This report dives into how nature-based carbon project developers around the globe are funding their projects, structuring offtake agreements, and where they’re running into the biggest hurdles accessing project finance. It’s based on a survey of 74 NBS project developers.
Four findings from the research:
1. The majority of projects rely on organization-level funds or project-level equity
Survey respondents most commonly relied on organization-level funding, including a founder loan and company-level equity, to cover project expenses. About one quarter of projects had access to project-level equity.
2. The cost of capital alongside the cost of getting ‘investment-ready’ were top obstacles to accessing finance
Respondents cited the cost of getting a project past milestones most financiers and funders require, coupled with lengthy investor and offtaker due diligence timelines, as their top obstacle to accessing funding. The high cost of capital was the top source of overall project cost uncertainty as well as another major bottleneck to accessing finance.
3. Projects with an offtake were 6.7x more likely to utilize project-level debt
Project-level debt was rare—just 13 percent of projects utilized this as their primary funding source. Of these, 85 percent had a signed offtake or were in late-stage negotiations for one.
4. Philanthropic capital was scarce, and primarily for new developers with early-stage projects
Just 9 percent of projects utilized grants or philanthropic capital as their primary funding source. This funding was almost entirely used by projects that were very early-stage (pre-PDD) and developers who had never previously sold credits.
Download the full report below.