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Standard Chartered Provides Debt Financing for Carbon Project Developer UNDO

Standard Chartered Provides Debt Financing for Carbon Project Developer UNDO

UK-based international banking group Standard Chartered announced today a new debt financing transaction for carbon removal project developer UNDO, completed in collaboration with British Airways, CUR8, CFC and WTW, and aimed at demonstrating a transaction structure enabling the scaling of finance for Carbon Dioxide Removal (CDR) projects elsewhere.

According to the landmark Intergovernmental Panel on Climate Change (IPCC) climate change mitigation study released last year, scenarios that limit warming to 1.5°C include carbon dioxide removal methods scaling to billions of tons of removal annually over the coming decades. The report also noted, however, that while there are multiple existing solutions to capture and store CO2, most are early stage and currently limited in scale.

Founded in 2022, London-based UNDO develops carbon removal projects based on enhanced rock weathering. The company’s technology accelerates the natural geological process of weathering by spreading crushed silicate rock onto agricultural land, where plants and microbes in the soil speed up the weathering process, removing CO2, while simultaneously enriching soil with essential nutrients. According to the company, the process has the potential to scale rapidly to permanently remove billions of tonnes of carbon dioxide.

Jim Mann, Founder and CEO, UNDO, said:

“Enhanced rock weathering represents one of the most robust carbon dioxide removal solutions available today because it is permanent, highly scalable, and provides a host of co-benefits. Sectors like the aviation industry will require large amounts of high-quality carbon removal to meet their net zero commitments. UNDO and the carbon removal market need many more progressive partnerships like this to scale and meet the IPCC’s carbon removal goal of 10 billion tonnes a year by 2050.”

According to Standard Chartered, the new transaction will help overcome a significant barrier to scaling CDR projects by helping to unlock a new financing structure that separates the cost of a project from the sale of its credits, and gives project developers financial flexibility, in addition to reducing risks relating to delivery.

Marisa Drew, Chief Sustainability Officer, Standard Chartered, said:

“In the field of sustainability, we will need innovation and experimentation to be applied toward our hardest to abate sectors.  In these spaces, novel financial solutions and partnerships are key to unlocking opportunities that have scale potential. This transaction provides a bridge to bankability for high quality carbon removal projects and creates a solution that can be replicated across the airline industry to help ramp up a robust carbon removals market and accelerate ambition to achieve net zero.”

Under the new transaction, Standard Chartered will provide debt financing for UNDO, with British Airways committing to carbon credits to be generated from the financed projects, carbon removal market maker CUR8 providing due diligence and ensure high-quality removals, and CFC and WTW will act as specialist insurance providers to help de-risk the financing structure.

Marta Krupinska, CEO and Co-Founder, CUR8, said:

“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. We hope that this deal creates a flywheel effect whereby buyers can access highest quality carbon removals, de-risked by CUR8’s due diligence, with low upfront costs.”

Carrie Harris, Director of Sustainability, British Airways, added:

“Carbon removals are vital for urgently reducing the concentrations of carbon dioxide in the atmosphere and meeting global net zero emissions. At British Airways, they form a key part of our roadmap to reach our climate goals. We’re therefore delighted that this pilot has succeeded and whilst our initial purchase was relatively small, the partnership hopes to demonstrate the art of the possible and unlock future investment in carbon removals to help accelerate the scale-up of carbon removals solutions.”

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