UNDO Lands Groundbreaking Carbon Removals Financing Deal in 'Global First'

UK carbon removal start-up UNDO has secured an innovative debt financing deal, supported by significant corporates like British Airways and Standard Chartered, to accelerate the expansion of its enhanced rock weathering activities.

In what's being hailed as a "global first," the agreement unlocks critical funding. It includes a multi-year offtake arrangement, ensuring the corporate partners purchase the carbon removal credits generated by UNDO's projects.

The financing deal is led by Standard Chartered, which provides debt backing alongside partners such as British Airways, carbon removal firm CUR8, insurer CFC, and consulting firm WTW. UNDO launched a pilot project late last year in collaboration with British Airways, CUR8, and Standard Chartered, laying the foundation for this approach.

Standard Chartered called the transaction a "breakthrough" for the emerging carbon removals sector, noting it could pave the way for scaling similar financing models globally. While the value of the debt deal remains undisclosed, the structure is designed to address the significant financial hurdles typically faced by carbon removal developers like UNDO.

Marisa Drew, Chief Sustainability Officer at Standard Chartered, highlighted the potential to replicate this approach across a variety of carbon removal methods, emphasizing how the combination of smaller-scale financing and guaranteed offtake agreements can help mitigate investment risks and ramp up credit supply.

"In the field of sustainability, we will need innovation and experimentation to be applied toward our hardest to abate sectors," she said. "In these spaces, novel financial solutions and partnerships are key to unlock 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 the sector's ambition to achieve net zero."

The Intergovernmental Panel on Climate Change (IPCC) has projected that to reach net zero by mid-century, the world will need the capacity to remove over 10 billion tonnes of CO2 from the atmosphere annually and decarbonize the global economy. Currently, conventional carbon dioxide removal (CDR) methods can only address around two billion tonnes of CO2 annually, highlighting the pressing need to scale up nature-based and engineered carbon removal solutions.

According to Standard Chartered, achieving this scale will likely require billions of dollars in private investment and bankable financing models to support the development of high-quality carbon removal projects.

Last year, UNDO raised $12 million from various investors to accelerate its enhanced rock weathering activities. These activities accelerate natural carbon sequestration by facilitating the reaction between CO2-rich rainwater and mineral-rich rocks. Once the reaction is complete, the crushed rocks are spread on agricultural land, a process shown to boost crop yields and reduce the need for emissions-intensive fertilizers.

UNDO has also secured offtake agreements for its carbon removal credits with companies such as Microsoft and McLaren Racing, further strengthening its position in the growing carbon removal market.

UNDO founder and CEO Jim Mann described enhanced rock weathering as "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," he added. "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."

Carrie Harris, director of sustainability at British Airways, said the purchase of high quality carbon removals credits to offset its emissions "form a key part of our roadmap to reach our climate goals".

"Carbon removals are vital for urgently reducing the concentrations of carbon dioxide in the atmosphere and meeting global net zero emissions," she said. "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."

In related news, tech giant Google has partnered with direct air capture (DAC) developer Holocene to purchase carbon removal credits at a record-low price of $100 per tonne of CO2. This marks one of the most cost-effective deals for DAC technology to date.

The DAC projects from which Google will source these credits are expected to operational in the early 2030s. However, the company acknowledged that Holocene's technology is still in its early development phase.

As part of the agreement, Google will provide upfront financial support to Holocene while committing to a long-term arrangement to acquire carbon removal credits from the developer's future facilities.

"We're committed to doing our part to decarbonize the global economy and reach our goal of net zero emissions across our operations," Google said in a statement on Monday. "Carbon removal technologies are key to that goal. Partnering with Holocene to reach this milestone price will be a meaningful step toward advancing the viability of DAC as a tool to fight climate change."