The UK-based Standard Chartered bank, in partnership with British Airways, CUR8, CFC, and WTW, has closed a first-of-its-kind financial transaction with UNDO Carbon, a CO2 removal project based in England.
Working with enhanced rock weathering, UNDO is on a mission to spread enough amounts of its rock to remove 1 million tonnes of carbon by 2025.
Acknowledging the critical importance of carbon dioxide removal (CDR) initiatives in the global fight against climate deterioration, Standard Chartered and its key partners launched a novel financing approach, hoping to pave the way and stimulate the scaling of finance in the carbon removal sector.
The groundbreaking transaction, offering debt financing for UNDO, provides a promising solution to some of the biggest hurdles related to CDR investments.
By separating the cost of the CDR project from the sale of its carbon credits, this method of financing enables financial flexibility for the project developer and reduces the risk around deliveries.
Relevant: CUR8, UNDO, British Airways & Standard Chartered To Finance Carbon Removal
As part of their transaction, Standard Chartered, along with British Airways, CUR8, CFC, and WTW, have secured a multi-year removals offtake, with Standard Chartered supplying the necessary debt financing to support UNDO in expanding its operations.
This strategy holds considerable potential for scaling across different carbon removal methods, as it unlocks smaller financing amounts required for projects, and it helps to reduce the risk through guaranteed offtake agreements that provide the upfront capital necessary to increase supply.
These changes result in a simplified gateway for buyers, and the financing partners hope that this advancement will snowball into larger sales within the carbon removal industry.
Read more: Carbonx Issued Its First Report On Bridging The Gap In Carbon Removal Financing
Marta Krupinska, CEO and Co-Founder at CUR8, commented, “Building a trillion-dollar carbon removals market requires fit-for-purpose financial infrastructure, and we’re delighted to have created a mechanism to unlock finance at scale for carbon removals.”
“With this first-of-a-kind transaction, we want to demonstrate that financing not only makes carbon removal more affordable but also reduces buyer delivery risk, which stands to drive demand and scale this industry at the rate that it needs to,” she added.
