November 30, 2022

The financial agreements have had a reputation for misleading consumers. But entrepreneurs say technology can make them more transparent, flexible and efficient.
The decades-old business model is reemerging as a possible solution for customers who are feeling less flush.
With rising interest rates testing “buy now, pay later,” there’s an alternative way to break up a purchase into manageable payments: lease-to-own or rent-to-own agreements. As the fintech industry refocuses on customers who are feeling less flush, the decades-old business model is reemerging as a possible solution. It carries with it a somewhat unsavory history and potentially higher costs for consumers, making it a tricky business for fintech entrepreneurs and a complex investment for VCs to consider.
Lease-to-own or lease-purchase agreements are payment plans with additional fees, not loans. Under a lease-to-own agreement, a customer pays for a product in monthly lease payments, with some portion of the payment going toward owning the product. After a period of time, customers have the option to purchase in full or continue with their monthly payments until the end of the lease term. Profit is made through the fees customers pay: With many lease-to-own agreements, a customer who sticks with monthly payments through the full term will spend twice the cost of the product than if purchased outright.

Investors know that consumers like the idea of paying for purchases over time. According to a May study from PYMNTS, 10.2% of Millennials use “buy now, pay later” on a monthly basis. Data from LendingTree also published in May suggests that the market is growing, with one in three American consumers considering using a pay-later service.
But the “buy now, pay later” sector is facing headwinds, potentially opening up opportunities for a different approach. Consumers have less money to spend on big-ticket items, and rising interest rates are hiking the lending companies’ borrowing costs. That adds up to rising delinquencies, higher costs of operation and slimmer profit margins. According to The Wall Street Journal, 3.7% of Affirm customers were at least 30 days overdue on a payment in March this year, compared with 1.4% in March 2021. Yields on the company’s securitized offerings have risen sharply from a year ago.
Lease-to-own has some downsides. Retailers like Rent-A-Center and Aaron’s developed a poor reputation for selling low-quality products at high markups. Predatory rent-to-own agreements in the housing sector targeted low-income people of color. States have stepped in to regulate lease-to-own agreements, and four states outlaw them all together: Minnesota, New Jersey, North Carolina and Wisconsin.
But the business model’s advocates say the agreements enable subprime borrowers to make purchases they might not otherwise be able to afford. And fintech entrepreneurs say that technology can disrupt the model to make it more efficient, transparent and flexible so consumers don’t overspend or get left in the dark. “Programs like ours which give customers flexibility and benefits are going to become more prevalent,” says Neal Desai, CEO and co-founder of lease-to-own startup Kafene.
Most of the lease-to-own innovation in recent years has been in the area of home ownership, with companies targeting subprime borrowers who may not otherwise qualify for a mortgage. Divvy Homes, ZeroDown and Verbhouse are just a few. Adena Hefets, CEO and co-founder of Divvy Homes, told Money in April that about half of its customers are able to buy back their properties. The company declined to say how many customers become delinquent on their payments.

Kafene targets customers who would not qualify for “buy now, pay later” loans with their payment plans. Like the pay-later companies, Kafene partners with retailers, but makes money off of markups on the products rather than merchant fees. Customers can buy themselves out of a product’s lease early if they have the funds, saving money on an additional markup.
Retailers benefit from increased customer purchasing power, Kafene says — a pitch similar to that of “buy now, pay later” companies. Delinquency is uncommon under the lease-to-own model, Desai says, because customers who find themselves unable to continue with payments can return the item at no cost. And customers build credit as they make payments — a feature particularly beneficial to young consumers who are the prime market for payment plans, but are often averse to other credit-building products.
Ohad Samet, CEO and co-founder of debt collection startup TrueAccord, argues that lease-to-own operations are not delinquency-proof. His company performs collections for several, he says, though the company declined to name them. He also argues that “buy now, pay later” companies are not under major threat, pointing out that Klarna, a company where he was previously chief risk officer, was founded 17 years ago and is not new to economic changes. Lease-to-own serves a “small sliver of the market,” he says, and should be seen as “another avenue to acquire consumers and underwrite them.”
Many in the industry emphasize the importance of regulatory compliance. Lease-to-own agreements are regulated in slightly different ways in each of the 46 states where they’re permitted, which will require companies to tweak contracts depending on the jurisdiction. Transparency, like with all financial products, is also key for legal compliance: The FTC brought charges against rent-to-own company Progressive in 2020, for example, for deceptive marketing. The company was required to pay $175 million to settle. “Deceiving people about cost strikes at the heart of the FTC Act,” an FTC analysis of the settlement reads.

Still, the appeal of a recession-proof business model is likely to draw entrepreneurs. Though some are still bullish on “buy now, pay later” in a recession, it’s unclear how rising rates will pressure the business. According to Fitch Ratings, the credit quality of pay-later loans is “yet to be tested.” Competition from lease-to-own startups may provide another test.
Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.
The founder and CEO of point-source carbon capture company Carbon Clean discusses what the startup has learned, the future of carbon capture technology, as well as the role of companies like his in battling the climate crisis.
Carbon Clean CEO Aniruddha Sharma told Protocol that fossil fuels are necessary, at least in the near term, to lift the living standards of those who don’t have access to cars and electricity.
Michelle Ma (@himichellema) is a reporter at Protocol covering climate. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.
Carbon capture and storage has taken on increasing importance as companies with stubborn emissions look for new ways to meet their net zero goals. For hard-to-abate industries like cement and steel production, it’s one of the few options that exist to help them get there.
Yet it’s proven incredibly challenging to scale the technology, which captures carbon pollution at the source. U.K.-based company Carbon Clean is leading the charge to bring down costs. This year, it raised a $150 million series C round, which the startup said is the largest-ever funding round for a point-source carbon capture company.
Carbon capture and storage is controversial in part due to the industries it serves; while cement and steel makers are among the industries that all but require CCS to lower emissions, oil and gas companies have also shown great interest. Carbon Clean’s latest funding round was led by Chevron, and the technology is seen as a potential lifeline for the fossil fuel industry, despite there being readily available alternatives like renewables and electric vehicles.

The technology has also been criticized for not delivering the emissions reductions it promises. That includes an infamous case last year involving none other than Chevron in Western Australia, in which the company missed its targets, and a Shell blue hydrogen project that emitted more carbon than it captured. The Government Accountability Office has also lambasted the Department of Energy for investing $1.1 billion in projects that largely failed to live up to expectations.
It’s against this backdrop that Carbon Clean is striving to clean up CCS’ image and deliver on its promise. Carbon Clean CEO Aniruddha Sharma told Protocol that fossil fuels are necessary, at least in the near term, to lift the living standards of those who don’t have access to cars and electricity.
While technologies like CCS hold a lot of promise, helping the world potentially address that issue while still meeting net zero goals, the risks of locking in more fossil fuel use are real, especially if Carbon Clean and other CCS companies can’t scale as promised. CCS also does nothing to help with other forms of local air pollution, which is a major public health concern.
Sharma, for his part, said he has “done nothing else but carbon capture” his professional life. Along with co-founder and CTO Prateek Bumb, he started working on Carbon Clean’s technology out of university. Bumb had done a five-month internship in Italy studying decarbonization science, and Sharma asked him who was doing that work in India. “No one,” he told him, and thus Carbon Clean was born.
He spoke to Protocol about what Carbon Clean has learned, the future of point-source CCS, as well as the role of companies like his in battling the climate crisis.
This interview has been edited for clarity and brevity.
What’s the most challenging part of carbon capture that you’re still working through?
Scale up is the most challenging part. The technology is working right now. Going from here to the next level of scale up, maybe 10 times bigger, is going to be interesting and challenging, both because you’re trying to increase the equipment size and you’re trying to increase our supply chain. Once you’ve got the materials, then you need a workshop or machining capacity capability that can actually produce the equipment specifically for you. But in the current atmosphere, that’s not something that’s necessarily available. So we’re spending a lot of time on how we scale up both the supply chain and the equipment and the delivery capability.

You just raised a $150 million series C led by Chevron. A bulk of your investment comes from fossil fuel companies, including Saudi Aramco and Equinor. How do you make sure your work isn’t just a way for them to pay to continue polluting?
President Biden is asking oil and gas companies to produce more oil, but they’re not necessarily producing that much oil because the market doesn’t necessarily see producing fossil fuels as a good thing to do. So I think people realize that there is a need to reduce dependence on fossil fuels and reduce carbon dioxide emissions and work towards the energy transition.
From our perspective, whenever you partner with companies like Chevron, we always look for proof in the pudding. Chevron has committed $10 billion to Chevron New Energies, which is solely working on decarbonization. If they have the biggest footprint today, they’re the ones that need the most help decarbonizing.
How do you make sure the removal project doesn’t negatively impact the local communities adjacent to the carbon capture?
I think the issue is much deeper: How does the energy transition in general impact the population and the people being affected by it? When these companies start reducing their production, there will be more jobs available and you can reorient a lot of them towards decarbonization. We’re also leading the creation of a new industry that actually didn’t exist. If you think about decarbonization and the level where we need to be — or should be — over the next 10 years, you’re talking about creating five companies the size of Exxon or Chevron in the decarbonization space. These companies will employ tens of thousands of people, so we’re talking about hundreds of thousands of job opportunities to be created for decarbonization. For our company, we ensure that the impact of what we’re trying to do is translated into the local communities.

How much should your corporate clients be relying on your services when it comes to reaching their net zero or decarbonization goals? In other words, what proportion of their drawdown should come from emissions reductions versus paying for point-source carbon capture?
I generally advise our customers to diversify their options. I tell my customers that in 2024, get one unit at your site and spend 10% of your money for decarbonization using one of our carbon capture boxes, spend 10% for another form of decarbonization, and another 10% for electrification, and maybe another 10% for biomass. Try all the options across the board, so that within a year or two, you know which one or two options to scale up. Maybe carbon capture and electrification are the best options for you. If you’re in California, green hydrogen carbon capture is the perfect option for you, so we’re not saying that ours is the only solution.
But how much of their decarbonization journey should come from any sort of carbon capture versus just not having that pollution be released at all?
I think that’s where the conundrum is, right? We help decarbonize heavy industries like steel and cement, which are relatively difficult to replace in the medium term.
But you also work with fossil fuel companies, for which there are renewable alternatives.
We focus on heavy industry that is really hard to replace in the medium term. Steel, cement, chemicals—we use these things on a daily basis. If we stop producing them, then how would we progress as humanity? We have to keep using heavy industrial products for some time more. And we cannot allow them to just run like that; we have to decarbonize them today.
“We focus on heavy industry that is really hard to replace in the medium term. Steel, cement, chemicals—we use these things on a daily basis. If we stop producing them, then how would we progress as humanity?”

So is it your hope that eventually your company won’t have to exist?

I think heavy industry will always exist. So we’ll always be there supporting the decarbonization. If you think about brute numbers, 2 billion people today don’t have access to electricity. [Editor’s note: The International Energy Agency pegs that number at 770 million.] How much of an industrial output needs to be produced to elevate and alleviate poverty for 2 billion people? It’d be immoral to say, “Well, actually, you know what, steel and cement companies, stop tomorrow.”
Bigger picture: How much CCS does the world need? Put a number on what you expect. A gigaton? Less? More?
Let’s work backwards. Industrial emitters today contribute about 25% of the global carbon dioxide emissions, more or less. That’s about 10 billion tons of emissions. Even if you said that we will be able to electrify some of it or use hydrogen for some part of it, you would still need to decarbonize a significant chunk of that 10 billion tons using point-source carbon capture technologies, and they need to happen between now and 2040. As a company, we are focused on scaling our solution and the availability of that solution to a billion tons per year of carbon dioxide captured.
Michelle Ma (@himichellema) is a reporter at Protocol covering climate. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.
Experts say robust intellectual property protection is essential to ensure the long-term R&D required to innovate and maintain America’s technology leadership.
Every great tech product that you rely on each day, from the smartphone in your pocket to your music streaming service and navigational system in the car, shares one important thing: part of its innovative design is protected by intellectual property (IP) laws.
From 5G to artificial intelligence, IP protection offers a powerful incentive for researchers to create ground-breaking products, and governmental leaders say its protection is an essential part of maintaining US technology leadership. To quote Secretary of Commerce Gina Raimondo: “intellectual property protection is vital for American innovation and entrepreneurship.”
Patents are the primary means of protecting IP — trademarks, copyrights, and trade secrets offer additional IP protection — and represent a rule-of-law guarantee akin to a deed’s role in protecting land ownership. The founders of the United States wrote patent protection into the Constitution to “promote the progress of science and the useful arts.” Abraham Lincoln revered patents for adding “the fuel of interest to the fire of genius.”

A fireside chat with Qualcomm youtu.be
In today’s knowledge-based economy, IP rights play a foundational role. “Core R&D is the first step in getting good products into people’s hands,” said John Smee, senior VP of engineering and global head of wireless research at Qualcomm.Everything from smartphones to the Internet of Things, automotive and industrial innovation begins as a breakthrough within our research labs.” At Qualcomm, Smee said, strong IP laws help the company confidently conduct cutting-edge 5G and 6G wireless research that will make its way into products ranging from everyday consumer goods to the factory floor.
Semiconductor companies, in particular, are fiercely protective of their IP because it’s their primary competitive advantage. Chip companies go to extraordinary lengths to protect their IP by maintaining black boxes only accessible to one person per fab, choosing highly secure operating locations, and keeping R&D teams separate from fab operations teams.
On the legal side, America’s Semiconductor Chip Protection Act of 1984 bestows legal protection of chip topography and design layout IP while the EU’s Legal Protection of Topographies of Semiconductor Products of 1986 protects IC design. These regulations “have encouraged firms to continue to innovate,” according to the findings of Qualcomm’s and Accenture’s report, Harnessing the power of the semiconductor value chain.Having a high-quality patent portfolio also helps companies build out their ecosystem, should they choose to license, through advising, training, support for launches, assistance in expanding to new markets, and much more.
Licensing democratizes innovation and invention— it makes the cutting-edge IP developed by one firm accessible to a broad range of others. As such, it allows other companies to skip the R&D step and jump right into building on the innovator’s foundation. This lowers the barrier to entry for upstart companies while providing a steady return on investments for the companies who have the resources to dedicate to heavy R&D.

An outsize economic impact
IP protection also has an outsized impact on the US economy and helps create good higher-paying jobs. A report from The United States Patent and Trademark Office (USPTO) found that in 2019 industries that intensively use IP protection account for over 41% of U.S. gross domestic product (or about $7.8 trillion) and employ one-third of the total workforce — that’s 47.2 million jobs. In 2019, the average weekly earnings of $1,517 for workers across all IP-intensive industries was 60% higher than weekly earnings for workers in other industries.

Workers in IP-intensive industries were more likely to earn higher wages as well as participate in employer-sponsored health insurance and retirement plans, the USPTO report found.
But patent laws are often subject to much debate — one person’s idea of protection is another’s view of monopoly. That’s where organizations like LeadershIP come into play. The group brings together experts on IP and innovation to debate issues at the intersection of research, policy, and industry.
In addition, several efforts are underway to help inventors get their ideas into the marketplace. The Inventors Patent Academy (TIPA), for instance, is an online learning platform aimed at guiding inventors through the benefits of patenting and the process of obtaining a patent. TIPA has designed its program to make patenting more accessible and understandable for groups historically underrepresented in the patent-heavy science and engineering fields, including women, people of color, people who identify as LGBTQIA, lower-income communities, and people with disabilities.
Closing these gaps would promote U.S. job creation, entrepreneurial activity, economic growth, and global leadership in innovation. Estimates suggest that increasing participation by underrepresented groups in invention and patenting would quadruple the number of American inventors and increase the annual U.S. gross domestic product by nearly $1 trillion.
If we want our nation’s rich history of innovation to continue, experts say, we must create an IP protection ecosystem that helps ensure that tech innovation will thrive.
“With the protection of patents,” Smee said, “there is no limit to where our creativity can take us.”

Are tech firms blowing millions in funding just weeks after getting it? Experts say it’s more complicated than that.
Bolt, Trade Republic, HomeLight, and Stord all drew attention from funding announcements that happened just weeks or days before layoffs.
Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.
AJ Caughey is a data researcher for Protocol | China. Previously, he worked at Meridian International Center administering State Department cultural exchange programs and as an Applied Data and Governance Fellow for the International Innovation Corps. AJ holds master’s degrees from the University of Chicago’s Harris School of Public Policy as well the Committee on International Relations.
Fintech startup Bolt was one of the first tech companies to slash jobs, cutting 250 employees, or a third of its staff, in May. For some workers, the pain of layoffs was a shock not only because they were the first, but also because the cuts came just four months after Bolt had announced a $355 million series E funding round and achieved a peak valuation of $11 billion.
“Bolt employees were blind sided because the CEO was saying just weeks ago how everything is fine,” an anonymous user wrote on the message board Blind. “It has been an extremely rough day for 1/3 of Bolt employees,” another user posted. “Sadly, I was one of them who was let go after getting a pay-raise just a couple of weeks ago.”
An analysis by Protocol of layoffs and funding rounds by more than 400 startups between seed and series E revealed that, on average, firms conducted layoffs just three months after publicly announcing funding rounds. While most firms fell into the range of cutting staff two to three months after making funding announcements, a handful of companies waited two weeks or less after going public about funding rounds before making layoffs.

Are firms blowing through millions in the weeks after the check is deposited in the bank? Experts told Protocol that it’s more complicated than that. Startups wait several months to a year after venture capital checks hit their bank account before going public with the news, but the delay can result in terrible optics and often a feeling of betrayal among those laid off.
“By the time we’re hearing about private companies raising capital … it’s not actually reflective of when that work was actually done,” said Susan Alban, partner at Renegade Partners. A founder may not want their competitors to know about funding, or want to wait until there are other announcements to tack onto a funding round, like a product release or a new executive hire, to do a press push.
Funding details become more exclusive the bigger an organization gets. At a company with 100 employees, it’s easier to keep the news of a major hire or a big VC check from slipping. But at a company with 2,000 people, “announcing it internally is announcing it publicly,” said Alban. “Even if you know everyone is under an NDA, you don’t announce something at an all-hands with 2,000 people without expecting that it’s going to be leaked.”
Like Bolt, Trade Republic, HomeLight, and Stord all drew attention from funding announcements that happened just weeks or days before layoffs. Delivery startup Getir laid off thousands just over two months after receiving more than $700 million in funding.
“The communication was handled poorly, no empathy towards the unlucky ones, only words on concentrating efforts and impact,” one former employee of Trade Republic posted on Glassdoor.
“Literally fired the best workers and now it’s awful,” a Getir employee wrote on Glassdoor in the weeks following its layoffs. “[Getir’s] not gonna last the year.”

One former HomeLight employee’s Glassdoor post had an overall positive review of their experience at the company, but said that “it definitely hurt” to be part of its wave of layoffs. “In our town halls for the past 3-4 months … we were all repeatedly told that ‘HomeLight is in a good position where we don’t think [layoffs are] going to be an issue for us,’” the poster wrote. “It was pretty jarring to just to sign on to work one morning, get an email saying that there would be layoffs, and then get that dreaded meeting an hour later.”
Most of these companies doing layoffs right after announcing funding blame the rapid shift in economic conditions. Plus, big funding announcements don’t always equate to a company’s financial health. Travel startup Pollen cut staff after raising funding and collapsed just three months later.
Though it’s impossible to know the financial guts of a company from the outside, many will conduct layoffs to extend their runway, Anthony Kline, partner at The GP, told Protocol. Prior to the recent downturn, venture capitalists were “seeing a bit of a gold rush” in tech. But as things have slowed, funding rounds have become harder and harder to come by. “You’re able to see the caboose now; you’re not gonna see, like, an infinite line of cars.”
As the economy shifted, so did the role of the founder and CEO, Kline said, changing from “growth product leader to resource allocator.” Jobs that don’t directly align with generating revenue or are duplicate roles are first on the chopping block.
“If they don’t assume that there’s some additional round of funding that’s 12 months out, it might be 24 or 36 months out, then they have to be a little bit more creative and a little bit more resourceful,” Kline said.
It’s difficult to predict if a company will have rocky times ahead, but smart leaders can plan ahead about when to announce funding. If the announcement comes months or a year after closing the round, it gives the illusion that a company is doing better than it is. And, optics aside, layoffs after funding announcements (and in general) are a blow to internal morale. Doing them in a transparent and thoughtful way is crucial.

Having employees be in the know about company details, financial standing, and what the future of the company looks like might help ease the blow of layoffs. “If people understand what their purpose is in a company, and that you see them for what it is that they’re fulfilling, and you’re helping this company succeed, that is like a tried-and-true strategy, and it takes time, it takes dedication, and I think it takes a lot of thoughtfulness from a founder,” said Kline.
Being present with your staff amid layoffs, especially in a time of increased remote work, is important to let employees know you’re not disconnected and you’re listening to how layoffs impact them.
“You see a lot of situations where a founder is so preoccupied with allocating resources, talking to investors, or talking to customers, that they’re spending most of their time externally and less so internally,” Kline said.
Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.
The world’s largest carbon offset issuer is fighting a voluntary effort to standardize the industry. And the fate of the climate could hang in the balance.
It has become increasingly clear that scaling the credit market will first require clear standards and transparency.
Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).
There’s a major fight brewing over what kind of standards will govern the carbon offset market.
A group of independent experts looking to clean up the market’s checkered record and the biggest carbon credit issuer on the voluntary market is trying to influence efforts to define what counts as a quality credit. The outcome could make or break an industry increasingly central to tech companies meeting their net zero goals.
Globally, Verra — short for the Verified Carbon Standard — issues roughly two-thirds of the carbon credits on the voluntary market, including credits for renewable energy and forestry and land use, among other types. Established in 2007, the registry is the longtime face of the market’s status quo.
But as demand has surged for carbon credits — particularly as the tech industry looks to meet its net zero targets by offsetting a (small) portion of its emissions — it has become increasingly clear that scaling the credit market will first require clear standards and transparency. In fact, this is precisely the conclusion that forced a 400-member industry task force on scaling the market to change tack in 2021. In its wake, the Integrity Council for the Voluntary Carbon Market emerged. It published proposed reforms — including establishing an agreed-upon definition for credit quality and evaluating methodologies accordingly — in July.

While Verra initially supported the effort, it has since taken issue with the specifics of even these modest potential reforms. Last week, the organization demanded that the council make a “course correction” and took particular issue with the approach that gives credit types that meet the quality definition a thumbs-up in a note to stakeholders.
“We especially fear that the principles-based review of programs has been supplanted with a blunt, one-size-fits-all approach that seeks to directly set the scope and rules of the market,” Verra wrote in mid-September. Verra also argued for program-by-program evaluation rather than one that evaluates the quality of specific credit types.
In a new analysis, the climate research nonprofit CarbonPlan said Verra’s objection was “melodramatic” and “about control.”
“The Integrity Council is running a voluntary, opt-in labeling effort — nothing more,” the CarbonPlan team wrote last week. “The Integrity Council isn’t proposing to do anything about credits that fall short of its standards, nor is it clear how they could if they wanted to.”
Carbon markets are essentially the Wild West. Countless methodologies exist to define what makes for a quality credit, and imposing order on any lawless frontier is proving to be a challenge. But the stakes couldn’t be higher.
A BloombergNEF analysis found that the carbon offset market could be worth as much as $550 billion by 2050, a time period when net zero commitments will come due. However, absent global standard-setting, it is possible that there won’t be enough quality offsets to keep up to the demand. That could mean a lot of money gets wasted on ineffective credits while causing the planet to overheat to dangerous levels.
The fact that this initial attempt does not have the support of the voluntary market’s biggest player does not bode well. CarbonPlan speculated that at the root of Verra’s objection is a concern that its credits are not “robust enough” to meet the benchmark set out by the council’s proposal, and that new standards “could threaten their dominant position on the supply side of the voluntary market.”

Verra, for its part, maintains that its concerns are with the process’s efficiency, not with its proposed scrutiny.
“We don’t wish to see good projects unable to move ahead because the methodology they are using is waiting too long in line for its assessment,” Andrew Howard, Verra’s senior director for climate policy and strategy, told Protocol. “Verra is confident the VCS program will meet the ICVCM’s quality thresholds.”
Verra proposed several specific “course corrections” for the council, ostensibly with efficiency in mind. First, it argued for evaluating entire programs rather than specific credit types or methodologies. CarbonPlan said that approach “doesn’t pass the laugh test” given that it would force the council to give the whole swath of Verra credits a thumbs-up without acknowledging how much, for instance, a renewable energy credit’s methodology might differ from that of a forestry credit.
“That is no way to confront the well-documented challenges in the voluntary carbon markets, many of which are present in Verra’s offerings, and it would force the Integrity Council to either bless most of the market uncritically or categorically exclude its largest player,” CarbonPlan said.
In response, Verra said the council should sample or use spot checks to make sure all of a program’s credit types deserve the council’s approval, but that relying on a methodology-by-methodology evaluation rather than more efficient approaches would leave the council at risk of “seriously bogged down.”
Verra also took issue with the proposal to step up standards over time and suggested that the council use existing aviation industry offset standards. Taking that approach, though, would ignore the very real need for sharper offset standards and the reality that the aviation industry’s standards are rife with loopholes.
Regardless of what shape the council’s final reforms take, though, Verra doesn’t have to participate in the council’s proposed benchmarking if it doesn’t want to. If the registry does opt out, it would seriously undermine the scope of any new standards by making two in three carbon credits exempt.

That puts the council in the midst of a tug-of-war as Verra pulls it to change its plan and CarbonPlan and its other supporters urge it to stay the course. Should the council allow itself to be swayed by Verra’s concerns, CarbonPlan said it could put its very independence at risk.
“Either [the council members] accede to Verra’s demands and abandon any claim to independence, or they forge ahead and work with only a minority of the current market,” CarbonPlan summarized via Twitter. “We hope they will choose the latter.”
Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (ljenkins@protocol.com).
The document unveiled today by the White House Office of Science and Technology Policy is long on tech guidance, but short on restrictions for AI.
While the document provides extensive suggestions for how to incorporate AI rights in technical design, it does not include any recommendations for restrictions on the use of controversial forms of AI.
Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of “Campaign ’08: A Turning Point for Digital Media,” a book about how the 2008 presidential campaigns used digital media and data.
It was a year in the making, but people eagerly anticipating the White House Bill of Rights for AI will have to continue waiting for concrete recommendations for future AI policy or restrictions.

Instead, the document unveiled today by the White House Office of Science and Technology Policy is legally non-binding and intended to be used as a handbook and a “guide for society” that could someday inform government AI legislation or regulations.
Blueprint for an AI Bill of Rights features a list of five guidelines for protecting people in relation to AI use:

While the document provides extensive suggestions for how to incorporate AI rights in technical design, it does not include any recommendations for restrictions on the use of controversial forms of AI such as systems that identify people in real time using facial images or other biometric data, or for use of lethal autonomous weapons.
In fact, the document begins with a detailed disclaimer noting that the principles therein are “not intended to, and do not, prohibit or limit any lawful activity of a government agency, including law enforcement, national security, or intelligence activities.”

Alondra Nelson, the OSTP’s deputy director for science and society, pushed back on suggestions that the document could disappoint human rights and AI watchdogs who had hoped for a document recommending more concrete rules for AI.

“I categorically reject that kind of framing of it,” Nelson told Protocol. “The document moves as the title says from principles to practice. Upwards of 80% of the document is about precise prescriptive things that different stakeholders can do to ensure that people’s rights are protected in the design and use of technologies,” she said, adding, “Our job at OSTP is to offer technical advice and scientific advice to the president.”
A year ago, Nelson and former OSTP Director Eric Lander co-authored a splashy Wired opinion piece announcing the agency’s plans to produce an AI Bill of Rights that might help alleviate problems with AI systems that had been unleashed by industry for use with no federal regulatory guidelines.

Nelson and Lander mentioned AI systems that reinforce discriminatory patterns in hiring and health care as well as faulty policing software using inaccurate facial recognition that has led to wrongful arrests of Black people. And, linking to an article about surveillance tech used in China to track and control the Muslim minority Uyghur population there, they alluded to use of AI by autocracies “as a tool of state-sponsored oppression, division, and discrimination.”
I categorically reject that kind of framing of it,” Nelson told Protocol. “The document moves as the title says from principles to practice.
Soon after the announcement, OSTP held several public listening sessions in November 2021 on AI-enabled biometric technologies, consumer and “smart city” products, and AI used for employment, education, housing, health care, social welfare, financial services, and in the criminal justice system.
While some advocacy groups have indicated frustration with the slow process for publishing the AI Bill of Rights, Nelson said by one measure — the Biden-Harris administration’s Summit for Democracy held in December 2021 — it is actually early.

“We had committed by December to finish this, and we are completing it with a little bit of time to spare,” Nelson said.

Scandal has plagued OSTP this year. Former OSTP Director Lander resigned In February amid accusations he created “an atmosphere of intimidation at OSTP through flagrant verbal abuse.” Later in March, POLITICO revealed that Lander had helped enable an organization led by former Google CEO Eric Schmidt to pay the salaries of some OSTP staff.

Lawmakers have proposed legislation that would take ethical commitments made by the government out of the realm of theory and into practice. Legislation introduced in February, for example, would require companies to assess the impact of AI and automated systems they use to make decisions affecting people’s employment, finances, and housing and require those companies to submit annual reports about assessments to the FTC.
Despite a lack of federal AI laws or regulations, the U.S. has agreed to uphold international principles established in 2019 by the Organization for Economic Cooperation and Development that call on makers and users of AI systems to be held accountable for them, and ensure they respect human rights and democratic values including privacy, non-discrimination, fairness, and labor rights. Those principles also called on AI builders and users to make sure that the systems are transparent, provide understandable and traceable explanations for their decisions, and are safe and secure.
In conjunction with the publication of the AI Bill of Rights, other federal agencies are expected to signal commitment to take actions reflective of its tenets. For example, the Department of Health and Human Services plans to release recommendations for methods to reduce algorithmic discrimination in health care AI and the Department of Education is planning to release recommendations on the use of AI for teaching and learning by early 2023.
Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of “Campaign ’08: A Turning Point for Digital Media,” a book about how the 2008 presidential campaigns used digital media and data.
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