Storytelling with Impact

Your Stories, AI, and George Washington

May 31, 2025/in Democracy, Government, Personal Stories, Writing/by Mark Lovett

On this day in 1790, President George Washington signed into law the first U.S. Copyright Act. The Act emerged from the unique intersection of Enlightenment ideals, economic necessity, and the practical challenges facing a new nation as leaders were trying to establish its cultural and intellectual identity.

To understand why the law felt so urgent to the Founders, we need to step back and consider the current situation. In colonial America, there was no protection for authors’ works. Publishers could freely reprint books without compensating the original author, which created an environment of need without incentive.

George Washington Signed the U.S. Copyright Act on May 31, 1790

The Founders recognized this as more than just an economic problem — it was a threat to the kind of society they were trying to build. They believed deeply in the power of knowledge and education to sustain a republic. Think about it: how could America develop its own intellectual traditions, its own literature, its own scientific contributions, if there was no financial incentive for Americans to write and publish?

When Washington signed the Act, he was addressing several interconnected challenges. First, there was the immediate practical need to protect American authors so they could make a living from their work. Second, there was a desire to encourage the growth of American publishing and printing industries, which were still quite small compared to their British counterparts. Third, and perhaps most importantly, there was the recognition that a healthy democracy required an informed citizenry, and that meant fostering a robust marketplace of ideas.

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The law itself reflected these concerns in interesting ways. It protected books, maps, and charts for fourteen years, with the possibility of renewal for another fourteen years if the author was still alive. This was actually quite generous compared to many state laws of the time, but deliberately limited to prevent the kind of perpetual monopolies that the Founders associated with European aristocracy.

It embodied a carefully considered philosophical approach that prioritized societal benefits while providing necessary incentives for creative production. The legislation was conceived in essentially utilitarian terms, taking as its primary goal the encouragement of intellectual activity and production for the good of society as a whole.

This framework aimed to guarantee both material benefits for creators and intellectual benefits for readers, recognizing that sustainable creative industries required economic incentives while knowledge advancement demanded public access to creative works.

The limited scope of the initial law — protecting only books, maps, and charts — demonstrated a focused approach to establishing the copyright system. Rather than creating a centralized copyright office, the legislation directed authors and proprietors to register their works at U.S. district courts in their areas of residence, establishing a decentralized but systematic approach to copyright administration.

Consider how this law would have affected someone like Benjamin Franklin, who was not only a scientist, inventor, and statesman but also a prolific writer and publisher in Philadelphia.

Benjamin Franklin was the author of Poor Richard's Almanac

Without copyright protection, Franklin’s “Poor Richard’s Almanac” could have been freely copied by competitors, eliminating his incentive to continue producing it. The same principle applied to countless other potential authors whose stories and ideas might never have reached the public without the economic protection this law provided.

The timing of this legislation — just one year after the Constitution was ratified — reveals how fundamental the Founders considered intellectual property rights to be a critical step in the country’s evolution. They understood that the stories a nation tells about itself, through its literature, its newspapers, its scientific works, and its philosophical treatises, shape its character and destiny. By protecting authors’ rights to profit from their work, they were essentially investing in America’s future capacity to generate and share knowledge.

To ensure broad awareness of the new protections, the Act was widely printed in newspapers following its passage. This dissemination strategy reflected the government’s recognition that the law’s effectiveness depended upon public understanding of both the rights it created and the obligations it imposed.

Copyright Law and AI Training

Navigating Intellectual Property in the Age of Large Language Models

The rapid advancement of large language models (LLMs) has ignited a global debate about the ethical and legal implications of training artificial intelligence systems on copyrighted materials. As AI companies increasingly rely on vast datasets scraped from the internet, questions about intellectual property rights, fair use doctrines, and the boundaries of creative ownership have moved to the forefront of legal and technological discourse.

Major Pending Cases

1. The New York Times v. OpenAI/Microsoft (2024)

Allegation: ChatGPT reproduces NYT articles verbatim and creates derivative works that compete with original reporting.
Defense: OpenAI claims transformative use through factual summarization and cites precedents like Authors Guild v. Google (2015).
Status: Oral arguments scheduled for Q3 2025; considered a bellwether for news media rights.

2. Sarah Silverman et al. v. Meta (2023)

Allegation: LLaMA model trained on pirated book copies from “shadow libraries” like Bibliotik.
Defense: Meta argues dataset providers warranted copyright compliance, shifting liability.
Status: Motion to dismiss pending; could establish liability chains in dataset procurement.

3. Getty Images v. Stability AI (2023)

Allegation: Stable Diffusion outputs contain modified Getty watermarks, proving unauthorized training.
Defense: Stability AI claims watermark removal constitutes transformative use.
Status: UK High Court allowed copyright claim to proceed to trial in 2025.

Regulatory Developments

U.S. Copyright Office Report (May 2025): Concluded that “unauthorized reproduction of entire creative works for commercial AI training likely exceeds fair use boundaries”. Recommended congressional action to clarify liability.
EU AI Act (2024): Requires AI companies to document all copyrighted materials used in training and implement opt-out mechanisms for rights holders.

Key Legal Arguments

Plaintiffs’ Position: Training constitutes mass infringement by creating unauthorized copies during data ingestion. Outputs act as derivative works, violating market value.
Defense Position: Training is transformative analysis protected by fair use, analogous to human learning. Outputs don’t replicate protected expression.

Back to you…

This is obviously a very complex topic, but I bring it up as many of my clients have published books which formed the foundation of their speaking career. In other cases, clients have worked on crafting their signature talk, and now realize there’s a book to be written.

Some storytellers are okay with their stories being referenced by AI — they feel the exposure is a positive thing. Others, however, believe their original works should be protected — they think that if they end up in the public domain they will suffer financially.

I’m not sure what the outcome will be, but I’m thinking that if President George Washington was alive today he would be concerned about how the Act is being circumvented — that the intent of protecting intellectual property was being ignored in the name of amassing wealth.

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It Took Thousands of Personal Stories to Create the Mariner 9 Story

May 30, 2025/in Government, History, Science, Technology/by Mark Lovett

Fifty-four years ago today, on May 30, 1971, a symphony of human ambition lifted off from Cape Kennedy. Mariner 9 wasn’t just a spacecraft — it was the culmination of thousands of individual stories, each person contributing their unique thread to a tapestry that would forever change how we see our place within the cosmos.

Launch of Atlas-Centaur Rocket Carrying Mariner 9 Mars Probe

The Genesis of a Dream

The Mariner program began in 1962, nine years before the launch of Mariner 9. NASA’s Jet Propulsion Laboratory conceived this series of robotic explorers as stepping stones to the planets. Each mission built upon the last — Mariner 2 had whispered past Venus, Mariner 4 had glimpsed Mars in passing. But Mariner 9 would be different. It would stay, orbit, & see.

The development of Mariner 9 took approximately four years of intensive work, from initial design concepts in 1967 to its 1971 launch. Yet this timeline barely captures the human drama unfolding behind the scenes — engineers working through weekends, mathematicians recalculating trajectories late into the night, technicians hand-assembling delicate instruments with the precision of watchmakers.

A Cast of Thousands

Picture this: over 5,000 people directly involved in the Mariner 9 mission, with countless more supporting roles spanning across multiple states. From the assembly floors of Denver to the tracking stations scattered across the globe, this was humanity at its collaborative best. Each person — whether they wielded a soldering iron or a slide rule — contributed their personal skills and passion.

Mariner 9 Mars Probe

The mission required an extraordinary convergence of skills, including:

Aerospace engineers designing the spacecraft’s structure
Propulsion specialists calculating fuel requirements
Computer programmers writing navigation software
Antenna technicians ensuring Earth-Mars communication
Planetary scientists planning observation sequences
Materials experts selecting heat-resistant components
Optical engineers crafting camera systems
Electrical technicians wiring complex circuits
Systems integrators coordinating all subsystems
Project managers orchestrating timelines
Quality assurance inspectors checking every detail
Mathematicians computing orbital mechanics
Thermal engineers managing temperature extremes
Power systems designers creating solar panel arrays
Attitude control specialists maintaining spacecraft orientation
Data analysts interpreting incoming signals
Mission planners designing observation strategies
Telecommunications engineers establishing deep space communication
Launch vehicle coordinators preparing the Atlas-Centaur rocket
Ground operations controllers managing the mission from Earth.

Five Gifts to Humanity

Mariner 9’s achievements resonate through the decades. First, it became the first successful Mars orbiter, proving we could establish a permanent robotic presence around another planet. Second, it mapped most of the Martian surface with unprecedented detail, revealing a world of stunning geological complexity. Third, it discovered evidence of ancient water flows — those mysterious channels that whispered of a warmer, wetter Mars. Fourth, it provided our first detailed study of the Martian moons, Phobos and Deimos, expanding our understanding of small celestial bodies. Fifth, it demonstrated that long-duration interplanetary missions were possible, paving the way for every Mars mission that followed.

The Ripple Effect

Imagine if Mariner 9 had failed. Would we have the rovers — Sojourner (1997), Spirit (2004–2010), Opportunity (2004–2018), Curiosity (2012–present), and Perseverance (2021–present) — exploring Martian soil? Would we still dream of human colonies on the Red Planet? Would countless young minds have been inspired to pursue careers in science and engineering? The mission’s success created a cascade of possibility that continues to shape our technological vision of space exploration.

Back to you…

I’ve worked with a long list of folks whose story involved technical achievements, from scientists to engineers and entrepreneurs. While digging below the surface we invariably discover a cast of supporting characters that made their project a success. If your story involves a team effort, weaving bits of their stories is one way to add depth and richness to your story.

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The House Un-American Activities Committee: The Day Freedom of Expression Became a Crime

May 26, 2025/in Democracy, Discrimination, Freedom, Government, History/by Mark Lovett

Throughout history, personal stories have been adversely affected by the acts of unjust and misguided governments. Such unjust actions are often justified for a variety of reasons, including an individual’s ethnicity, culture, gender, religion or political beliefs. This last item — political beliefs — sparked a decision that had far-reaching effects on the fabric of American society.

The date is May 26, 1938. The United States remains in a fragile state as a result of the Great Depression as its citizens watch with growing unease storm clouds gathering across Europe and Asia. But on this spring day in 1938, a war of a very different sort was being declared as the United States Congress established the House Un-American Activities Committee — a name that would in time become synonymous with fear, suspicion, and repression of free thinking.

Seeds of Suspicion

The committee’s origin grew from the genuine feelings of anxiety and concern in much of America. In the 1930s, the U.S. was a nation caught between ideologies. The rise of fascism in Europe and the spread of communist influence worldwide had many Americans wondering: who among us might harbor allegiances to a foreign power?

The committee’s original purpose seemed straightforward — to investigate any alleged disloyalty and subversive activities by private citizens, public employees, and organizations suspected of having communist or fascist ties. Reflecting the fears of their constituents, Congress believed they were creating a shield to protect American democracy from enemies within.

But what began as a tool for national security would gradually transform into something far more reaching, far more troubling, and far more destructive to the ideals of personal freedom — the freedom to think, act, and speak freely.

The Evolution of Fear

In its early years, the committee investigated various groups and individuals, though not in a way that garnered much attention. But history has a way of amplifying certain loud voices, and the committee found its loudest voice in Representative Martin Dies Jr. of Texas, who chaired it from 1938 to 1944.

Dies cast a wide net, often making sensational accusations that grabbed headlines but sometimes lacked substantial evidence.

The committee’s approach evolved with the times, and during World War II, it focused on Nazi sympathizers and fascist organizations. But as the war ended and the Cold War began, the committee’s attention shifted decisively toward communist influences.

This is when the committee truly found its dark purpose — and when it began touching the lives of ordinary Americans in ways that would forever change how we think about loyalty, dissent, and freedom.

The post-war years brought us to the era most associated with the committee’s infamy: the reign of Senator Joseph McCarthy and the broader phenomenon we now call McCarthyism. Though McCarthy himself wasn’t directly part of HUAC, the committee became a central stage for the anti-communist fervor that swept the nation.

Pencil Drawing of Senator Joseph McCarthy

Hollywood in the Crosshairs

Perhaps no single episode better illustrates the committee’s reach — and its tragedy — than its investigation of Hollywood. In 1947, the committee turned its attention to the film industry, convinced that communist writers, directors, and actors were using movies to spread subversive propaganda.

The hearings produced the infamous “Hollywood Ten“—writers and directors who refused to answer questions about their political beliefs and associations. These men were cited for contempt of Congress, served prison sentences, and found themselves blacklisted from working in their chosen profession.

Imagine being a screenwriter, someone whose life’s work involved crafting stories that moved audiences, only to find yourself branded as un-American for your political beliefs. The ripple effects were profound: careers destroyed, families torn apart, and an entire industry gripped by fear. Actors, writers, and directors began policing their own associations, their scripts, even their thoughts.

Pencil Drawing of American screenwriter Dalton Trumbo

This wasn’t just about Hollywood, though. The committee’s actions sent a clear message to every American: think carefully about what you believe, what you say, and whom you associate with. The very foundation of free thought and expression — pillars upon which America was built — began to crack under the weight of suspicion.

The Human Cost

The point is, history isn’t just about government policies and committees — it’s about the human stories that unfold in their wake. Teachers lost their jobs for belonging to the wrong organizations. Labor union leaders found themselves under investigation. Even librarians were questioned about the books they chose to stock.

The committee’s influence extended beyond those directly called to testify. It created what we might call a “culture of conformity” — a climate where Americans began to self-censor, to avoid controversial associations, to keep their political thoughts private. In trying to protect American values, the committee was inadvertently changing what it meant to be American.

The Reckoning

Thankfully, history has a way of (eventually) correcting course, though often at great cost. By the late 1950s and early 1960s, public opinion began to turn against the committee’s methods. The excesses became too obvious to ignore, the damage to innocent lives too severe to justify.

The committee existed until 1975, but its influence waned significantly. Court decisions began to protect the rights of those called before congressional committees. Public sentiment shifted toward valuing civil liberties over security paranoia. The very people the committee had targeted — intellectuals, artists, activists — began to speak out about their experiences.

The Long Shadow

Looking back at the House Un-American Activities Committee, we can now see it as a cautionary tale about the dangers of letting fear override our fundamental values. Historians largely view the committee’s actions as a dark chapter in American history — a time when the pursuit of security led to the trampling of civil liberties.

But here’s what makes this story particularly relevant to our times: the underlying tensions that created HUAC haven’t disappeared. Every generation faces the challenge of balancing security with freedom, of protecting society while preserving individual rights. The specific threats may change — terrorism, cyber warfare, foreign interference — but the fundamental questions remain the same.

Lessons for Today

We can only speculate how history would have unfolded had the House Un-American Activities Committee never been established. Would American society have been more open, more tolerant of dissent, more willing to engage with uncomfortable ideas? Would the civil rights movement, the anti-war protests, or the explosion of artistic expression have happened sooner?

As we navigate our own complex times, with our own fears and uncertainties, the story of HUAC whispers to us across the decades: be vigilant not just against external threats, but against the erosion of the very values that make our society worth protecting. For in the end, the greatest danger to any democracy may not come from its enemies, but from the compromises it makes with its own principles in the name of security.

Even though the House Un-American Activities Committee was disbanded nearly fifty years ago, its shadow still falls across American life, and its basic premise of persecuting people for their beliefs has seen a resurgence in America.

Back to you…

How has your personal story been influenced by some form of discrimination or persecution? Have you ever felt that it wasn’t safe to express your true feelings for fear that you would have to pay a price — a price so high that you remained silent? Do you live in a country — or have lived in a country — that is repressing freedom of thought? Sharing such stories is vital if we want personal freedom to thrive.

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The Day America Reached for the Moon: Understanding President John F. Kennedy’s Bold Promise

May 25, 2025/in Government, History, Politics, Science, Society/by Mark Lovett

Yesterday’s article talked about Samuel Morse and the birth of the telegraph, and how an inventor’s vision, driven by grief, jump started the era of electronic communication. But that’s not to say that such technological achievements can only be initiated by someone with technical skill. Politicians with a vision of the future far different than the present can serve as inspiration for shifts in the timeline of humanity.

One such story began with a young man standing before Congress, promising to accomplish something that had never been done in human history. On May 25th 1961, President John F. Kennedy did exactly that, declaring America would land a man on the moon before the decade’s end. But this wasn’t just about exploring space. To understand why Kennedy made this audacious promise, we must first step back into a world gripped by fear, competition, and the urgent need for national purpose.

The Shadow of Sputnik

Four years before Kennedy’s bold declaration, the world had changed overnight. On October 4, 1957, a metallic sphere no larger than a beach ball began orbiting Earth, beeping its simple signal across radio waves around the globe. Sputnik 1, launched by the Soviet Union, represented far more than a technological achievement — it was a thunderclap that shattered American confidence.

Exploded view of the Sputnik 1 satellite

Picture the American families of 1957, stepping outside their homes to peer up at the night sky, knowing that somewhere among those familiar stars was a man-made object placed there by their Cold War adversary. The implications were terrifying. If the Soviets could launch a satellite, they could certainly launch a nuclear warhead. The same rocket technology that lifted Sputnik could deliver destruction to American cities.

The psychological impact was perhaps even more profound than the military implications. America had long considered itself the world’s technological leader, the nation that had won World War II through industrial might and innovation. Suddenly, we were playing catch-up to a communist rival we had underestimated.

A String of Soviet Triumphs

The humiliation deepened with each Soviet space achievement. In November 1957, they launched Sputnik 2, carrying a dog named Laika — proving that living creatures could survive in space. America’s first satellite attempt, Vanguard TV3, exploded on the launch pad in December 1957, earning the mocking nickname “Kaputnik” in the press.

Then came the ultimate blow: on April 12, 1961, just weeks before Kennedy’s moon speech, Soviet cosmonaut Yuri Gagarin became the first human to orbit Earth. The smiling young pilot returned to a hero’s welcome, his achievement broadcast around the world. Once again, America was second.

Consider the personal stories embedded in this moment. Gagarin, a farmer’s son who had worked in a steel foundry, now represented the triumph of Soviet ideology. Meanwhile, American parents worried about their children’s futures in a world where their nation seemed to be losing the most important race of the modern era.

The Cold War Context

To truly understand Kennedy’s moon commitment, we must appreciate the global stakes of the Cold War in 1961. This wasn’t merely a competition between two superpowers — it was a battle for the hearts and minds of the entire world. Newly independent nations in Africa, Asia, and Latin America were choosing between American capitalism and Soviet communism. Every achievement, every failure, was scrutinized as evidence of which system was superior.

Space exploration had become the ultimate proving ground. Unlike military might, which remained largely hidden and theoretical, space achievements were visible to all. When a Soviet rocket successfully launched, people around the world could see it, hear about it, and draw their own conclusions about Soviet capabilities.

Kennedy’s Personal Stakes

For Kennedy personally, the space race represented both tremendous risk and opportunity. At 43, he was the youngest elected president in American history, criticized by some as inexperienced and untested. The failed Bay of Pigs invasion had damaged his credibility. He needed a victory — something bold and inspiring that would restore confidence in American leadership.

Yet Kennedy was also a pragmatist who understood the enormous challenges involved. Before making his moon commitment, he consulted extensively with NASA officials, scientists, and engineers. He wanted to be certain that while the goal was ambitious, it was achievable. As he privately told NASA administrator James Webb, “I’m not that interested in space. But we’ve got to beat the Soviets.”

Beyond the Moon: The Deeper Goals

Kennedy’s moon commitment served multiple purposes beyond the stated goal of lunar exploration. First, it provided a concrete, measurable objective that would focus American scientific and technological efforts. Rather than competing with the Soviets on multiple fronts, America would concentrate its resources on one spectacular achievement.

Second, the moon program would drive innovation across countless industries. The technologies developed for space exploration would find applications in civilian life, from computers to materials science to telecommunications. Kennedy understood that the space program would accelerate American technological development in ways that would benefit the entire economy.

Third, the moon goal would inspire a generation of young Americans to pursue careers in science, mathematics, and engineering. The president recognized that America’s long-term competitiveness depended on nurturing scientific talent, and the space program would serve as a powerful recruitment tool.

The Ripple Effects Through History

Looking back across the decades, we can see how profoundly Kennedy’s decision shaped not just American history, but human civilization itself. The Apollo program employed over 400,000 people at its peak, driving innovations that gave us everything from cordless tools to freeze-dried food, from improved computers to advanced materials used in everything from aviation to medicine.

Earthrise, taken on December 24, 1968, by Apollo 8 astronaut William Anders

But perhaps most importantly, Kennedy’s moon commitment changed how we see ourselves as a species. When Apollo 8 astronauts photographed Earth rising over the lunar horizon in 1968, that image — our blue, fragile planet suspended in the cosmic dark — helped launch the environmental movement. When Neil Armstrong stepped onto the lunar surface in 1969, he spoke for all humanity: “That’s one small step for man, one giant leap for mankind.”

Consider how different our world might be had Kennedy not made that commitment. Without the technological drive of the space program, would we have developed personal computers as quickly? Would satellite communications have advanced as rapidly? Would our understanding of Earth’s climate and environment be as sophisticated?

The young president who stood before Congress that May day in 1961 was doing more than committing America to reach the moon. He was choosing hope over fear, ambition over resignation, and in doing so, he set in motion a chain of events that would transform not just America, but our entire understanding of what it means to be human in an infinite universe.

The moon, as Kennedy understood, was never really the destination. It was the journey that mattered — and the proof that when we dare to dream beyond our limitations, we can achieve the impossible.

Back to you…

Maybe your story is not as dramatic. Not one that changed the course of history. But think about those moments when you made a bold decision that change the course of your life. Then consider how that decision rippled out to affect the lives of others. And the point of telling your story now, is that the lessons you learned, the wisdom you gained in the process, can continue to benefit others.

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Navigating Carbon Markets from the Climate Rising Podcast

March 15, 2025/in Climate Change, Entrepreneurs, Environment, Government/by Mark Lovett

As climate change continues to be the most significant threat our planet has ever faced, telling stories about this crisis — sometimes focused on personal experiences, but other times focused on the efforts intended to mitigate the issue. In either case, storytelling is one of the most powerful tools available, considering its ability to shine a light on what is happening, and what we are presently doing about it. The Climate Rising Podcast is a brilliant example of telling stories about climate change solutions.

On the Climate Rising Podcast, business and policy leaders join Harvard Business School faculty to discuss what businesses are doing, can do, and should do to confront climate change. Each episode dives into a particular topic with a subject matter expert in the field. While not presented in a true storytelling fashion, if you’re personal story involves a technical or scientific topic, there is much to learn about how complex issues can be dissected and presented in a way the general public will understand.

Alexia Kelly, Managing Director of the Carbon Policy and Markets Initiative (CPMI) at the High Tide Foundation, joins host Mike Toffel for the fifth episode in our series on voluntary carbon markets. Alexia has worked for nearly two decades at the intersection of carbon markets, policy, and finance, with roles spanning government, private industry, and nonprofits.

In this episode, Alexia discusses how voluntary carbon markets are evolving, the critical role of policy in shaping carbon finance,and how standards and governance can improve market integrity. She also explores how advances in digital technology, data transparency,and AI-driven monitoring are transforming carbon credit verification and market confidence.

Additionally, she shares her perspective on the integration of voluntary and compliance markets, including recent developments in Article 6 of the Paris Agreement.Alexia also offers career advice for those looking to enter the field and shares resources for staying informed on carbon markets and climate finance.

Okay, so there’s a lot of technical information here, along with acronyms, policies, and agencies. But note how Mike steers the conversation — at times diving deeper, while in other cases changing direction or seeking clarification.

You can use this technique by asking a trusted friend to interview you. They do need to have a basic understanding of your topic, of course, but having another person ask questions allows you to think about your story differently. Give this episode a listen and peruse the transcript to uncover new ways that complex stories can be told. The world needs to hear you, but also understand your message.

Transcript

Note: The following was AI generated, and may not perfectly match the interview.

Mike Toffel:

Alexia, thank you so much for joining us here on Climate Rising.

Alexia Kelly:

Thanks for having me, Mike.

Mike Toffel:

So, you have a really interesting biography. You’ve worked in the nonprofit sector. You’ve worked in the private sector. You’ve worked in the government sector. Tell us a little bit about your background and how you ended up where you are today.

Alexia Kelly:

Yeah, sure. Great to be here and have this conversation today. I’ve had the opportunity to work on carbon markets really since some of the earliest days. So, I started my career in 2006, actually the first regulation of the greenhouse gases in the United States at a nonprofit in Oregon called the Climate Trust, which was established under the 1997 carbon dioxide regulation. And so basically ran parallel to the development of the Kyoto Protocol under UNFCCC. So, over the course of nearly two decades working in and around carbon markets and carbon pricing, I’ve worked in the nonprofit sector, including with the World Resources Institute on Waxman-Markey when we were trying to get federal legislation passed in the 2009, 2010 era. I was recruited to join the State Department team in 2010 at the beginning of the Obama administration and had the opportunity to spend a number of years there working both on international development work through our Enhancing Capacity for Low Emissions Development Strategies program, as well as our lead negotiator for emissions trading under the UNFCCC, which was pre Article 6, but we’ll talk a little more about Article 6 later, which are the emissions trading provisions of the Paris Agreement.

And then after that, I wanted to go into the private sector. So, I ended up working in a family office trying to understand why we had this big finance gap between all of the investment opportunities we were seeing in the climate clean energy space, particularly in emerging markets, and why that money wasn’t moving. So did a bunch of work on understanding capital markets and really tried to understand what motivates the private sector to take action, which led me to joining Netflix in 2019 to help establish its inaugural sustainability program. So, they had no sustainability program prior to that, not even a greenhouse gas footprint. And so, we really built the program all the way from the ground up. And so, I served as our director of Net Zero in nature there for about three years before joining the High Tide Foundation just a couple of years ago to establish on what is now the Carbon Policy and Markets Initiative.

Mike Toffel:

Great. So, it’s such an interesting and varied history. Let’s talk about the High Tide Foundation. What was it formed? It’s a family office. It’s a funder. And it has a few different sorts of lines of interest. So, if you could tell us about each of them, then we’ll dive more into the Voluntary Carbon Market’s piece of it.

Alexia Kelly:

Yeah, absolutely. So, the High Tide Foundation is a private family office philanthropy focused exclusively on addressing the climate crisis. There are two primary areas of focus for the foundation. We do a tremendous amount of work on methane through our funding of Carbon Mapper, the Methane Hub and other major initiatives to help really address and tackle methane pollution, which of course is one of the fastest kinds of emergency breaks we have to pull as we’re looking at addressing the climate crisis.

I lead our work focused on carbon markets and carbon pricing. And so that’s through the carbon policy and markets initiative, which we established just two years ago, to really help bridge what we observed was an increasing divide between where civil society and the science wants companies to be and where companies operating in the real economy actually are.

And so, I joke that now I’m just a professional board member and we spend lots and lots of time really trying to build bridges and establish high integrity rules of the road that accelerate action and ambition while also recognizing that there are very real constraints that folks operating in the global economy are facing as we seek to advance decarbonization solutions.

Mike Toffel:

Great. Now, we’ve spoken with Mark Kenber at VCMI and Amy Merrill at ICVCM, some of the organizations that you directly work with. Can you tell us a little bit about the bridges between the High Tide Foundation and your role and those organizations as well as others that you’re also helping to coordinate and sync up?

Alexia Kelly:

Absolutely. Yeah. So, I serve on the, as a board alternate, a high tide foundation was a major funder of the ICVCM, the integrity council for voluntary carbon markets predecessor, which was called the task force for voluntary carbon markets. and that you think you’ll cover that when you talk to Amy, but really coming in and having real capital markets actors looking for the first time at this artisanal baby carbon market that’s been out in operation for a number of years and really thinking, okay, what’s it going to take to grow that market?

So, the High Tide Foundation has been a primary funder of that. We also invest significant in-kind resources there. I serve on the standard oversight committee of the ICVCM as well as the, as the chair of our continuous improvement work programs, which I can talk a little bit more about later.

I also sit on the expert advisory group of the Voluntary Carbon Markets Integrity Initiative and on the US Technical Advisory Group of ISO, which is the International Standards Organization. So really spending a lot of time helping to connect dots and accelerate connective tissue among and between all of the different standard-setting bodies that are out there that are now really deciding what constitutes credible, voluntary corporate climate action and how do we do the accounting for those actions so that we know what’s working and what’s not working and really have a basis upon which to compare level of effort and engagement across this set of issues.

Mike Toffel:

So all these, as I understand it, all of these organizations basically are trying to lift the tide of standards so that the critiques that have befallen much of the voluntary carbon markets are addressed by, again, raising the bar, setting standards, say, you have to be at least some level of integrity in order to even be in the market of voluntary carbon markets. Because to the extent that there’s these laggards, it pulls down the whole industry. Is that the right way to think about it?

Alexia Kelly:

Absolutely. I mean, you need that strong floor. And actually, when I was at the Climate Trust in 2008, we established something called the Offset Quality Initiative because there was a lot of concerns over whether or not we were really going to be able to set that bar for offsets because this endeavor of pricing and measuring and quantifying the impact of actions that we’re taking to mitigate climate change is so challenging.

And so, we’ve really needed to agree on what a rule set is for how you do that accounting and how you do that measurement, because it didn’t exist. Like we’ve been literally making all of this up as we go for the last two and a half decades. And we’ve learned a lot. But I think it’s important to remember that this is really the first time we’ve ever tried to do this. And certainly, when we were writing the rules, the first time, you know, 15, 20 years ago,

We lacked a lot of the technologies, science, and data that we have available to us today, which means that you sort of have to set rules with what you have, right? As a policymaker, that’s what you do. You take the best available information, and you set the policy in the best, most rigorous way you think possible.

And so, we’ve seen that kind of continue to evolve in the carbon markets over the last 20 years and we’ve also gotten a lot better at doing this. And I think that doesn’t get enough credit and attention. We have actually a fair degree of uniformity and agreement now on what the core rules should be for what constitute high-quality carbon credit.

And we have a much better sense of what needs to happen between now and the next five years to really get this market to scale because it’s still not operating on the scale, right? It represented about $750 million in value last year. Like it’s a baby market still relative to almost any other capital market that’s out there.

Mike Toffel:

So, can you say that you’re seeing some progress in these areas and getting some consensus? Can you describe an example or two of what that looks like? So, what would have been allowed in the past that’s now not going to meet the minimum bars that these organizations are lobbying for?

Alexia Kelly:

Yeah, it’s a really good question because what we’ve seen over the last couple of years, particularly through the work of the Integrity Council for Voluntary Carbon Markets, is an emerging consensus on what global thresholds quality standards look like. So the core carbon principles that we’ve laid out, thinking about things like additionality, things like permanence, those key tenets of what constitute a credible way to measure the impact of the things we’re doing are pretty well established now. I think we’ve explored that from just about every avenue and there’s broad consensus on how you do that. The assessment framework that the ICVCM published a couple of years ago, which is the rule book by which we measure how these core carbon principles are implemented by the programs, also represents a really important step forward in terms of the consensus of what right looks like.

But one of the things that struck me the most as we’ve been going through, so what we do at the ICVCM is we go through methodology by methodology, and we look at all of the methodologies that the programs are using for a given type of project. So maybe a landfill gas destruction project, for example, or renewable energy credits or RED+ or improved forest management.

So, there’s different methodologies that have emerged to measure the impact of all of those things. And it often comes down to one or two key decisions or like emissions factors in each of those methodologies that determine how much credit you get for that particular project and determine whether we’re doing a good job of assessing the net impact of that particular project.

That set of work has been particularly challenging. So, we’ve assessed about 37 % of the market at the ICVCM right now, and we’ve only approved 3 % of the core methodologies. And one of the reasons that that’s the case is because of renewable energy. And renewable energy is kind of a fascinating example of how this market has evolved because when the first renewable energy projects were getting going, 25 years ago, 30 years ago, they were substantially more expensive than their fossil fuel incumbent alternatives, orders of magnitude more expensive. And over the last 20 years, we’ve seen just a precipitous decline in the cost of renewables, which is a wonderful thing. That’s exactly what all the policies we’ve put in place is what we wanted to see happen. But it calls into question whether a lot of those projects really need now the carbon finance to help close that financial viability gap. And yeah, sorry.

Mike Toffel:

Right. Let me just interject a minute. So just to make sure people are following this and make sure I’m following this. So, one of the criteria to have a carbon credit issued is it has to pass these many tests, but one of them is this additionality test, which essentially states, this project, does the project success in terms of being profitable depend, is it hinge on the climate finance coming from the carbon credits? Because if it would be profitable on its own, well then you don’t really need the carbon credits. And only if the carbon credit pushes it over that threshold, that’s when it can be issued a carbon credit. That’s the game, saying I’m going to invest in one carbon credit in order to create emissions reductions or removals that wouldn’t otherwise have happened. So, this is all about the counterfactual, just to catch folks up.

Alexia Kelly:

Exactly. Yeah. Thanks so much for that explanation. And that’s exactly right. And so we have about eight different ways in which we test for what’s called additionality, ranging from a peer financial additionality test, which are the carbon credits helping you meet your internal rate of return threshold, for example, all the way through to what we call positive list of technologies where we say, okay, we know that this technology is still more expensive and not common practice. And so therefore, up until a certain rate of penetration, all of that’s going to be considered additional and you don’t even have to think about it. If you meet this technology test, then you’re good to go.

Testing for additionality is extremely difficult, right? Because what we’re trying to do is develop a universally applicable sort of set of tests that can accommodate the almost infinite range of individual project circumstances, while also setting a pretty good threshold bar that’s enabling us to separate out the stuff that really didn’t need the carbon finance from the stuff that did. And, you know, as in most other fields, it’s not going to be perfect every time.

That’s just not the way the world works. And that’s OK. And I think that’s one of the things that the carbon market has really suffered from is this expectation that it’s perfect all the time. And it’s not going to be. And we don’t need it to be. What we need to do it to be is effective. And we do need it to be actually delivering the environmental impact that it needs in order to help us solve this problem. Because for me, if I’m going to spend $1 on climate change mitigation, I want to make sure that that dollar is doing something that wasn’t going to happen anyways, that has a lasting atmospheric impact.

And that’s really helping us move the needle on the climate fight because otherwise I’m wasting my money. And so that is what the carbon markets enable us to do. It’s the first place I always joke that, you know, the carbon markets aren’t the worst. They just went first. Like they were the first time we ever tried to do this huge, complicated thing. And we are getting much, much better at it than we used to be. And I’m feeling particularly optimistic that, you know, moving forward, we’re really going to be able to do that granular assessment much more robustly and rigorously, you know, in no small part, as we talked about yesterday, you know, just around the advent of new technologies and data and sources of information that we just simply didn’t have available the first time around.

Mike Toffel:

Great. And I want to dive into that in just a minute. Before I do that, one of the organizations that you mentioned you’re working with is ISO, or the International Organization for Standardization, Swiss-based with lots with national, in a sense, national offices or national outreach in each of the countries, including the US, under other names that are like ANSI and so on. And ISO has lots and lots of standards. I’ve done research in this area for some time. They have ISO 14,001, which is an environmental management standard, the 9,000-quality management standard, a more recent occupational health and safety, 45,000 in one standard. And they so far don’t have a standard, I understand it, on voluntary carbon markets and what constitutes like an ISO meets an ISO bar. And so, it sounds like they’re working on that. It’s taken… I don’t know, you mentioned 20 years for us to get there and we’re not there yet. Tell us a little bit about what ISO’s angle on this and why it has taken so long?

Alexia Kelly:

Yeah, there’s two things happening at ISO that are related to both supply and the quality of the credits and then demand. And I’ll touch briefly on both of those. The supply side is actually interesting because ISO has had a standard on how you do project-based greenhouse gas accounting for a very long time. We finished it in, I think, 2006 maybe, 1464-2, for those of you who want to go look it up. And what that does is basically provide very high level guidance around how you do this quantification. So, you need to think about additionality. You need to think about permanence. But it’s really at a principles level.

So, ISO tends to deliver standards that are at a relatively high level. And then you layer underneath it in more detail at the other standard level. So, as we’ve noted, what’s happened in this space in particular is that because it’s not regulated and because we haven’t been able to come up with a uniform global system to address this problem, we’ve seen this kind of thousand-flowers-blooming approach in the voluntary carbon market where a bunch of different nonprofits and regulatory regimes around the globe have sort of popped up and said, okay, this is important. We need to figure out how to do this. And somebody should really be bringing some transparency and oversight to this space. We’re going to do that on a nonprofit basis.

And so, you hear about the big four, Verra, ACR, and other carbon crediting standards that are active. Those are nonprofit organizations. They are often built on top of the ISO 1464-2 rules. So, what’s happened is that’s become the backbone. And then you have other organizations that have come in and kind of put the muscles and the flesh on the whole system so that you have a system for actually getting all the way through to market issuance and crediting. So, they are in the process of reviewing some of those core standards around what are the principles of defining quality.

On the other hand, and I think of interest to folks, you there’s been a lot of debate around what defines a credible net zero claim for companies that are taking voluntary action and what should be allowed to count. How do you set your target? How do you account for progress towards your target? What does that all mean? That’s the other half of the work that we do at CPMI quite actively. And that’s really part of this debate.

If we want a functional market, you need high quality supply. And you need high quality demand. We have to have both of those things. A market with no demand is not a market. And there are real ideological divisions in civil society and in the nonprofit space in particular around whether markets can ever be an appropriate way to solve environmental challenges. I think, over the course of my career, we’ve seen a number of instances where they’ve been harnessed very effectively to do that.

But there’s also been high profile failures, right? And if you read the New Yorker article about some of the stuff that’s happened in the voluntary carbon market, like the lack of oversight and regulation has been a real problem. And there are opportunities for carbon cowboys to come in and take advantage of the system. And so that’s really eroded trust and confidence, think, particularly among young people who are sort of saying, look, you guys have had 20 years to implement these market systems.

They aren’t working. We’re still in a climate crisis. And it’s a real honest and important and legitimate conversation to be having about where do we deploy market-based solutions effectively and where do we just need regulation? I think if you ask most of us who’ve worked in this space a long time, we’d prefer to have regulation hands down every time. But we’ve also really struggled to get regulation in place. And so now we’re in this world where voluntary action plays a really important role.

So ISO has actually established a process now to write rules around what a net zero standard might look like and what type of information you would need to disclose if you wanted to make a claim and have it, what we call assured or have a third party come in and look at what you’re saying to make sure it’s legitimate and meets the rules of an existing standard that’s out there in the world. So that conversation is happening right now under this big international umbrella in ISO’s incredibly complicated and kind of Byzantine architecture that frankly is worse than the UN. It’s kind of amazing. But those conversations are moving forward apace, and the hope is that they will have a kind of initial agreement on what our credible net zero standard looks like that’s internationally applicable in the next 18 months or so.

Mike Toffel:

Got it. I want to circle back to something you said earlier, where you said these markets have been evolving, and they don’t need to be perfect every time. I don’t know. wonder if, in fact, you mentioned the New York article has been a number of articles of instances when things haven’t worked, when the measurement has been proven to be overestimating, for example, how much carbon is actually being sequestered, or reversals occur. You prevent a stand of trees that had intended to be felled from, in fact, being felled and you’ve addressed leakage, no one else’s forest is falling instead, but then there’s a hurricane that knocks them down anyway or a forest fire.

So those emissions aren’t sort of secured for the long run, the permanence concept. So, my sense is that they don’t have to be perfect, but there has to be consequences when those imperfections arise because, just like when you buy a product or a service and you have an expectation that it’s going to work, if it doesn’t work, you have some recourse for a warranty. And I do know that there’s some mechanisms in place that are called buffer pools where you can tap into if in a reversal case, or there’s even insurance that can arise. My sense is that those mechanisms are not widely understood, and they’re often not in the

And maybe they don’t always exist. I don’t actually know. What’s your sense about that? When these failures do occur, do you feel like the systems are in place actually to nonetheless sort of compensate for the losses? Or are there still cases where those losses occur and then you’re just at a loss?

Alexia Kelly:

Yeah, this is one of my favorite questions and most important issues facing us. And I’ll take baselines and permanents separately because they’re two distinct but related issues. The permanent one is interesting because as you know, we actually have quite extensive systems in place to manage reversals and address the risk of reversal and storage. And they are not well understood. I think they don’t get talked about enough and people really don’t understand how they work.

A fundamental principle of almost all crediting systems is this notion of conservativeness. So almost always, you’re going to be the most conservative number across the board. And so, what we find is often projects are already pretty significantly discounted even before they get to issuance and the credits are out there. So, there’s this whole additional layer of protection that the system has built in that the public really never even sees because it all happens before the credits are issued. As you’re looking, so say I have a forestry project, I’m going to be applying my methodology. I’m going to be bringing my experts to collect the data. They do it all through statistically validated sampling systems, right? So, they’ll go out and they’ll do random plots and they’ll send people out into the middle of these woods and they have to go out and do direct measurements.

This is being helped and accelerated a bunch by remote sensing and AI, but we still do on the ground verification. So, it will often take a week to cover an entire project, and they send scientists out to go do direct measurement of the trees and then use really complicated sort of stratification systems in order to make sure that we’re getting a statistically valid representation of the carbon stored in that particular project. That then gets run through this whole process and you have a series of discounts that are applied before you even get to the credit issuance. So, there’s conservativeness built into the system there. Then after issuance, you have long-term monitoring requirements where farmer foresters will sign up and say, look, I’m signing up legally to make sure that this carbon stays sequestered in this particular project area for X number of years. And it varies. You have to figure it out, and the challenge here is that what we’re trying to do is design a system that delivers real atmospheric benefit.

And there’s been a raging debate in the academic and scientific community for a very long time about, we like to say as long as it matters, how long does carbon need to be stored in order for it to have a real meaningful atmospheric impact? And the answer actually turns out to be not very long, right? So at this point, particularly given where we are with CO2 loading in the atmosphere, anything we can do to store and defer the release of carbon has an atmospheric benefit. How much atmospheric benefit, right, is the thing that’s in question? And there’s the additional complexity of if I’m using that credit to compensate for a fossil-based emission somewhere else, then you need to think about the equivalent impact.

So, there’s two parts to permanence that you have to think about as we’re thinking about this system design. So, it gets very complicated. The way the standards have dealt with this is that they, in addition to the discounting and conservative calculations, also have what are called buffer pools. So, post issuance, they’ll look, and you are actually required to basically take a portion, and it varies across standards. It’s anywhere from 5 % for the jurisdictional level programs down to as much as 30 % 40 % of your total credits must be set aside in case there is a reversal. If a reversal occurs, then there’s an extensive process that they go through to actually directly measure the amount of carbon that was released from the project. And then they will go back and cancel an equivalent number of in the buffer reserve to make sure that the atmosphere is made whole and that the credit

And you’re not allowed to issue more credits until you’ve paid the buffer reserve back. So, it acts basically like an insurance mechanism. There’s lots of debate about how big those buffer reserves should be? What types of credit should be in them? What are the rules around administering them? Should we be looking at a two to one cancellation? Like there’s a lot of pieces to unpack as we design that system, but I believe that having nature in these markets is not optional. We must use the power of nature, which is our original carbon removal machine. Trees and forests and wetlands and soils play just an essential role in regulating the climate and in helping us fight climate change cost effectively and efficiently. And so, we’re going to need to take a system level approach to addressing this challenge. And I believe we can do that.

I actually think that we have both science and the system capacity to set up really robust safety nets so that if reversals do occur, we can still make the atmosphere whole because that of course is the most important objective of any of these systems.

Mike Toffel:

Is there transparency around the levels of these buffer pools, like an annual report that would declare these as assets and the usage of them?

Alexia Kelly:

So, the treatment of assets is a whole separate ball of wax, but generally, no. And that was actually one of the things that ICVCM really came in and did was to establish minimum transparency requirements across the board. actually, co-chair our continuous improvement work program on permanence. And one of the things that we’re looking at is doing buffer reserve stress testing. So, we’re working with the standards to go in and say, OK, guys, let’s look at how you do this. Because I have to say, you know, the standards get a lot of criticism for this, but the fact of the matter is nobody else cared or was paying attention when we were setting this stuff up the first time. And so, they’ve had to be judge, jury and executioner, you know, in terms of managing and building this infrastructure to make sure that we can deliver long-term atmospheric benefit and assurance.

And so, there’s a lot of really exciting conversations happening right now about, what would a global permanence approach look like? And how could we think about these types of systems in a more comprehensive way so that you don’t have these small nonprofits trying to stand up these systems and manage this big problem by themselves but actually think about it more holistically from a market wide perspective. So, I’m expecting that there’s going to be a lot of really exciting and interesting progress in this set of topics in the next couple of years. But we still have a way to go. There’s the system is not where I think any of us would like it to be if you asked the people who work in the market today.

And this I think is just a fundamental question that we have to ask ourselves is, know, is it better to have something that is working well, but maybe not perfectly, but actually doing things in the real world or which we can easily do, should we wait until we have the perfect design, and we’ve got it all figured out and we talk to each other about it for another 20 years and then maybe we set something up once we’re sure that we have absolutely every T crossed and every I dotted. I’m very much, especially after working in the private sector for so long in the camp of it is much better to be doing things even if they aren’t delivering 100 % of what we need them to be doing because we’re in a climate emergency. And I want to throw water on the fire, not debating the color of bucket of throwing the water.

Mike Toffel:

Yeah, and even if every drop of that water doesn’t reach the fire, the majority of it is doing so, and there’s these mechanisms to reroute those drops, it sounds like.

Alexia Kelly:

And I do just have to say also, the thing about the markets and the reason why I’m still like here and doing this work is because A, I don’t think we get to where we need to be in terms of transforming capitalism without putting a price on carbon. And that’s what carbon markets do. And B, I have never, ever, ever seen a better instrument, not even in all my years working with USAID and managing hundreds of millions of international assistance dollars.

I’ve never seen a better system for getting money from where it is today to where it needs to be in the global South and to frontline communities and ecosystems in particular. It is one of the best, most transparent, most rigorous systems we have for getting that money deployed into the things that really, really matter today for helping us address climate change and in addressing, you know, historic environmental inequity and providing support to frontline communities.

And I’ll just give one super-fast anecdote on that. When I was at Netflix, there was due diligence in our project that we were buying for our portfolio. And it was this amazing rainforest for dry lands protection project in Kenya. And there’s one paragraph, like one line in their kind of spec sheet that caught my eye. And I asked about it. And they said, it’s, the headwaters of a major river. And I asked in the interview about it, and they said, yeah, that’s the, actually is also the headwaters of the drinking water source of a city of a million people down river.

So, these projects like that wasn’t quantified. It was literally just a line in the report. But the fact that this forest was providing drinking water for a million people in an area that has severely affected by drought is just an example of what we call core benefits, not co-benefits of these projects and the climate resilience and adaptation benefits that they deliver along with biodiversity and economic justice and financial transfer. So, you know, we’re big believers in the power of these markets because we’ve seen them work and we’ve seen firsthand the impact and benefits that they deliver to people.

Mike Toffel:

Not to mention the whole point of carbon pricing is to try and reduce carbon at the most efficient way possible system-wide. That’s why economists are so in favor of this as a regulatory tool and the absence of regulations, borrowing that same logic in these, in the voluntary market; that’s the goal which I think often gets overlooked.

Alexia Kelly:

It very much does. And I think in this debate too, it’s getting a little lost. We talk in the net zero conversation, there’s a big focus on how do we drive supply chain decarbonization, right? Like we want companies that have a net zero target to reduce their emissions, which is totally fair. That’s true. We do want them to reduce their emissions. We also want their money to fund all of the other mitigation that is often, actually almost always substantially lower cost than what it’s going to cost them to reduce their emissions internally, particularly in the United States.

And so, balancing that in net zero kind of rules is really important and one of the big debates we’re having right now is how do we do that so that we can keep companies focused on the hard work of decarbonizing their actual operations, right? Getting electric vehicles in, deploying energy efficiency, buying renewable energy, doing all of that really important work, while also mobilizing the money we need for nature and all of the other core of carbon removal and building that whole ecosystem and set of technologies. It’s all going to take money, and we need to be doing it all simultaneously and as quickly as possible.

Mike Toffel:

So let me pivot a bit. Now, you mentioned these markets have been around in one form or another for quite some time. And more recently, we’ve seen the injection of all sorts of interesting data revolution pieces here, whether it’s the satellites collecting CO2 and methane data, including I think methane sat you guys were involved with. EDF has just recently launched a satellite, which we did an episode on, to monitor methane emissions.

There’s all this new data; there’s machine learning and AI technologies out there. Digitization is just really like the force that and climate change seems to be like two of the next gen, like disrupt everything forces. How do you view this revolution affecting the voluntary carbon market?

Alexia Kelly:

Yeah, great question. I’m so excited about what remote sensing, AI, machine learning, and internet of things is going to enable us to do to build really excellent monitoring reporting and verification systems. We call them MRV systems. And it’s the whole system you build to make sure that the thing you’ve done is actually doing what it was supposed to do. So High Tide has invested heavily in remote sensing capability and building out that ecosystem of both technologies and support nonprofits that are doing work. So, we are an early investor and instrumental in getting Carbon Mapper up and out, which is a compliment to EDF’s methane set. Carbon Mapper does very precise measurements of super emission sources of methane around the globe.

And these emission sources were going undetected because we didn’t have granular enough data review technology. So, we’re very excited about what that transparency is. And having philanthropy come in and fund this work means that this data is available to the public. So, there’s been a lot of work that’s happened in the remote sensing and satellite space because it’s very expensive to do, right? These satellites cost tens of millions of dollars each. There’s been a lot of that that’s been built behind proprietary paywalls.

And so having philanthropic dollars coming in means that we get to build the things and then make them publicly available, which then, of course, unleashes a whole new world of accountability and transparency. And we’re seeing that it really plays out in the carbon markets in big ways as well. So, what happened a few years ago as some of these new satellite technologies were coming on board, as folks were able to look at and see at much lower cost what was actually going on in a lot of these project areas. And in some instances, they found that we were underestimating the amount of carbon that was being stored. Those stories don’t tend to make headlines. What does make the headlines are the instances, and these also existed, where we overestimated the amount of deforestation that was happening.

And that, I think, it’s a wonderful thing that we have all of this new data and information, but it also means that it’s caused sort of a reset in the market in some ways, because when we wrote these methodologies the first time, we didn’t have any of that information available. And so, it’s caused, I think, a revolution in the way in which we are thinking about and making measurements for carbon projects and overall, incredibly exciting ways. I feel so much better knowing that we have this data and information because it enables us to say with much more precision and accuracy, this is working and this isn’t working. And that’s essential to building out this entire system.

So, I, and you know, I’ll also say the internet of things. So, often, particularly in developing countries, you’ll have a bunch of cook stoves, right? You’ll have thousands of cook stoves distributed over a bunch of countries. We know there’s real environmental and atmospheric benefits to those projects. But precisely measuring exactly the amount of wood that’s going into the cook stove on a daily basis in places that often don’t even have electricity is extremely challenging, right? So, we rely on statistics, which we should continue to do. We rely on sampling and survey technologies. But we can also now put sensors on that are just automatically pinging data all the time so that we can measure much more precisely and consistently; the atmospheric impact of these things and what’s really happening on the ground.

So it’s hard to overstate the importance of these technologies for enabling us to build out that really comprehensive MRV system that’s also going to enable us to help build better permanent systems overall, inform how much should be going into buffer reserves and do a much better job of setting baselines, which as you mentioned earlier, is that counterfactual projection into the future of what would have happened in the absence of the project. And so, we can get much better historical data at much lower cost now. So, we’re really excited to see this set of technologies come to fruition and it’s going to have huge impacts on the market moving forward.

Mike Toffel:

Got it. Let’s just dive in for just a second on the cook stove example, because I want to provide a little bit of background or seek a little background. So typically, cook stoves projects involve someone financing the deployment of cook stoves to enable folks, in some cases, to, for example, use less wood or use wood more efficiently in cooking. And so, the idea is it reduces deforestation. It still allows people to cook their meals.

And the reduction in the deforestation is the carbon credit claim and the financing that these cook stoves wouldn’t be available without carbon financing. That’s the additionality claim. And the issue, as I understand it, is like the measurement question, which, for example, is, well, if we give out 1,000 cook stoves, are all 1,000 of those being used every day? Are some of them maybe breaking and therefore like only 900 in year two are being used? And then maybe some people use two of them.

And so, there’s actually, they’re getting twice as much cooked. So that’s good for the family. But they’re still using the same amount of forest, for example. So, there’s all these different question marks in the deployment. Is that the type of thing? And you’re saying with technology, we can perhaps identify the extent to which these cook stoves are being deployed to take away some of the assumptions that one would otherwise have to do or the manual census every year for X years to sort of check in on this. Is that what we’re talking about?

Alexia Kelly:

That’s right. Yeah. I think the cook stove is actually an interesting example because as you noted, a lot of these impact numbers are tied to the relative deforestation rates around the project area where people are collecting the fuel wood from.

And there’s been a lot of debate about what is the right number, how do you measure it? It’s obviously enormously variable depending on cultural, geographic, know, a wide range of conditions that are in place all over the place. And so, there’s a new model that’s being developed using remote sensing data in order to do a better job of calculating the net impact of cook stove projects in surrounding areas. And so, it’s just a good example of how new technologies are enabling us to do better and more accurate measurement. But it also is causing corrections in the market because the data we had before wasn’t as good as the data we have now. And so, most of the standards are now in the process of rewriting the rules to reflect and accommodate this new data that we have. Does that mean that everything that came before is garbage? No, it doesn’t. But it does mean that we are now even better at more accurately measuring what’s happening on the ground.

Mike Toffel:

Great. OK, so I want to pivot again. You had mentioned earlier in your intro, of course, that you’d worked for the State Department. You’d mentioned that you’d sort of helped negotiate the Paris Agreement. And so, I want to take advantage of that expertise that you bring to talk a little bit about the compliance markets, which are working in parallel to these voluntary carbon markets, and just to sort of explore the use of carbon credits in that market, which I think date all the way back to the Kyoto Protocol in the late 90s and the CDM or Clean Development Mechanism, which set up some rules for how you can, in countries that didn’t themselves have to reduce, they could nonetheless reduce and sell the benefits of that to the countries that had to reduce, which sounds a lot like a carbon credit, but maybe at the more national level, with the of the endorsement and backing of the UN, which again is different from the voluntary carbon market.

So, give us a brief history of carbon credits in the compliance market. And then all the way to today, where most recently in Baku, the most recent COP, as I understand it, there was finally some real precision around, you mentioned Article 6 of the Paris Agreement, which sets up some rules again for going above and beyond regulatory requirements using mechanisms that seem a lot like the carbon credits we’ve been talking about.

Alexia Kelly:

Yeah, absolutely. And it’s important to note that the unit of measures in carbon markets, regardless of whether they’re in voluntary or compliance systems, is the same. So, it’s one ton of carbon dioxide reduced, removed, or avoided, and typically measured in metric tons. And so, the difference comes in the methodologies, typically. and the issuing bodies for the credits. And so, one of the disadvantages of the fact that we haven’t had a global system in place so far is that there is no kind of one decider on what quality looks like in the market. So, we have this patchwork of both regulatory and voluntary standard setting bodies that have emerged over the course of the last 20 years to say, this is how you measure a ton of carbon.

These are the rules under the UNFCCC, the United Nations Framework Convention on Climate Change, which is of course where we negotiate international agreements related to climate change, under the UN has been working for almost 30 years on trying to broker an international global deal to address the climate crisis. I joined the UN process in 2010 when I joined the beginning of the Obama administration and we had just come out of Copenhagen where the US came and said, we’re back.

But the system we built under Kyoto that we helped architect, we didn’t really like so much anymore because it differentiated between developed and developing countries. And in order to get a deal through Congress, the US felt that it needed to, we needed to be on equal footing with China and India and some of our economic competitors or we were never going to get a deal done.

Mike Toffel:

Right, because those were categorized at the time as developing countries which didn’t have obligations unlike, for example, Europe and the US.

Alexia Kelly:

Correct. So, under Kyoto, global North countries, the US, the EU, Australia, Canada had emission reduction obligations that were quantified, and the global South did not. Which look, there are good reasons for that. The global North is responsible for most of historic emissions, and it’s only been until the last decade or so that the emissions profiles have flipped pretty dramatically and China and India, South Africa have all emerged as large, globally important, and impactful emitters.

So, we came to Copenhagen and, after Copenhagen, and basically said, we need a new deal. We’re going to have to renegotiate everything because we need developing countries. We know your emissions are increasing, and we need developing countries at the table and on equal fitting with the US. And so, it took us six years, but that’s what the Paris Agreement is.

It is a normative system that enables us to bring all countries to the table. In order to get all countries to the table though, what it basically meant is that the countries demanded that they were able to write their own rules by and large for what they wanted to do domestically. And so, we have these things called nationally determined contributions, which is where every country kind of sits down and says, this is what I’m willing to contribute.

These are the targets I’m setting. These are the coverage requirements. And we have reporting and transparency about that at the UN. We also have a court of public opinion where you come and you bring your report, you have this thing called a biennial report, you bring it to the UN, you stand up in front of the UN, you report on your progress and you defend it and countries ask you questions about your report.

What are you saying? What are you doing? How is this policy working? What happened here? Why did you do that? But that is now the kind of international architecture and system we have emissions training has always been a contentious part of the UN system as well. Historically, under Kyoto, there was a bidirectional, it was one-way flow. There are the clean development mechanism and a variety of other instruments, but mostly the EU, which was really the only country that had a significant carbon price and obligation, bought from developing countries who generated credits and sold them through a UN administered mechanism called the Clean Development Mechanism.

Because we are now in a world where all countries have emission reduction obligations, accounting gets a little more complicated and so do the kind of flows of credits and the potential flows of credits. So, there’s three articles or three paragraphs under Article 6, which are the emissions trading provisions of the UN. Article 6.2 covers bilateral agreements. Its countries now are able to sort of write their own rules for how they want to do emissions trading.

If two countries want to cooperate on a bilateral basis, they can do that. They set up their program. They set up their systems and they report it to the UN on this is what we’re doing. Article six, four is the centralized UN body. So, we have a centralized UN body that works a little bit like the CDM did where there is a decision-making group that sets the rules, approves the methodologies and issues the credits supported by the UN secretariat.

And it’s called Article 6 supervisory body. And they are responsible for writing and approving the rules under Article 6.4. So that’s for countries that would really like to have that UN oversight and want a centralized and administrative, you know, it’s like a system that’s all kind of taken care of for them. That’s what 6.4 is. And then the third paragraph is 6.8, which are non-market-based approaches, which is in there at the assistance of countries that don’t believe in market based mechanisms. I wanted to have a note in there. So that’s the story about over a beer. The important ones are really 6-2 and 6-4.

Mike Toffel:

Great, so what’s the recent. What happened in Baku? Because these paragraphs were in from the beginning, or are these paragraphs new? Yeah, okay.

Alexia Kelly:

Those are the original paragraphs. And then what we needed to do was write all the rules for how you did that because 6.4 just says we’re establishing this body. And then you had to go out and write all of the what we call modalities and procedures, all of the rules for how the body was going to work, who was going to sit on the body, how many times was it going to meet, who was going to be responsible for making the decisions, what were the criteria that you’re using to make the decisions, like all of that had to be written up. And that ended up taking 10 years.

So, they worked for the last nine years. So, what happened in Baku that’s so significant is that we finally agreed to the rule set. So that means that in the next year or so, we should start to see credit flowing through this UN system as methodologies get approved and as projects and pipelines start to come in. So that’s net-net a great thing because it hopefully means that we’ll get that money going again into mitigation globally.

But we’re going to need to watch it as well because the thing I personally don’t like about the Paris Agreement is that it is normative, and it is largely voluntary, and it doesn’t have as much oversight as I would like of stuff that’s happening in different parts of the world. We rely very heavily on transparency. So, it’s going to be important for civil society and others to keep an eye particularly on 6-2 and these bilateral agreements that countries are writing because here you have two parties that are both interested in potentially inflating baselines or creating credits because it’s going to make it cheaper and easier for them to meet their international commitments.

So that’s a place where I think folks are going to need to keep a close watch and that we’re certainly watching closely, and we’ll be seeking to advocate. I think it’s also a place where the ICVCM is going to help a lot because we are becoming truly a global benchmark for both voluntary and systems about what right looks like and what good looks like. So, making sure that we push the whole world towards that threshold is going to be incredibly important in the next few years.

Mike Toffel:

Yeah, a very interesting enmeshing of the voluntary institutions and the compliance markets that are emerging. OK, so before I let you go, let me ask you the same question I ask all of our guests before I let them go, which is advice. So, for folks who are listening to this podcast, some might be interested in learning more, maybe thinking about career opportunities in the voluntary carbon markets or maybe now in the compliance carbon markets, now that there’s some interesting evolution going on – What advice do you have for them as far as podcasts or conferences or websites or newsletters, whatever it might be?

Alexia Kelly:

Yeah, but well, before I give you my quick list, I will say I really encourage people to go work in government. Go work in government. You learn a tremendous amount. Our civil society and government institutions are really fragile right now. And whether it’s the local level, the federal level, we need good people filling those jobs. And so, it is the best way to develop your career I can possibly imagine. And its’ incredibly important work for keeping the fabric of our society knit together. If you want to get more involved in carbon markets, there’s lots of good resources out there. So, there’s the Navigating the American Carbon World Conference that happens every year in Los Angeles in March.

That’s hosted by the Climate Action Reserve and the International Emissions Trading Association. The International Emissions Trading Association is an industry association that is basically the carbon market. And they host a number of conferences as well that are quite good. Then if you can, go to a COP or go to the UN because that is where a lot of these conversations end up happening. So that’s a really excellent place to learn more as well.

Mike Toffel:

Great. Terrific. And you’re launching a podcast?

Alexia Kelly:

I am launching a podcast, yep, just in the next couple of months. It’ll be called Navigating Net Zero and we’ll cover both corporate decarbonization perspectives as well as really dig into some of these meaty issues that you did such a great job raising here today, Mike, in terms of how does the carbon market work, what’s happening, where is it going, and how do I stay abreast of the rapidly moving and evolving spaces.

Mike Toffel:

Well, I look forward to subscribing once that’s launched. It was a wonderful conversation, Alex. Very wide-ranging and I’ve learned a lot. So, thank you so much.

Alexia Kelly:

Thanks so much and thanks so much for having me today. This is great.

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