From ambition to action: funding scalable carbon removal
[SINGAPORE] There is increasing recognition that carbon dioxide removal (CDR) is critical, if not indispensable, to supporting global climate goals. This is driving demand for carbon removal opportunities and solutions, suggesting that CDR is poised for rapid growth.
While climate and transition finance have been gaining traction in South-east Asia, current efforts still fall short of what is needed to meet climate pledges. As the SEA Green Economy report published by Standard Chartered and its partners found, the region faces a US$50 billion funding gap – one that can be bridged with innovative financial solutions.
Innovation, collaboration, action
Recognising the importance of leveraging finance to scale CDR solutions, Standard Chartered recently co-hosted the Puro.earth Apac Carbon Dioxide Removal Summit in partnership with Nasdaq-backed carbon credit platform Puro.earth and the Carbon Business Council.
The event brought together more than 170 participants, including thought leaders, policymakers and entrepreneurs looking to shape the future of CDR in the region. Kicking things off, Chris Leeds, head of carbon markets development at Standard Chartered, highlighted three key themes for the summit: innovation, collaboration and action.
He noted that as companies explore CDR approaches ranging from direct air capture to biochar, it is essential to foster a culture of innovation that encourages bold ideas, rigorous research and practical experimentation. 'We must be willing to take risks, to learn from failure and to celebrate successes,' he said.
This requires a concerted effort by all stakeholders in the ecosystem, and should be matched by decisive action.
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Chris Leeds, head of carbon markets development at Standard Chartered, says it is essential to foster a culture of innovation that encourages bold ideas, rigorous research and practical experimentation. PHOTO: STANDARD CHARTERED
'We must move from ideas to implementation, from plans to projects, and from commitments to measurable outcomes,' he added.
'This summit is not just a forum for discussion; it is a catalyst for action. We should leave here with a renewed sense of urgency and a clear road map for the future, with ambitious targets and accountability for delivering results.'
Accelerating CDR with innovative finance
Also present at the summit was Lucy Palairet, director of carbon markets development at Standard Chartered, who participated in an insightful panel titled 'Unlocking Finance for Carbon Removal at Scale'.
In line with the theme of collaboration, Palairet highlighted that Standard Chartered is working closely with the Singapore Sustainable Finance Association. This comes as the private sector recently presented various financing structures to the government, aimed at developing transformative financing pathways for carbon markets.
One example of Standard Chartered's support for CDR projects is its landmark deal involving British Airways (BA). The partnership represents an innovative debt financing deal that offers capital to Undo, a carbon removal project developer which specialises in enhanced rock weathering.
Commenting on this partnership, Leeds said: 'We need a technological solution that can scale, allowing CDRs to become affordable across the market, and to deliver the net in net-zero. This transaction puts money into a project in an efficient way, through upfront bank finance.'
Indeed, the move is significant as early-stage developers are typically considered too risky for banks to offer corporate loans.
Additionally, the deal paves the way for scaling finance for CDR projects globally. Standard Chartered is looking to replicate this success across different sectors, including clean cooking and reforestation. By agreeing to an advance purchase deal with BA and backing it with insurance, the developer also sees its credit risk lowered.
Mitigating credit risk
Building on this discussion, Palairet shared three key strategies for managing credit risk when it comes to carbon market transactions.
At a panel discussion, Standard Chartered director of carbon markets development Lucy Palairet (second from right) notes that the private sector recently presented various financing structures for carbon markets to the government. PHOTO: STANDARD CHARTERED
The first is choosing a reliable offtaker. An offtake agreement is a long-term contract that enables a buyer to purchase future carbon credits from a project developer. In the deal facilitated by Standard Chartered, BA acted as the offtaker, lowering credit risk thanks to its strong reputation.
Essentially, offtakes reduce financial risk for suppliers and help secure credits for buyers at a predetermined price, enabling large-scale investment in CDR projects and a clearer path to net-zero.
The second solution is utilising a robust environmental risk management framework to ensure that transactions meet high standards of financial and environmental integrity.
According to Palairet, each company that Standard Chartered trades with goes through a rigorous risk management process. This includes a detailed carbon accounting review, social level assessment, senior management sign-off, and comprehensive due diligence to ensure the credibility of transactions.
As for the third strategy, Palairet noted that future market standardisation will help further mitigate credit risk. 'Standardisation is important to enhance the credibility, transparency, and comparability of climate change mitigation projects, enhancing the ability of market participants to assess and compare the quality of different projects.'
'This should increase capital directed to higher-quality projects, improving the effectiveness of the carbon market as a whole,' she added.
Echoing this sentiment, Leeds noted that 2025 marks a pivotal year for CDR growth, with the bank seeing increased investment from venture capital, private equity, and institutional investors in CDR technologies.
'This influx of capital can help scale up operations, reduce costs, and bring new innovations to market,' he said.
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