InPlanet has released a new white paper that explores ways to address the critical financing gap for carbon dioxide removal (CDR) projects, pointing to revenue financing as a solution. 

The publication, titled Closing the Climate Financing Gap, is a joint publication between InPlanet, Idemitsu, CFC, and Carbon Removal Partners, and it builds on an innovatively structured transaction between the authors.

As part of the transaction, in which InPlanet is the supplier of enhanced rock weathering (ERW) CO2 removals, Idemitsu is lending the financing while CFC acts as the insurer. The agreement was introduced by Carbon Removal Partners and brokered by Howden. 

Drawing from this experience, the white paper focuses on revenue financing and its potential in addressing the financing challenge standing in the way of scaling numerous CDR projects. 

The publication also goes over other non-dilutive instruments, such as grants, venture debt, and asset-backed finance, looking at what each of them finances and where it falls short.

Over the past few years, the carbon removal sector expanded significantly and has now reached a point in which the demand from buyers exceeds the supply available on the market. 

To answer the growing buyer interest and reach climate-relevant levels of impact, the carbon removal sector needs to scale further, yet financing is one of the main factors obstructing that goal for many project developers. 

As InPlanet highlights, the challenge is not a lack of visibility into future revenues, as suppliers are increasingly locking in long-term offtake agreements, but rather the issue is timing, as developers must invest in their projects today, while revenues arrive only once carbon credits are delivered.

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