- Standard Chartered provides innovative debt financing to UNDO’s carbon removal project, aiming to scale the industry.
- British Airways, CUR8, and insurers partner to secure 4,000 tons of carbon credits and reduce financing risks.
- This deal sets a precedent for future carbon removal financing, paving the way for lower costs and scalability.
Standard Chartered Leads Innovative Financing for Carbon Removals
Standard Chartered is breaking new ground by providing debt financing to UNDO, a project developer specializing in enhanced rock weathering, a method that captures carbon through the spreading of rock dust. This financing model is designed to scale the carbon removal industry and reduce the high upfront and operating costs typically associated with such projects.
Chris Leeds, Head of Carbon Markets Development at Standard Chartered, explained the significance: “These projects are high cost—they need to be scaled, but to do that we have to finance them.”
British Airways is set to purchase 4,000 tons of carbon credits from UNDO, a deal structured by CUR8, which also provided due diligence and advice. Insurers CFC and WTW will cover the risks, making this a secured transaction despite the nascent technology in the carbon removal sector.
Scaling Through Debt Financing
Historically, carbon removal projects have relied on large offtake agreements, where companies like Microsoft commit to buying credits upfront. In contrast, this deal uses debt financing, a tool rarely applied to the carbon removal sector but one that holds promise for scaling up new technologies.
“This is quite rare,” noted Eli Mitchell-Larson, Chief Science and Advocacy Officer at Carbon Gap. He highlighted that while solar and wind projects benefited from similar financing models, they had the backing of public utilities with high credit ratings, unlike many carbon removal technologies today.
A New Model for Carbon Removal Financing
British Airways directly approached Standard Chartered to finance the deal, believing that if banks get involved, the industry can scale more quickly. CUR8 and UNDO, both startups, will benefit from the financing structure, which turns what might have been a risky venture into a more secure, bankable deal.
Marta Krupinska, CEO of CUR8, underscored the importance of this approach: “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.”
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By creating a model where debt can finance carbon removals and insurers cover the risks, Standard Chartered and its partners are setting the stage for future growth in the sector. Leeds added: “We’re not trying to pick winners but invest in technology that has a chance of scaling.”
As more projects adopt this financing model, it’s expected that costs will fall, and carbon removal methods will become more accessible to companies looking to reduce their emissions.