Green Entrepreneurs Assemble—The newsletter for green entrepreneurs and professionals.

A rising tide lifts all boats 🙂 

Hi, I am Akhoy, all the way from North-eastern India.

I put in 100s of hours every month to reach out and interview business people around the world, who are working towards creating a more sustainable future for the planet. Some of them are just starting, while others are generating millions in revenue. There are invaluable lessons you can learn from people at different stages of growing green businesses.

I live in a biodiversity hotspot myself that is undergoing rapid urbanization and deforestation (these two are BFF, to be honest). My childhood 👶 involved watching a bunch of green hills go bald. 

I understand the importance of successfully monetizing activities that are meant to protect the earth’s ecosystems.

Interestingly, there is very little first-hand content online on green entrepreneurship, which is why I decided to create this newsletter.

Podcasts demand a good deal of time to listen to, but the written format is easier to consume. I have also highlighted important words and phrases to make each interview a quick read.

Without further ado, let’s welcome today’s green hero—

Table of Contents

1. Tim's Backstory

2. Business Model

3. Metrics of Restoring Ecosystems

4. How to Benefit Locals

5. Risks

6. Balancing Economic Growth with Nature Preservation

7. Future Plans

8. Collaborate with Tim

9. 🟢“1 Minute Summary” of the Interview

(Note: I have preserved Tim’s voice but made some light edits for readability)

🟢Could you please tell me your backstory and how you founded Operation Wallacea and rePLANET?

I started doing a zoology degree, and I realized that I didn't like laboratory work and really just liked to work in the field. So, I went down a sort of whole organism ecology route and ended up as a fisheries and conservation scientist working for the government.

And then after that, I established the Institute of Environmental Management and Assessment. That was an organization to drive up standards in environmental auditing and environmental impact assessment.

And after that, I left it and set up Operation Wallacea. The reason behind that was because I wasn't enjoying doing it. It was a lot of office work at the institute in the end.

What I wanted to do was to get back to being a field biologist. So, I set up a project, initially with help from the Hong Kong and Shanghai Bank in Singapore.

The idea behind it was to map the biodiversity in some of these areas that were being lost before we had the chance to even survey just to find out what was there. So, the bank agreed to help fund the project for the first couple of years, and then it had to stand on its own feet.

So, I ran that for 25 years. It was fantastic. I ended up going all over the world. Essentially, what you have to do when you're running these sorts of biodiversity research expeditions is you have to be able to go into remote parts of the world and work with local communities and partners and make things actually work on the ground.

So, when we came to the pandemic, it was a bit of a problem. Because running expeditions in the middle of the pandemic was impossible. So, at that point, we were thinking, what are our skills? What can we actually do?

And one of the things we could do was you could send us virtually anywhere in the world and we could set up a project that would actually work on the ground. And I thought, well, okay, that's interesting, but who the hell's going to pay for that? Because I can't see it to be very much of a skill, really.

We started using some of the time in the pandemic to start drafting the sort of work on how you quantify a unit of biodiversity gain. And then we got funding for RePLANET to start. That was concentrated on developing ecosystem and restoration projects in really remote locations.

By chance, the very skills we'd learned all those years of running expeditions in remote locations were exactly what you needed to get these projects to work on the ground.

In any career, there's a large degree of chance. But my advice to people that are starting out is if you're interested in something, try and think of a way in which you can monetize it, in which you can your career can actually be what you like to do anyway because that makes a huge difference to the satisfaction levels.

Things have changed enormously. When I was an ecologist starting out, you know, I didn't expect to get rich. I expected and hoped to have a very interesting career. And in both of those, it turned out to be correct. But now things have changed.

There's a massive demand for people who've got field ecology skills. The amount of money that's now looking to be invested in helping restore ecosystems is huge, and it needs field ecologists.

It needs people that can do this sort of work. So, I would go and give a lecture to students that you're the first-generation as ecologists that actually have some pretty exciting career prospects ahead of you.

You should make money. You're not going to make as much money as a lawyer but you are, for once, not going to be bottom of the pile. You should be up there competing with the economists.

🟢From what I understand, you restore ecosystems and create carbon credits, and then you sell the carbon credits and that's how you generate revenue for your business. Am I correct?

Almost. What we do is we put together projects, and they usually have a fair size. So, you're talking about at least a million carbon credits that come out of them. They'd be selling at around anywhere between $9 and $15 each. But what we don't do is fund the project ourselves and then sell the credits. We forward fund it. 

So, we go to investors for funds. We’ll then provide the funding to start the project off. Let's say it's $4 million to start the project off to get to the state where you can have your first issuance of carbon credits. And at that point, the carbon credits have sold, the first batch of those credits is used to fund the next stage of the project up until your next issuance of credits.

And then after that, the communities get 60% of the funding. So, they get the next slice, as it were. And then finally, the investor gets their slice of it. So, it means that 60% of the benefit is going to local stakeholders, owners, users, managers and members of those communities in developing countries.

It also means that the investor is getting their money back, depending on the project.

Five to seven years after putting in the funding, they have their money back again. They make an internal rate of return of around, you know, 12 to 15%. So, what it's doing is allowing straightforward commercial investment to go into ecosystem restoration. It's become an attractive investment proposition, and that's what we're trying to make it.

We're trying to get the private sector markets to start scaling up and start pouring money into fixing ecosystems. And this way, there's actually a way in which they could make money from it.

So, that's what's made the big change. We currently have 23 projects available. We have 11 of which we're going through due diligence and we’re closing or finalizing deals with different investment funds.

And I don't think we'll have too much problem selling the rest. It's just there's only so many hours a day you can do this. It takes time to develop all of these links for the different funds. But we now established ourselves in the market as providing a high-quality product and able to manage projects, which we were never in doubt on, to be honest.

I mean, the bit we thought would be hard was how on Earth do you put together a project and sell it? Now we've learned that bit. We're now into the delivery stage, and that's the bit we're least about because that's effectively what we've been doing with Operation Wallacea here for many years. You know, setting up these big operations in different parts of the world and making them work.

🟢After you restore an ecosystem, at what point do you decide that, yes, the ecosystem has been restored? Are there any metrics?

Yes. When we're doing a restoration, we're not just quantifying the carbon, we're quantifying the biodiversity as well. So, the biodiversity is done through a basket of metrics. You know, a structural metric such as habitat value, but also lots of faunal and floral metrics.

You have at least four of those. You can have more, but at least four. But together, if you look at them, they would say, "Okay, you've got a coral reef here, and we're protecting it."

If you sent a marine biologist a few years after you started on the project of protecting it, they would say, "Okay, well, this reef is a lot better now." Well, if they're making that sort of general claim, what are the metrics they're using for making that decision?

It would probably be things like rugosity, how many nooks and crannies and holes there are in it. It would be coral cover, abundance of herbivorous and piscivorous fish species, total biomass and species richness of commercially exploited invertebrates, things like octopus and squid and so forth.

So, if all of those metrics had improved over time, you'd say that reef is better. And what you can now do is quantify how much better it was. It depends on the state of the ecosystem. But things will start getting better on all the metrics.

And then eventually, they'll get to a plateau. I suppose that's the point that you can say that your ecosystem is being fully restored. But that can take 20 to 400 years depending on the habitat that you see.

🟢The places where you do the restoration work, are they privately owned or are they government-owned?

They're nearly all privately owned.

I have to say one of the biggest problems we've faced is dealing with governments, where governments have had land that they themselves own. It's been very difficult dealing with it because they're often trying to think through their own carbon and biodiversity laws, and they haven't got them.

So, they're nervous about making a decision. You know, why should they approve this? Are they being cheated somehow? They're just deeply suspicious and indecisive. It's much easier dealing with private landowners. And I don't necessarily mean the wealthiest estates. We're often talking about community-owned land in these developing or small-scale farmers. These are not wealthy people; they are living at a very impoverished level.

So, if we're talking about projects, for example, in Central America where we're looking at cattle farming areas, where the size of the farm is anywhere from a couple of hectares up to 200 hectares. But the amount of money that they are getting is abysmally low.

And what we can do is offer them a contract whereby we promise to restore 30% of their land forest, for which they get paid. They also get a bonus. But as part of the same deal, we offer to provide the funding to allow them to move into rotational grazing, which is where you confine the cattle to areas for a period of time and then move them to the next area.

And that actually allows you to hold more cattle per unit area than the normal extensive grazing. So, that means that it's more profitable for the farmers. So far, I've described three income streams for you.

They get more profits from the cattle, they get more cattle and therefore more profits from them. They get income from planting the trees and maintaining them, and they get income from harvesting some of the excess trees.

The fourth element to this is that we're trying to produce credits in our scheme. Let's say it's a reforestation scheme, and we'd produce it for around about $9. So, the issuer is getting those credits at that price. So, when the funder then gets those credits, what they then do is sell them because they then want to make a profit on that.

Now, if we're producing credits at $9 and 60% of that funding has gone to the local community, that's all working at that stage. But suppose now these guys sell those credits as soon as they get them for $18. And that's quite possible because of secondary prices. That means that the communities have only got 30% of the funding. So, what we do is we put a clause on all of our sales contracts.

So, 60% of the profits made on reselling those credits have to be paid back into a sustainable business and livelihood fund. So, 60% of all sales through that go into this fund. That's the fourth pot of gold, as it were, that's offered to the farmers. The point of this is the farmers can get significantly more money than they're currently getting from cattle grazing.

They end up with more cattle, they end up with 30% of the land forested, which is actually what many of them want anyway. I mean, there's a big call from farmers in that part of the region. They say, “Please can we reforest because everything's dying out, we need to start getting some of the wetness back again.”

And so all of that is a way in which the private sector markets can actually drive changes. The sort of changes that you want to see. And if you have the advantage of having the private sector do it, if you're not reliant on government grants (which are always finite), if an investor can see that there is a profit to be made in doing this (at a reasonable level), whilst at the same time ensuring the communities are getting 60% of the available funds— then effectively it's a business.

And it allows them to start seeing destroyed areas as areas in which they could invest and benefit local communities.

🟢What kind of risks are involved in the carbon credits industry? And if anyone is committing any malpractices, how do you identify that?

It’s a lot better than it used to be. It used to be full Wild West land, you know, the carbon worlds. But there've been so many charlatans and crooks in it that the buyers now are saying, “Look, we don't want these cheap carbon credits. We want something that's high quality.”

And high-quality means, first of all, no double counting. You'd be amazed how many credits are on the market now where they are being double counted. But we don't allow any projects where there's double counting. Secondly, it means quantifying the biodiversity benefit as well as the carbon benefit.

Now, that doesn't necessarily mean selling biodiversity credits as well, but what it does mean is making sure that when you are selling your credit, you know how much of a biodiversity uplift has been gained as a result of selling that carbon credit. And then the third thing is making sure that the local community is not cheated, they're getting the fair crack of the whip.

And that's those three things combined are basically what defines high quality. And that's where the market is moving to now. Everybody's terrified as a buyer of getting caught out buying really rubbish credits, you know, where you bought a credit that's got no additionality, you know, like a wind farm.

I always marvelled for years at how people managed to sell credits for those. Because the argument is if you buy a credit, that carbon dioxide would not have been saved or not emitted or sequestered anyway. Well, that's a nonsensical argument.

Renewable energy is a compulsory, legal part of the power mix now. There are considerable grants for that as well as extra payments. So the concept that carbon dioxide wouldn't have been emitted as a result of you buying those credits is nonsensical.

But they were being sold on the marketplace really cheaply. You could get them for a dollar apiece. And those are virtually disappearing very, very quickly. And there's been some others in the avoided loss market as well. But the area that we concentrate on, and many people are beginning to concentrate on now, is forget avoiding loss. So many assumptions in those.

They're looking for restoration-type projects. And that's restoring ecosystems.

The less assumptions, you can actually measure how much carbon has been accumulated. You're not estimating what's been lost. You can actually measure what's being sequestered over time.

And so they're much more secure. And that's how we see the market moving. And most of the corporates and investment funds we're dealing with are saying exactly that.

🟢So, I live in a biodiversity hotspot region myself. What are your thoughts on balancing development with the preservation of nature? Because the people living in remote areas also need more than facilities, and more often than not, that comes at the cost of destroying nature.

The best way, in the end, to ensure that the environment is properly managed is to make sure that everybody in the world has access to be able to grow their wealth. If I were a villager in a community and I was struggling to feed my family, I would have no hesitation to go hunting in order to feed them.

A key part of any environmental program has to be making sure that a large percentage of those benefits are going to the local communities. And I don't mean in cash payments. I'm not a big believer in that. I'm a big believer in giving people an opportunity, in other words, investment in small businesses. So that the funding that's coming in from these projects is making a massive difference.

Let's just take an example. Let's take Honduras. We had a project restoring 2,200 hectares of mangroves. The payments to the local communities from the baseline budgets were $113.8 million.

That’s how much they're making, but that's just the base budgets. Now, remember, those credits get to be sold. They're going to make something like $40 million at the end of that process. So, those are huge sums of money that have been transferred. They're enough to change education, housing, and health, and provide business opportunities.

And this is what we see that is so crucial. These projects are not just about restoring ecosystems. They are a significant wealth transfer to impoverished communities. And this is where I get upset about governments, by the way. Because in that case, would you believe the government stopped the project?

And they stopped the project on the basis that they wanted the money. The money had to go to the government. And the government would, of course, pay the community. Of course, they would. If you believe that, you might as well believe in unicorns and fairies!

And so, you know, no investor's going to say, “Yes, let's give the money to the government, because, of course, they do such a brilliant job doing this.” They'll want to make sure the communities get it. And that is one of the biggest problems in this ecosystem development world.

The government sees money going to communities, and they want it. Sometimes they just want a percentage in terms of tax. Sometimes they want all of it. And that's what's stopping those communities in Honduras from getting rich. No, their own government!

🟢So, what are your plans for the rest of the year for rePLANET?

Oh, lots of projects starting. So, we're starting projects in Colombia, Panama, Costa Rica. So, we should have 11 projects started by the middle of the year, August at the latest. And those are huge projects.

They're each about $12 million each project. And of course, with the multiplier effect, you know, that money is for the baseline budget for those communities. But of course, with the multiplier effect, you should at least double that.

And that money is going to communities to help them develop businesses. That is unless the government steps in and says, “Hang about. Let us have it.” So, hopefully, that doesn't happen.

But it shouldn't because in these cases, you're dealing with private landowners, communities, small farmers. They own the land. They, therefore, own the carbon rights. But say we keep away from government, I'm happy.

🟢If you would like any of our readers to help you and your company in anything, what would it be?

We work with lots and lots of different types of organizations. So, obviously, on the ground, you know, we don't directly run these projects. They have to be run by local NGOs, local community people. You know, if I turn up in Honduras and start trying to work with a community, they're not going to trust me because they don't know me.

You have to have a reliable community-based NGO that can actually deliver the projects. So, a lot of our interactions, with people around the world, are if they're members of these NGOs and can identify projects for which we could do.

But then on the other side of things, on the technical side of things, we're always looking for fantastic ideas that are coming out of the market to improve to speed up biodiversity monitoring, for example, or carbon monitoring.

I was at Davos just this last week, and I saw a couple of outstanding things. Stream Motion, a fantastic new startup that's looking at how cameras underwater can make a huge difference to monitoring reefs.

Then there's an organization that is renting out or almost donating gas exchange flux towers so you can measure the actual amount of carbon dioxide being sequestered on your land, and they take a share of the credits.

So those are really innovative ideas. And that's the sort of thing that the market needs.

Connect with Tim on Linkedin here: Tim Coles | LinkedIn

🟢“1 Minute Summary” of the Interview

• Background and Initiatives:

  Tim started with a zoology degree, pursued fieldwork, worked in fisheries and conservation, and founded Operation Wallacea and rePLANET.

• Purpose of Operation Wallacea:

  Initially funded by a bank, Operation Wallacea aimed to map biodiversity in threatened areas and engage local communities in conservation.

• Transition to rePLANET:

  Due to the pandemic limiting field expeditions, the team shifted focus to developing ecosystem restoration projects with RePLANET.

• Forward Funding Model:

  Instead of self-funding, projects are forward-funded by investors. Revenue is generated through the sale of carbon credits, with profits shared among stakeholders.

• Ecosystem Restoration Metrics:

  Restoration success is measured by biodiversity metrics, including habitat quality, species richness, and carbon sequestration rates.

• Private vs. Government Ownership:

  Projects primarily involve private landowners, as dealing with government-owned land poses challenges.

• Challenges in Carbon Credit Industry:

  Buyers seek high-quality credits with no double counting, quantified biodiversity benefits, and fair distribution of benefits to local communities.

• Balancing Development and Conservation:

  Tim sees wealth creation for local communities as crucial for sustainable environmental management.

• Future Plans:

  Tim is starting rePLANET projects in Colombia, Panama, and Costa Rica, focusing on community-driven business development. 11 projects, each $12 million.

• Collaboration Opportunities:

  Tim seeks partnerships with local NGOs for project implementation and innovative solutions for biodiversity and carbon monitoring.

The upcoming interview is with Carlo Charles, Co-founder of Flint. He is a young entrepreneur in his early twenties solving a BIG problem. As the demand for modern-day devices grows exponentially, so does the hunger for batteries— which often have a detrimental impact on the environment.

Thankfully, Carlo has a greener solution.