CUR8, Standard Chartered Bank, British Airways and Partners Deliver Milestone Forward-Financing Transaction to Scale Carbon Removals

We recently reached a significant milestone at CUR8. Working alongside British Airways, Standard Chartered and UNDO, we’ve built and successfully completed a first-of-a-kind solution to overcome one of the biggest hurdles to financing carbon removals. 

In this first-of-its-kind transaction, we created a way for UNDO, a UK-founded carbon removal project developer specialising in Enhanced Rock Weathering, to access debt financing from a multi-year offtake purchased by British Airways.

This transaction opens up a route to traditional financing from banks for carbon removal projects elsewhere. At scale, we envision a working capital solution like this to be able to provide developers with more financial flexibility to deliver demand for high-quality credits from the corporate world – in adherence with new regulatory waves and evolving purchasing standards, such as the Oxford Offsetting Principles. 

Addressing The Financing Gap

Carbon removal companies are simultaneously solving for science, hardware & software complexity against commercial & regulatory uncertainty, meaning they need more money upfront compared to other early and scale ventures, such as software companies. Often, their only way to generate revenue is to sell carbon credits, which leaves little room to separate the cost of financing a project from carbon credit pricing – making removals less affordable for the end buyer.

According to the Intergovernmental Panel on Climate Change (IPCC), we must remove at least 10 billion tonnes of CO2 annually by 2050 to meet our global climate targets. However, supply is not growing at the rate required to meet this need - BCG estimates that supply could fall short of demand by 3- 6x in 2030 at current supply trajectories. To scale supply as required, the market needs to unlock significant levels of institutional capital. 

For most financial institutions, options to participate in this market are limited to project financing or early-stage venture capital. While venture capital alone is too costly at scale, project financing is often too bespoke and has a high minimum investment requirement (typically, $75-100m; according to XPRIZE, only 9% of companies fundraising were looking for funds over $30m). 

Our first-of-a-kind offering directly addresses this challenge. It offers a financial model that benefits the buyer, supplier and banking partner – reducing delivery risk due to financing challenges and making carbon removals more affordable. 

A Scalable Financing Solution for Carbon Removals

The working principle behind this solution is to finance removals in a scalable, repeatable way. Our offering is not too dissimilar from revenue-based financing in the software world and purchase-order factoring in the banking world. The innovation lies in doing this for carbon removals, where scientific integrity, project quality, and transparency need to be demonstrated.

That is where CUR8 comes in. Our proprietary due diligence framework assesses performance risk for projects across five key pillars - Impact, Integrity, Delivery Risk, Future Potential, and Beyond Carbon - taking into account the total carbon removed over time, the supplier’s rigour and transparency, their potential to scale up and to deliver greater impact over time. 

Backed by our diligence, we identify projects and suppliers, such as UNDO, with the highest potential to deliver removals impact at scale and enable buyers such as British Airways to confidently buy carbon removals. 

With our financing solution, suppliers can offer and sustain pay-on-delivery terms from buyers – converting future payments to cash in the bank today. Suppliers can cover critical expenses and grow while building a credit history for future financing from large lenders such as Standard Chartered Bank.

With this financing flywheel in place, we want to make it easier for more buyers to enter this market, benefitting from reduced delivery risk due to lack of financing and more accessible payment terms due to lower upfront costs. 

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The broader case for carbon removals is now open and shut. But while the ‘why’ is clear – mitigating the worst effects of climate change – the ‘how’ remains challenging.  That’s changing. This transaction shows how the carbon removals can scale and reliably meet rising demand from big companies. It shows how to cross the divide between pilot and commercialisation. It represents, in other words, the bridge to bankability.

We welcome conversations with carbon removal project developers interested in our novel working capital solution. Please reach out to us here.

Organisations interested in enabling financing for carbon removal projects and committing to long-term offtakes can book a meeting with us here.   

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