Project Finance for Nature-Based Solutions

About

Overview

A project finance facility that aggregates high-integrity nature-based carbon projects with pre-purchase offtake agreements from high-integrity carbon credit buyers. The idea also proposes to include a technical assistance facility as a de-risking mechanism.

The Problem

Nature-based solutions are underinvested compared to renewable energy and other climate solutions which have clear sources of revenue to repay investors. While it has historically been difficult to find a payer for the ecosystem services provided by nature, today a significant number of global companies are making commitments to net zero which include offsets for hard-to-abate emissions. As a result, voluntary carbon markets offer a growing opportunity for nature-based solutions to monetize carbon sequestration and secure long-term, reliable revenue streams that make projects more attractive for private investment. However, navigating carbon markets and securing up-front financing on fair terms are not easy, especially for smaller projects in developing economies. As a result, the volume of capital flowing to nature-based projects is limited, relative to the size of the opportunity.

The Solution

Project Finance for Nature-Based Solutions will combine partnerships with corporate off-takers, technical assistance, and low-cost project debt backed by long-term agreements for future credits generated by the project.

Target Impact

The target market for project finance via voluntary carbon markets is estimated at USD 5 billion, indicating significant potential for impact.

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