Carbon Removal Financing and Enhanced Rock Weathering: Pioneering a First-of-a-Kind Financial Solution

Across all areas of UNDO, our business is built with scale in mind. Our operational partnership model enables us to scale across borders. Our tech is built to ingest high-quality operational data from across these global partners. We are developing low-tech scientific techniques to measure carbon dioxide removal (CDR) in each region. However, one area that is vital to fulfilling our gigatonne-scale mission is finance. Only by having access to upfront finance to fund operations can we deliver high-quality carbon removal at scale.

Financial solutions are crucial to enable the carbon removal market to reach the multi-billion tonne scale required to hold global warming below 1.5 degrees. The industry is in its infancy and needs to scale exponentially to meet 2050 targets set by the Intergovernmental Panel on Climate Change to achieve net zero. UNDO is the pioneering removal supplier to pilot this new approach to solving this industry-wide finance issue developed by market maker, CUR8.

The Challenge of Financing Carbon Offtakes

Despite the importance of scaling up this industry and the demand from corporations for sustainable solutions to offset their carbon footprints, funding can be a challenge even for the most promising carbon removal approaches. Currently, many buyers of carbon credits are only willing to engage in payment-on-delivery offtakes. Since this is the case, funding for MRV and operational deployment must be found elsewhere.

This is a key hurdle that blocks the growth of many CDR projects as equity is not a scalable route for offtake finance. While grants and venture capital are generally available during the early stages, traditional banking products needed for scale, such as commercial debt, are harder to come by, because the risks of these innovative approaches are difficult to calculate. This leaves access to project debt as the critical lifeline for developers.

A First-of-a-Kind Financing Model for Carbon Removals

In December last year, UNDO, alongside CUR8, British Airways, and Standard Chartered, announced a first-of-a-kind solution to unlock upfront project financing, allowing carbon removal developers to gain easier access to operational capital. This, in turn, allows them to scale through long-term offtake agreements. 

Director of Sustainability at British Airways, Carrie Harris, cited the airline’s commitment to net zero by 2050 and how carbon removal was an integral part of their sustainability strategy as to why they were motivated to be a part of this landmark deal. 

“At British Airways, carbon removals form a fundamental part of our long-term strategy and so we are delighted to be a part of this ground-breaking pilot. Whilst this initial purchase is relatively small, the partnership hopes to pave the way to unlock future investment in carbon removals and help accelerate the future scale-up of carbon removal technology. This collaboration will reinforce our commitment to achieving net zero by 2050 and is a long-term and necessary solution to act on our carbon emissions.”

Carrie Harris, Director of Sustainability at British Airways

Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is the airline sector’s global scheme to strategically tackle its sustainability approach. Currently, its primary carbon reduction strategy revolves around the use of Sustainable Aviation Fuels (SAF). By working with and integrating high permanence removal methods, such as UNDO’s enhanced rock weathering solution, CORSIA and its airline members can remove their carbon footprint more affordably and invest in projects that need finance.

The Structure of the Deal

This deal was orchestrated by CUR8, which supported British Airways in purchasing a carbon removal offtake for more than 4,000 tonnes from UNDO and delivered debt financing to fund UNDO’s operations off the back of the removal credit purchase in partnership with Standard Chartered Bank. CUR8 aims to build on this product to further develop scale-up financing products across the carbon removal industry.

What was Standard Chartered’s motivation, as a financial institution, for joining this 4-way deal? Marisa Drew, Chief Sustainability Officer at Standard Chartered, explains:

“Our commitment to carbon removals recognises its critical importance in the delivery of net zero. As a Bank with a significant presence in many of the emerging markets most impacted by climate change, we are clear that high-integrity carbon markets and related removal activity can accelerate net zero progress when coupled with continued mitigation and adaptation efforts. Given this focus, we’re excited by the opportunity to partner with such mission-aligned counterparties to develop this financing structure in hopes that it will support more providers to scale up and be able to access a greater quantum of capital to remove carbon, at pace.”

Marisa Drew, Chief Sustainability Officer at Standard Chartered

Wider Implications for the Carbon Dioxide Removal Sector

This multilateral deal sets a precedent for ambitious carbon removal suppliers to scale more quickly by obtaining debt financing, secured on future client demand via advanced purchase agreements. This way, suppliers can move away from relying on bespoke financing structures, meet their working capital needs, and establish a credit history in the process.
This transaction doesn’t just impact enhanced rock weathering. It has the potential to benefit CDR as a whole.

On the wider implications for the sector Marta Krupinska, CEO and Co-Founder at CUR8, says:

“We’re on a mission to rapidly accelerate business adoption of carbon removals. This pilot is a win-win for the industry as it proves we can provide financing to suppliers and access to the best quality removal credits without needing upfront payments from buyers. We hope it is the first of many that will unlock more capital for carbon removals and more action from buyers, starting now.”

Marta Krupinska, CEO and Co-Founder at CUR8

In pioneering this first-of-a-kind arrangement, UNDO refined its requirements and has a better understanding of what is needed to finance larger offtakes on a repeatable basis.

As is often the case when doing something for the first time, the process was not frictionless, but it has yielded lessons that will make it easier to construct and streamline future processes. We encourage other developers, as they scale, to get in touch to discuss best practices when trying to access debt financing.

Without suitable financing available and accessible, the planet will never reach gigatonne-scale carbon removal. The ‘bridge to bankability’ is being constructed for the most promising and innovative carbon removal suppliers who face a financing gap, and UNDO believes that carbon removals can be made eligible for affordable, lower-cost capital in the form of debt. For enhanced rock weathering specifically, a series of successful credit deliveries will build a track record of debt repayment, which will build financial trust in UNDO’s removal method. Ultimately, carbon removal financing is another central ingredient in the CDR market recipe that must scale to empower projects to stop, and hopefully reverse, climate change.

Take Action on Carbon Removal

With innovative financial models driving enhanced rock weathering, the path to scalable, impactful carbon removal is clearer than ever. Get involved in pioneering carbon removal solutions that are shaping a more sustainable future.

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