Why Carbon Credit Project Developers Must Embrace a Digital Transformation
The world’s carbon markets are critical trading systems that put prices on carbon and are essential in helping to achieve the goals of the 2015 Paris Climate Agreement, which calls for net-zero emissions by 2050 and for keeping global temperatures to no more than 1.5°C above pre-industrial levels. But for the carbon markets to scale to the size needed to meet global sustainability and climate goals, it’s crucial for carbon credit project developers to operate in efficient and innovative ways. That means relying on spreadsheets for inventory management, manually creating project proposals, and painstakingly inputting customer data are no longer viable strategies. Early investment in digital solutions is key for streamlining operations and ensuring long-term success.
Within the last decade, companies across industries have experienced digital transformations that have supercharged their efficiency and productivity, fundamentally reshaping how they operate, innovate, and scale. At the same time, the voluntary carbon market is poised for growth and on track to hit between $34 billion and $1.1 trillion by 2050, according to Bloomberg New Energy Finance. For this up-and-coming market to achieve its full potential, it will need to undergo the same digital transformation that more mature sectors experienced. By embracing innovation and harnessing digital tools as early as possible, carbon credit project developers can improve operational efficiencies, make data-driven decisions, scale their impact, and grow revenue, ensuring the voluntary carbon market reaches its full promise in driving climate action.
The urgency of digital transformation in the carbon markets
The amount of data project developers generate, need, and use is growing exponentially, fostering greater demand for high-capacity technology solutions. For example, a project developer may frequently analyze a mangrove restoration project’s carbon capture rates or look at carbon market demand insights to adjust its credit issuances, fostering the need for digital platforms that support high data bandwidth.
At the same time, technology to streamline internal processes is rapidly advancing, making it the perfect time for project developers to begin using digital tools to optimize their operations, scale their project, and enhance their impact in the carbon markets.
While carbon credit project developers excel in deploying innovative technologies for measuring and capturing carbon, their back-office operations can sometimes lag behind. By improving their workflows through automation and advanced digital solutions, developers can reduce their reliance on manual tools, like Excel spreadsheets or basic cloud storage systems, minimizing errors and freeing up their time for high-value tasks. ”Spreadsheets may initially sound helpful because they’re free, but they’re not scalable and have a large scope for errors,” says J.D. Crabtree, Vice-President of Growth and Marketing at Cloverly. “When project developers take a manual process from 20 hours to one or two, they can shift their focus from credit management, sales, and marketing to the things that got them into the business in the first place — scaling their technology and expanding their projects.”
Digital transformation lessons from other areas and sectors
Over the past decade, digital transformations have driven significant progress and growth for businesses in more mature areas of sustainability — such as monitoring, reporting, and verification (MRV) or supply chain emissions reporting — and industries, like energy, financial services, or healthcare. Within the banking sector in particular, digital transformation leaders grew their active customer base by 0.5% and their retail revenues by 0.8% between 2018 and 2022, according to a Harvard Business Review analysis. On the opposite end, those lagging on a digital transformation saw their active customer base flatline and a decline in retail revenues, proving that embracing technology is key for companies’ long-term growth and success.
The voluntary carbon market is expected to balloon in the next decade, making it ripe for a similar digital evolution. To improve operational efficiencies, make data-driven decisions, scale their impact, and grow revenue, carbon credit project developers can learn from lessons from the past to adopt new and innovative technologies.
If you look at industries like energy, finance, or healthcare, they’ve undergone significant digital transformations over the last decade. By adopting technology solutions, they’ve improved efficiency, scaled operations, and enhanced transparency. The voluntary carbon market has a huge opportunity to draw from these lessons and adopt similar tools to streamline their operations, reduce manual work, and build trust with buyers and regulators.
Lessons from monitoring, reporting, and verification
Carbon credit project developers are likely familiar with the digitization of the monitoring, reporting, and verification (MRV) of projects. And while this digital transformation may be relatively new, it’s already having measurable impacts that are helping to usher in a new era of the voluntary carbon market, providing valuable lessons for developers when it comes to their internal operations, credit management, and sales processes.
Pre-digital transformation
Prior to adopting digital MRV tools, developers were expected to manually record and monitor data — such as electricity or fuel consumption — from different entities through paper receipts, Excel spreadsheets, or other physical methods. This process was time-consuming, typically involved multiple people, and was prone to human errors. Reporting also required manual analysis and the creation of greenhouse gas (GHG) emissions reports that needed to be physically reviewed and sometimes required follow–ups on incomplete or incorrect data. At the same time, verification involved a manual audit of GHG reports and was heavily reliant on physical documents that could get lost or damaged, making the process expensive and inefficient.
Embracing digital tools
To streamline the MRV process, many project developers invested in digital technologies to improve data collection, analysis, and quality control. Some of these technologies included smart sensors, cloud computing software, artificial intelligence and internet of things (IoT) devices, blockchain encryption, and satellites and drones. All these tools could be applied to the three types of MRV — emissions, mitigation actions, and support, says a 2022 World Bank report.
Results
Digital tools revolutionized traditional MRV processes by enabling a near-real-time analysis of data through smart meters, equipment sensors, and linked billing systems. This reduced the amount of resources needed for data collection and helped developers avoid discrepancies. Automatic notifications could also flag potential issues to developers, minimizing disruptions caused by data gaps, while reporting became more efficient with digital tools automatically generating GHG emissions reports. Verification also shifted to remote processes by leveraging dedicated user profiles for certifiers, making the process both cheaper and faster.
Energy sector
The global energy sector is undergoing a massive digital transformation and is already seeing its benefits. This transition has been heavily supported by the International Energy Agency, an intergovernmental energy organization, which has emphasized the importance of a digital transformation when it comes to improving efficiency, integrating renewable energy, and reducing GHG emissions. While changes are still ongoing, the industry’s digital evolution can act as a blueprint for carbon credit project developers looking to streamline their operations through technology
Pre-digital transformation
Historically, the energy sector has relied on manual processes and legacy infrastructure that is incompatible with new technologies. This led to limited real-time insights and inefficiencies, which resulted in inflexible energy systems and often delayed responses to fluctuating energy demands. Prior to implementing digital tools, many energy companies also had siloed operations, poor data, and minimal integration between generation, distribution, and consumption data. This ultimately caused slow decision-making and poor resource utilization, undermining the sector’s ability to effectively respond to customer needs.
Embracing digital transformation
Many energy companies are embracing digitization to improve energy management, streamline complex tasks, and enhance interconnectivity between systems. For example, some organizations are using smart meters to track energy generation and emissions, while others are using AI load balancing to address changes in energy demand. Smart grids — networks that use technologies, sensors, and software to match electricity supply and demand — have also emerged as solutions to support the energy sector’s growth and transition.
Results
The energy sector’s digital transformation has led to cost savings, as well as significant improvements in operational efficiencies and sustainability outcomes. Automated systems and predictive analytics allow utilities to manage energy distribution more effectively, integrate renewable resources more easily, and respond to demand changes faster. Smart grids and IoT devices have also enhanced fault detection, reduced downtime, and increased system reliability, while AI-based tools have optimized energy usage and maintenance schedules. All these advancements are not only supporting the sector’s transition to a low-carbon future — they’ve improved customer experiences by providing greater transparency and control over energy consumption.
How carbon credit project developers can begin their digital transformation
Similar to other industries that have scaled through technology, carbon credit project developers will need to undergo a digital transformation to help the carbon markets reach their full potential. But while digitization is needed to grow and maintain competitiveness, the process of adopting in-house technologies is not without its hurdles, requiring careful planning, internal leadership consensus, investment in the right tools, and effective change management.
- Analyze goals and ambitions
Carbon credit project developers looking to catalyze a digital transformation should start by defining their organization’s vision on what this transition could look like. This often includes assessing their organization’s desired outcomes — whether it’s to enhance productivity, scale their carbon credit project, or build trust with buyers and regulators. Developers should also ensure their goals are measurable, realistic, and tied to both quick wins and long-term success to be able to achieve momentum.
- Assess operations
Keeping their digital transformation goals top-of-mind, project developers should assess their current operations, identifying any gaps and inefficiencies that could be addressed through technology. This requires an honest look at what’s working and what isn’t.
“The operations problems that make you pull your hair out are where digital tools can drive the biggest transformation and help you operate efficiently as you innovate,” Crabtree says.
- Invest in the proper service providers
Once project developers have identified their operational gaps, they should research service providers that specialize in solutions tailored to the carbon markets. That’s because the right digital tools and platforms are essential to streamlining operations and effectively scaling. When developers understand all the technology options available, they should invest in ones that are scalable, user-friendly, integrate well with existing systems, and can adapt as a project grows.
- Support change management
Implementing new technologies isn’t just about using innovative digital tools — it’s about ensuring a project developer’s staff are prepared for the transition. To do this, developers should prioritize change management by involving employees early, providing training, and fostering open communication. By openly highlighting how digital tools will reduce workloads, improve efficiency, and align with their mission, developers can create a digital-first culture that drives successful technological adoption and innovation.
How carbon credit project developers will benefit from a digital transformation
Carbon credit project developers that adopt a digital transformation stand to experience a host of advantages — including streamlined operations and the abilities to make data-driven decisions, scale their project’s impact, and grow revenue. By expanding their projects, developers can contribute to the success of the carbon markets, helping the voluntary carbon market achieve its full potential.
- Improve operational efficiencies
A digital transformation allows carbon credit project developers to streamline their operations and eliminate inefficiencies that have been caused by outdated, manual processes. Automated tools and integrated platforms reduce the amount of time spent on tedious tasks — like carbon credit inventory tracking, manual reporting, pricing updates, proposal creation, and customer data management. By simplifying workflows, developers can focus on scaling their projects, building trust with buyers, and growing in the carbon markets. This has been shown in other industries that have embraced digital transformations. According to a 2023 survey from KPMG, 56% of US companies reported improved efficiency and cost-cutting, while 57% said they saw increased employee productivity due to digital transformation investments.
- Make data-driven decisions
Advanced digital tools provide developers with real-time insights and analytics, empowering them to make informed decisions based on accurate and actionable data. By leveraging technology, developers can easily manage their carbon credit inventory and operations, drive sales enablement, and rely on an information hub with accurate data that integrates with their other systems. “When project developers can shift their time from managing manual processes to analyzing data and making strategic decisions, that’s when they unlock their real potential,” Crabtree says. “By making informed decisions, developers will be able to scale and win in the carbon markets.”
- Scale project impact
Digital solutions equip developers with the tools they need to expand their projects efficiently and effectively. Whether scaling across new geographies or increasing a project’s capacity, digital platforms ensure operations remain consistent and reliable. Automation and having access to accurate data and insights also makes it easier to focus on what’s important in the business as operations grow. This has been demonstrated in many other sectors that have experienced a digital transition. The same KPMG survey found 56% of US businesses that invested in digital transformations were able to support new business development, while 55% reported increased innovation enablement.
- Grow revenue
By improving efficiency and scalability, a digital transformation positions project developers to capture core market opportunities and boost their bottom lines. Streamlined workflows and enhanced data accuracy allows developers to reduce overhead costs, optimize the pricing of their credits, and increase buyer confidence. “Adopting digital tools isn’t just about working smarter — it’s about creating systems that make your business more profitable and sustainable in the long run,” says Crabtree. Accelerating a project’s revenue ultimately drives growth in the carbon markets, allowing the voluntary carbon market to achieve its full potential in driving climate action and meeting global net-zero targets.
Embrace a digital transformation with Cloverly
Cloverly’s purpose-built software helps project developers kickstart a digital transformation within their organizations. Our solution helps you scale your projects by simplifying carbon credit management, enabling omni-channel sales distribution, and acting as a single source of truth for buyer interactions. Talk to our team to learn how to optimize your operations for sustained success.
