Interview with Clémentine Serey of emissions tracking firm Kayrros

As corporations, financial institutions and governments begin to realise they are sitting on a big uncovered short position on carbon, demand for data and analytics that helps them manage that carbon risk (and take advantage of any opportunities in carbon markets) is growing fast.

I recently had the pleasure to talk to Clémentine Serey, Product Manager at Kayrros about how their company is revolutionising carbon markets by analysing satellite information and delivering real time emissions data.

Their data (shown in the chart below) indicates that EU ETS carbon emissions spent most of the year well below 2022 levels, and indeed even recently they were significantly below 2020 levels. However, over the past few weeks Kayrros data suggests that carbon emissions from EU ETS covered emitters have rebounded strongly to levels more inline with December 2022.

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1. Could you begin by introducing Kayrros.

Kayrros is a digital MRV and environmental intelligence company. We use AI to process tens of terabytes of satellite imagery and other raw data every day to generate standardized datasets and insights for three main purposes: to slow down climate change and to manage climate and transition risks. We support the first of these goals by monitoring greenhouse gas emissions, including both positive methane and CO2 emissions as well as natural carbon sinks like forestry. For the second mission, we help our customers protect themselves and their assets by tracking their exposure to wildfire and flooding risks. We help manage the energy transition by bringing transparency on the pace of deployment of renewables and by monitoring fossil-fuel supply chains. Instead of investing in our own expensive hardware, we prefer to build super-sophisticated algorithms to analyse public satellite imagery. This allows us to extract troves of precise, actionable information from these underlying data, while keeping our imagery costs down.

2. How long has Kayrros been monitoring EU ETS emissions, and what was the motivation behind it?

Kayrros started monitoring EU ETS emissions in 2022 to help EU and UK carbon traders up their game by getting more visibility on underlying trends in demand for allowances. We realised that there was a real lack of reliable and timely public data on carbon emissions, and that carbon markets would never reach the desired volumes and efficiency as long as that remained the case. We understood that satellites could help monitor demand for allowances with an accuracy, frequency, and granularity that no other methodology can provide. Making carbon markets more efficient will also help send industry participants the right signals and give them the right incentives to decarbonise the economy faster.

3. Could you outline how Kayrros begins to monitor and estimate emissions? Are there any differences in approach between power generation and industrial emissions for example?

We use a combination of public data, geolocation signals and satellite imagery. The first step consists in gathering activity data for each of the sectors covered in the ETS market. Each sector is monitored with a different approach, depending on its specificity. For power generation, publicly available data provide a good starting point. Not so for the industrial sector, which is far more difficult to track. That’s where earth observation technologies come into play. We measure industrial emissions by using satellite imagery to detect activity at the plant level. Finally, we use transponder data to assess transportation activity from ships and planes. These measurements are refreshed weekly, a much higher frequency than can be achieved through any official source. The second step is to convert this activity data into emissions. This is possible thanks to a methodology that we have jointly developed with three academic research centres, called Carbon Monitor.

4. What proportion of EU ETS obligated emitters does Kayrros monitor? For example, some estimates suggest that 30 companies were responsible for more than half of EU ETS emissions in 2022.

We track 100% of the EU ETS scope, but don't provide the data at the company or asset levels. Our products provide aggregated data.

5. Has the accuracy improved over time, and do you foresee further improvements? I think I’m correct in saying that your estimate of total EU ETS verified emissions was 98.43% accurate in 2022.

You are correct! The accuracy can improve even further over time, but the levels reached are already really high. In coming months, we will work on improving the level of granularity (sub-sector or company/asset level data) that we provide in the industrial sector.

6. The maritime sector will be included in the EU ETS from 2024. Will you be covering obligated emissions by shipping activity in the EU/EEA area from next year? Is the shipping sector – perhaps like aviation – a more challenging sector to monitor and estimate emissions?

We already started covering maritime emissions to give our users a preview of the sector's emissions going back all the way to 2016. I would not say that the shipping and aviation sectors are more challenging to track (Industrial activity is the most challenging one!), the approaches we use to monitor the emissions of these sectors are actually quite similar, as we use geolocation data from both vessels and planes.

7. Do you use a similar methodology for the Californian carbon market? If not, could you expand on the difference? I know transport plays a role in CCA demand that is missing from the EU ETS.

The core principles of the methodology remain the same for tracking emissions in California: we first detect activity levels in each sector and then convert that information into emissions. You are right that transportation accounts for a much larger share of regulated emissions in California than in the EU, with road transportation, which is not included in the EU, making up roughly half of covered California emissions. For this sector, we have a similar approach to the one we have for the maritime and aviation categories in the EU market.

8. Do you have any plans to focus on other compliance carbon markets? The UK, China, or Australia perhaps.

The UK market is already tracked as part of our Carbon Watch product. We plan to expand to other US markets after California, and of course all Asian markets are on our list as well.

9. Who is your target customer base for the emissions data? I presume that utilities, energy trading companies, and hedge funds have a big interest.

Yes indeed, our customers are energy trading companies, hedge funds and utilities.

10. What emissions data do you offer to firms that sign up? How much detail can they view and how often is it updated?

Our users have access to daily updates of carbon emissions in Europe, at the country level and more important at the sector / sub sector level. There are several ways of getting the data: they can use the Kayrros Portal, updated daily, for a high level view of emissions level with charts and tables. They can also use our API to programmatically access our daily emissions data. Finally, they receive on a weekly basis a newsletter presenting the latest trends and a quick analysis.

11. How should my subscribers find out more if they think your service could be of use?

They can reach out to us via the Kayrros website. We will be happy to meet them and present our product and offer a short trial if they find it interesting!