- Standard Chartered has revealed that it will offer the first commercial debt to a technological carbon removal firm.
- Carrie Harris, director of sustainability at British Airways, said carbon removals formed “a key part” of reaching its climate goals.
Standard Chartered has revealed that it will offer the first commercial debt to a technological carbon removal firm after British Airways agreed to an advance purchase of more than 4,000 tonnes of credits from project developer UNDO.
The ability to suck climate-damaging carbon emissions out of the air is a central part of the world’s attempt to combat global warming. Yet, many of the technologies are nascent and unproven at scale.
While grants, pre-payments and venture capital have typically provided early-stage financing, project developers have been considered too risky for banks to offer them corporate loans, StanChart said.
It added that by agreeing to an advance purchase deal with BA and backing it with insurance that pays out in the event not enough carbon credits are produced to repay the loan, project developer UNDO’s credit risk is lowered.
UNDO uses so-called ‘enhanced rock weathering’ to speed up a natural process by spreading silicate rock dust over farmland. This dust captures carbon when it rains, locking it away for more than 100,000 years.
The deal’s partners, including offtake intermediary CUR8, insurer CFC, and broker WTW, hope its structure can be replicated by other developers and help scale up the market. Financial terms were not disclosed.
“We need a technological solution that can scale, allowing carbon dioxide removals to become affordable across the market and deliver the net in net-zero,” said StanChart’s Chris Leeds, head of carbon markets development. He noted, “This transaction efficiently puts money into a project today through upfront bank finance.”
Scientists have said that around 10 billion tons of carbon emissions may need to be removed from the atmosphere every year by mid-century to hit the world’s climate goal, yet such removal credits currently form only a small slice of the market. Carrie Harris, director of sustainability at British Airways, said carbon removals formed “a key part” of reaching its climate goals.