Transformative Projects
As part of their Master’s degree in Sustainable Management and Technology, students work on a sustainability challenge provided by a company to propose new perspectives or solutions that can have the potential to transform an industry or societal practice.
As global carbon dioxide levels continue to increase, emerging companies are offering solutions to combat global warming. However, these businesses often encounter initial financial challenges due to the higher operating costs of their technology compared to conventional alternatives. One possibility for providing financial support to such companies is through the Carbon Credit Market. In collaboration with Bloom Biorenewables, this project aims to investigate the financial feasibility of utilizing carbon credits as an additional source of income for scaling up startups like Bloom. In this case study, carbon credits would be claimed based on emission reductions achieved by replacing petroleum-based inputs with biomass.
As an initial step, the students who developed the project examined whether biomass-based startups can achieve negative emissions. Utilizing three different allocation methodologies such as carbon content allocation, economic allocation, and mass allocation within the Life Cycle Assessment (LCA) analysis, we assessed and compared Bloom’s carbon footprint with commonly used products and comparable bio-based alternatives. The findings indicate that depending on the allocation method chosen, Bloom can claim negative emissions for some of their products. Thereby they can compete with similar companies making claims for negative emissions. However, it is essential to note that these negative emissions are offset by a part of the emissions being allocated to co-products, resulting in the overall carbon dioxide emissions not being negative, once the total input, output, and operational emissions are considered. The idea of negative emissions is therefore a construct and not an actual reality.
To determine whether the evaluated emission reductions from our LCA analysis can be monetized through carbon credits, the students studied the carbon market, which can represent a highly uncertain but rapidly evolving business opportunity. They conducted a comprehensive market analysis and consulted various experts in the field to gain insights into costs, current trends, and prospects of both the Voluntary and Compliance Carbon Markets. These interviews also included discussions about preferred options for carbon credit verification and a case comparison of the most critical certification criteria. In this business case, centered around biomass input, they discovered that the sourcing of biomass plays a pivotal role in determining a company’s eligibility for carbon credits. Focusing on wooden pellets, with a case scenario analysis we compared Bloom’s carbon dioxide savings of wood as a substitute for common applications like heating. The study observed that Bloom’s processes offer greater potential for carbon savings compared to other utilizations.
To assess the financial viability of carbon credit certification, the students developed a financial model that explores the base case, best case, and worst case scenarios for carbon credits as a standalone business strategy. Despite the inherent uncertainty surrounding input parameter development for the Carbon Price, the Discount Rate, and possible Leakage reductions, our analysis suggests that carbon credits are likely to present a lucrative business model with significant potential for supporting biomass startups. The graph below presents the revenues generated by carbon credits for a fictional company that saves 1.5 tons of CO2 per ton of biomass and has an annual input of 100’000 tons of biomass. By changing the parameters, the model can be applied to any biomass company and therefore serves as a basis to explore the potential viability of carbon credit business models for other biomass-based companies.
In summary, integrating carbon credits into Bloom’s business model offers promising opportunities to increase its revenues. On a large scale, carbon credits might thus support the transition away from petroleum-based products and towards lower-emission alternatives.
Students: Lara Yasmin Hunziker, Per Christian Wessel, Ana Cristina Vides Gomez, Charlotte Luise Ahrens
Company’s Supervisors: Florent Héroguel, Remy Buser
Academic Supervisors: Boris Thurm
Project Lead: Samuel Wicki
