Corporate demand prompts request for proposals for 1 million carbon credits

A leading carbon accounting company is making a bold move in the carbon markets by signaling its intent to purchase 1 million credits. Watershed, which counts BlackRock, Walmart and General Mills as customers, said March 3 that it is inviting project developers to submit proposals, with a view to start contracting for credits at the end of June. The credits are required to meet customer demand over the next 18 months, company officials said.

Purchasing carbon credits to offset corporate emissions can be challenging, especially for small sustainability teams. Conducting due diligence on credit-generating projects, which can involve fields as disparate as forestry and industrial gases, is often time-consuming. Some buyers have also found themselves criticized in media coverage of flawed projects.

Watershed intends to smooth the process by purchasing credits that its team has vetted and selling them on to its customers. Watershed, along with rivals Persefoni and Salesforce-owned Net Zero Cloud, have offered related products for some time. This will be Watershed’s largest purchase, by volume, to date.

Focus on nature

The majority of the credits will likely involve nature-based solutions, such as regenerative agriculture and biochar. Engineered approaches, which include direct air capture, were not explicitly ruled out in the RFP. But the “urgent need” for companies to purchase credits will lead to a focus on nature-based options, which are more readily available, said Matt Konieczny, Watershed’s head of decarbonization. “Over time, we expect to increase the proportion of engineered solutions as availability increases.”

Whatever the credit type, Watershed will be under pressure to ensure purchasers that the credits they buy do not turn out to be flawed. Projects in two particularly controversial areas — grid-connected renewables and certain types of forest protection — will not be considered, said Konieczny. 

One input into the process will be Watershed’s scientific advisory board, which is chaired by Steve Davis, an earth scientist at Stanford University. Another quality gauge noted in the request is the recommendations of the Integrity Council for the Voluntary Carbon Market, an independent body that assesses methodologies followed by project developers. But Watershed will not consider the council’s findings definitive.

“We conduct our own due diligence on each project under consideration, not tied to any one methodology,” Konieczny said.