Standard Chartered has introduced an innovative financing model by providing debt funding to UNDO, a project developer specializing in enhanced rock weathering—a carbon capture method using rock dust. This approach aims to scale the carbon removal sector while addressing the high upfront and operational costs often associated with such projects.
Chris Leeds, Standard Chartered’s Head of Carbon Markets Development, emphasized the need for financing to make these high-cost projects scalable. British Airways has committed to purchasing 4,000 tons of carbon credits from UNDO in a deal facilitated by CUR8, which also conducted due diligence. Insurers CFC and WTW are covering the associated risks, ensuring a secure transaction despite the emerging nature of carbon removal technology.
Debt Financing to Drive Growth
Unlike traditional carbon removal financing, which relies on large offtake agreements where companies pre-purchase credits, this deal leverages debt financing—a relatively new approach in this sector. Eli Mitchell-Larson, Chief Science and Advocacy Officer at Carbon Gap, noted the rarity of such financing in carbon removal compared to solar and wind projects, which had the backing of utilities with strong credit ratings.
A New Model for Carbon Removal Financing
British Airways proactively approached Standard Chartered to finance the deal, recognizing the potential for banks to accelerate the industry’s growth. CUR8 and UNDO, both startups, are set to benefit from this structured financing, transforming what could have been a risky venture into a more secure investment.
Marta Krupinska, CEO of CUR8, highlighted the importance of this financing model, stating that building a trillion-dollar carbon removal market requires appropriate financial infrastructure, and this new mechanism unlocks large-scale funding for carbon removal projects.
As this model gains traction, costs are expected to decrease, making carbon removal technologies more accessible to companies aiming to reduce their emissions.