The carbon removal industry is rapidly evolving, but one challenge unites suppliers from all around the world: securing project financing. Without having adequate funding on hand, even the most impactful and innovative CDR projects are destined to remain simply ideas, rather than solutions with real climate impact.

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On January 29, 2025, Carbonfuture’s Adam Sipthorpe, Head of CDR Sourcing EMEA, sat down with a panel of finance and carbon removal experts to discuss the challenges suppliers face in securing project financing. Featuring Jeremiah Lim (Barclays), Linda Alami (Macquarie Group), Greg Stangl (Phoenix Energy), and Erica Vertefeuille (Terra Natural Capital), the panel brought a diverse array of perspectives.

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Here are four key takeaways from the discussion:

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1. Know the Difference Between ‘Project Finance’ and ‘the financing of projects’

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Early in the discussion, Jeremiah made a critical distinction between formal, standardized Project Finance (capital "P" and "F")—which is typically used for large, low-risk infrastructure projects like toll roads—and the more customized, flexible financing structures needed for carbon removal projects. Standard Project Finance works well for established industries. But in carbon removal, financing tends to be more tailored to each project’s unique risks and requirements.

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"When we distinguish between ‘Big P, Big F’ Project Finance and financing projects, the latter better reflects how funding is successfully structured in the carbon removal market." – Jeremiah Lim, Barclays

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What this means for suppliers: For the most part, the market isn’t quite ready yet for Project Finance (capital P and F) of durable removal projects. Financing CDR projects therefore requires more detailed underwriting, complexity and individual assessments. This can add time to your financing journey, so make sure to factor this in.

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2. Understand Which Investment Options Are Right for Your Stage of Growth

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"We don’t do super early-stage, first-of-a-kind projects. We focus on technologies that are proven – we like when there’s low technology risk, and we want to help developers scale up." – Linda Alami, Macquarie Group

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Funding sources often see a progression over time, from grants and philanthropy for pilot projects, to venture capital and micro finance options for early development, and large-cap banks and institutional investments for scaling operations. Each of these has their own risk tolerance and ability to provide funding, whether that’s equity or debt financing, or another method entirely.

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What this means for suppliers: Understanding where you are on your journey and which option might be right for you is vital. Approaching the wrong investor at the wrong time can lead to headaches and wasted time.

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3. In a World of Innovative Funding Agreements, Contracts Are King

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Lenders and investors want to see predictable, long-term revenue before committing to your organization. This doesn’t necessarily mean that you need a carbon credit offtake agreement, it could include secured agreements for other revenue streams such as heat or electricity agreements, depending on your technology and project specifics.

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Greg Stangl, CEO of Phoenix Energy, has experienced the value of these agreements first-hand: "You’ve got to have contracts in place. We had a giant infrastructure fund offering us more money than you could imagine, but they could not get comfortable with biochar, because we didn’t have a 20-year offtake agreement for it. But if we secure a power purchase agreement with a utility, that’s ironclad, a deal nobody questions. Our goal is to minimize the need for explanation."

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What this means for suppliers: Uncertain revenue streams are not attractive to investors, especially in a nascent and dynamic industry. Consider options to lock down a revenue stream, even if that sits outside of carbon credit sales, and use it as a bridge to scale your operations.

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4. Always Consider the Customer and Their Needs

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Many corporate buyers are racing to meet net-zero deadlines but have concerns about durable carbon removal—whether it’s cost, integrity, or long-term impact. While high-quality durable CDR is essential to achieving net zero, it’s crucial to understand your customers and the challenges they face:

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"We’re hyper-focused on bringing supply online, but here, the demand is so critical to unlocking value. As developers develop their projects, it’s really in service to the buyers, so keeping pulse on what they need and want is critical." - Erica Vertefeuille, Terra Natural Capital

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What this means for suppliers: Keeping tabs on the market and what’s top of mind for corporate buyers is important. It’s helpful to have an intermediary that can connect you with buyers and help you understand their concerns and needs.

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Final Thoughts

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Project financing (no matter the capitalization) is a big topic, and our panel discussed several other topics, such as insurance and its ability to help bridge funding gaps, the challenges and opportunities for projects located in the Global South, and other ways that CDR suppliers can reduce risk.

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If you couldn’t attend the webinar in person, be sure to check it out on our YouTube Channel, and reach out to our team of experts if you have further questions on how to take your project from idea to impact.