do not drive meaningful emissions reductions. The lack of robust oversight and standards in the voluntary carbon market has also been a major point of contention. Problems are still evident. Last month, for example, three carbon credit projects were suspended in the Brazilian Amazon after the Federal Police's Greenwashing Operation targeted the leaders of supposedly “green” initiatives with suspected links to a land-grabbing and illegal logging scam.
Mitti Labs, like other agtech start-ups, is attempting to fix this by using high-resolution satellite imaging and on-ground gas chambers to accurately measure methane emissions and train AI models to help farmers optimise their practice.
“Climate credits have had a chequered past,” the Lightspeed team said. “We, like many others, used to wonder what it really means that one can buy credits for growing forests or supporting a land-use project in another part of the world. Who keeps track of these projects, how do they do it, and for how long?”
Better tech = better carbon credits
The VC called for solutions that can both remotely monitor the projects and objectively calculate the “quality” of a project and its carbon-credit output throughout its lifetime. Without these “it becomes too costly and time-consuming to send field-agents to keep checking on projects and ensure adherence, and there are also a lot of ways to ‘game’ the system in terms of project quality.”
Better technology allows projects to be verified and ensures farmers are incentivesed to take advantage of carbon credit markets, the VC said. It added that Mitti has built a first rate set of digital measurement, reporting and verification (dMRV) tools “The dMRV sits at the heart of Mitti and we believe owning this IP is critical to influence both the buyer and the regulator as it ensures credit-quality and process adherence.”
Despite criticism of the carbon credit market, the demand for verified carbon credits is skyrocketing, according to Lightspeed. “By 2030, the expected demand is 1.5GT, while the current supply is only around 0.25GT, representing a $5 billion opportunity in Asia-rice alone, and we haven’t even started taking into account the methane markets. Carbon credit prices are anticipated to rise from $12-15 to $30–40 per credit due to this supply gap. Global corporations are aggressively pursuing NetZero goals, with 30% of the top 2000 companies relying on carbon credits to achieve their targets.
“We believe Mitti has the best team and tech to tackle this opportunity.”
