A ‘clear’ path to decarbonization
By Nick Van Osdol
I had the opportunity to ping over some q’s to Lincoln Payton, CEO of Cleartrace. Cleartrace announced a $20M strategic equity raise this week to expand its emissions tracking & traceability platform.
Carbon accounting is a broad term covering many software and hardware businesses and it’s a space that’s receiving a ton of attention of late. That’s why I thought taking a look under the hood of a company like Cleartrace would be a fruitful way to spend time.
Who are your competitors in the space, and what sets Cleartrace apart definitively from them?
“Cleartrace focuses on providing a single source of energy and carbon truth based on streaming data – primarily hourly data – drawn directly from its sources and fed into our granular carbon footprinting calculations. That’s in comparison to many competitors who still use spreadsheet-based approaches and rely on monthly or annual averages.
Further, we utilize blockchain technology to create an immutable ledger, minimizing data corruption risks or an incomplete data warehouse and providing permissions-accessible audit trails so companies can truly prove their impact. As data requirements increase for ESG reporting, we believe carbon emissions data will only be suitable for use by the world’s largest financial institutions if it is traceable, verifiable, and immutable.”
Where do you see the majority of demand coming – from energy providers who want to advertise the decarbonization benefits of their offerings or buyers who have objectives to meet?
“Demand is coming from the bottom-up – energy buyers need verifiable proof of their decarbonization achievements, and they are putting pressure on suppliers. Carbon-free energy (CFE) suppliers can also differentiate their offerings by providing measurements that their buyers need for their greenhouse gas disclosures.
The root of the question is why we are seeing success and traction. Companies are looking for solutions to bridge the gap between energy markets and corporate ESG needs. Cleartrace’s ability to drive enhanced connectivity between these two markets unlocks the ability for energy suppliers to upsell their clean energy offerings.”
At present, data centers, buildings, and the like look like modal customers for you. What other types of customers do you hope to support in the future?
“We’re starting to see more interest from companies who are trying to navigate the complexities of meeting their net-zero commitments, particularly when they have an opportunity to reduce their Scope 2 emissions through both onsite and offsite procured energy.
The reality is that any company dealing with decarbonization pressure needs our solution. Reputational and regulatory pressure is growing spurring companies to set bold goals, to, in essence, ‘show their work.’ As a result, they increasingly need to take a data-first approach.
Today, these pressures are driving greater traction for solutions like ours in commercial real estate, Big Tech (e.g. data centers, cloud computing, crypto mining), and heavy industries such as steel, chemicals, pharmaceuticals, glass, cement, and more.”
How do you plan to attract and expand to new customer sets?
“Cleartrace’s go-to-market strategy has unlocked significant network effects. For example, we may bring on a single commercial real estate customer, but that customer has many corporate tenants occupying their buildings who have ESG or sustainability goals and are also seeking this type of solution. As owners of single buildings or entire portfolios join our platform, their tenants will get onboarded to the service, sharing the visibility and value with their tenants’ ESG or sustainability teams. The same principle applies to co-located data center providers.
Similarly, we see the need for the Cleartrace solution to move up and down supply chains so companies can get a complete picture from origination to ultimate consumption.”
From your vantage point, what’s the state of the renewable energy market in the U.S. heating up? Dampened by things like what we saw earlier this year with solar developers unable to source the parts they needed from overseas? What are other key challenges?
“The U.S. renewable energy market has been on an incredible run over the last few years, and we’re living through the energy transition. Supply chain challenges and market complexities such as tariffs are impeding development speed. However, the continued climate impacts we see – for example, more extreme weather, changing seasonal load patterns, and reduced water availability to serve power plants – will continue to add momentum to carbon-free generation, new renewable project development, and broader electrification efforts.
As with any large-scale transition, there will be speed bumps, but the need for accelerated decarbonization efforts and improved data to stand behind claims will only grow.”