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#34 - SaaS Solution for Carbon Border Adjustment

#34 - SaaS Solution for Carbon Border Adjustment

Europe drops the CBAM bomb

Offshoring emissions is passing the buck. You produce the dirty stuff beyond your borders to maintain low CO2 emissions. Then, you import it while blaming others for their lack of climate awareness. Nasty but efficient

It is also true that environmental norms in emerging markets are often less restrictive. Coupled with cheaper labour, Western companies simply can't compete on price

This motivated the launch of the European Union Carbon Border Adjustment Mechanism (CBAM). Since October 2023, EU companies importing goods with high embedded emissions must complete a CBAM declaration and surrender corresponding CBAM certificates.

Countries and sectors most exposed to CBAM (S&P)

Regulatory Headache

No country can beat Europe when it comes to designing a terrific regulatory nightmare. The CBAM certainly keeps some CEOs up at night.

The UK also quickly built its homemade mechanism. The US and China criticised the initiative, for the sake of free trade (RIP WTO).

Emission Trading Schemes (ETS) around the globe will all eventually become CBAMs in some shape or form.

More than 200,000 companies will be concerned by the Carbon Border Adjustment Mechanism.

The Big 4 and other audit and consulting firms smelt money and quickly brushed up on a new set of services. Big data, big bucks.

But what if technology could crack it? Definitely an opportunity for a B2B SaaS.

Cbamboo, the "Bloomberg of CBAM"

Gabriel Rozenberg (CEO) and Daniel Sharp (CTO) met at Carbon13, the London-based climate tech accelerator. You could hardly think of a better duo to build this solution.

Cbamboo's software solution gained early traction and is already helping companies navigate CBAM requirements. The vision is to build the leading one-stop CBAM platform for trade compliance, tax, and sustainability teams.

Gab (left) and Dan (right)

I wondered if there was irony in seeing a post-Brexit UK-based company solving a European problem... and thought there was none. So I looked into it more carefully.

Cbamboo was raising a sub $1 million pre-seed at a very attractive valuation, with the round being led by the tier-1 climate VC Pale Blue Dot. Quickly oversubscribed, my friends' allocation got so small that they eventually pulled out.

I was seriously considering this investment, mainly because of the great co-founders, even though I'm not sure if this is a typical start-up play. Audit companies might very well dominate this new market very quickly. Time will tell.

Thank you for reading!
Colin Rebel
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