Founded in March 2022, Climacash described their business idea as bringing together two parties: ordinary people who lack motivation to be eco-friendly because it is too expensive, and responsible businesses who are not yet able to be completely climate neutral.

However, the company, which is owned by former journalist Erik Moora, IT expert Linnar Viik and OECD lead analyst Klas Klaas, has now decided to stop offering companies carbon credits as a way to offset their emissions.

"It means we have ended the scheme for which we made the initial web application and piloted with a small number of users," Moora explained to ERR.

There are several reasons for the decision, Moora said. One them was that trading carbon credits for cash, also known as offsets, is a questionable approach to solving climate and environmental issues.

"It's a big global market, it makes perfect sense, especially in the distant future. However, in practice, the vast majority of carbon credits on offer there have proven to be environmentally worthless. This is the case even when they are guaranteed by reputable verifiers. This has unfortunately been shown by a number of studies carried out in recent years," said Moora.

In addition, he says, it is not sensible for companies in Estonia, or in other countries, to engage in buying carbon credits for the time being. The most important first step to take first is for companies to do everything possible to actually reduce their carbon footprints.

"There are a wide range of opportunities to do this, of which companies are often not even aware. The first thing to do is to take steps one, two and three. That is, to minimize your caron footprint by measuring, assessing, reporting, setting ambitious targets and making sustainability part of your management system. And only then, when everything possible has been done, are able to talk about the 'final mile,' of funding for well-chosen initiatives that actually benefit the environment," explained Moora.

The third reason why Climacash abandoned its original business plan, according to Moora, was that carbon credits are only worth something if the environmentally friendly activities they finance are additional. In other words, the environmentally friendly actions would not have been implemented if no specific money for offsetting carbon emissions was available.

However, there is a very rapid revolution going on around the world, whereby clean technologies, practices and principles are being implemented very quickly without any carbon credits.

"In a situation like this, it is increasingly difficult to argue that a concrete environmentally friendly solution would not have been found otherwise," said Moora. "Consumer expectations, the superiority and economic viability of green technologies, and the concerns of companies and people for their future will do the job. Carbon trading may be environmentally justified in a few rare cases, but mostly it's not."

Moora said that those involved in the company continue to believe in the need to make it as easy and cost-effective as possible for everyone to act in an environmentally responsible way. In the future, they want to develop projects whereby companies, institutions and organizations can measure their environmental footprint with their employees and customers as well as work with their communities to reduce it. However, they will not do this by trading carbon.

Most of the support not used

In March last year, the Enterprise and Innovation Foundation (EISA) decided to support Climacash with €113,000 in funding. EISA communications specialist Egert Puhm, said €7,420 had been paid out to the company.

"We are currently communicating with the company about the completion of the project and the extent of the recovery will be clarified in the course of that procedure," said Puhm.

According to Moora, the company wanted to use the €113,000 they had applied for to build up their platform and conduct market testing, but decided not to use all the money allocated at an early stage of the project.

"We have used a small part of it, €7,700, which was allocated for the development of a test version. We have taken into account the need to repay this part if necessary and have already informed the EAS about this," he said.

Climacash has not raised money from outside investors, according to Moora. However, they have conducted market research on the subject, which found that since Russia's full-scale invasion of Ukraine began, and due to higher interest rates, funding startups has become much more difficult than before. In fact, the company has not seriously sought funding up to now, but has instead financed its operations in the old-fashioned way, via the founders' own resources.

Moora said the reason for establishing Climacheck was that, after talking to many companies, it became clear that they first needed an accurate picture of what their environmental impact actually is and what could be done to really reduce it.

"It also became clear that the ever-increasing burden on companies to measure, report and audit their environmental impact, and the carbon footprint during the life cycle of their products and goods, is a serious and complex challenge. So we set up Climacheck, a consultancy company to help Estonian companies cope with this challenge," said Moora.

Keit Kasemets, the current undersecretary at the Ministry of Climate, was one of the founders of Climacash. However, after becoming undersecretary, he withdrew his stake to avoid a conflict of interest.

According to the company's 2022 annual report, Climacash had a turnover of €21,013 in its first year of operation and made a profit of €2,702.

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