Virtus: The Dirt on Soil Carbon Credits

November was another exciting month for us at Gordian Knot Strategies!

This month, we made some excellent progress on projects with our current clients and are happy to be heading into December with some new work on our plate to top off a packed 2023.

Our weekly Sliced articles this month covered topics including how artificial intelligence (AI) is impacting climate finance and carbon markets, the current global state of countries engaging with Article 6.2 of the Paris Agreement, and what is going on in the world of green bonds.

COP28 kicks off in just two days. Like most in our space, we will be closely monitoring what happens over the coming weeks in Dubai.

As always, feel free to reach out to us via email or on LinkedIn. We are always eager to discuss climate finance.

All the best,

Gordian Knot Strategies

We are Igniting Climate Solutions: Mobilizing $1 Billion Per Year in Impact Investment by 2030!

There are currently around 170 different types of carbon credits trading on carbon markets around the world, including both compliance markets and the voluntary carbon market (VCM). One of the most interesting types of credits, and a type that has received a lot of attention in the past year, are credits tied to soil carbon. Although soil carbon credits are a distinct type of credit, measuring and monitoring soil carbon is also important for other types of crediting projects such as sustainable agriculture and grassland management.

However, unlike more prevalent carbon credits such as those generated from clean cookstoves or renewable energy, there remains speculation about the legitimacy of soil carbon credits and their classification as a credible credit type. In this article, we will review that matter.

To read more, click here.

170 types of carbon credit projects in 2022/ Source: Ecosystem Marketplace:The State of the Voluntary Carbon Markets, 2022

We consider it a privilege to collaborate with incredible clients who passionately devote their time, energy, and resources to diverse and meaningful projects globally. In recognition of this, we are showcasing the unified endeavors between our clients and us.

Client Served in the United States

GKS was enlisted by an innovative soil technology company to craft a robust go-to-market strategy for their novel tech offerings. The approach involved a meticulous evaluation of how the company’s soil carbon actionable data could seamlessly integrate into current and future carbon markets. This comprehensive strategy included identifying priority global markets and outlining a strategic approach to optimize market reach. After completion of the initial work, the company re-engaged GKS for a subsequent phase. GKS revisited the collaboration to distill findings into effective recommendations for pricing models tailored to the company’s unique business model. Through interviews with market actors, rigorous market research, SWOT evaluations, and other analytical methods, GKS provided insights that not only aligned with the company’s immediate goals but also positioned them strategically for sustained success in the dynamic landscape of soil technology and carbon markets.

“It was an absolute pleasure to work with Sean and the whole GKS on our project. The GKS reports were of very high quality and fully comprehensive.”

Henry Rowlands – CEO, Soil in Formation

🎙️ In our November episode of Untangling Climate Finance, Jay connects with Sean Kidney, the CEO of the Climate Bonds Initiative.

The two connected in August to review the current state of green bonds, the use of their proceeds, the prevalent topic of greenwashing, and how we can get more climate finance moving to slow down global warming.

Sean also shares some personal information such as his journey to becoming a leader in the bond space, and why he works so tirelessly to fight the climate crisis.

Click any of the links below to listen!

The U.S. Endowment for Forestry and Communities has just announced an RFP for their new Impact Investing Program.

The program seeks to deploy up to $5 million in 2024 for impact investments in companies, funds, or projects that advance systemic, transformative, and sustainable benefits for the health and vitality of working forests and forest-reliant communities in the United States.

Gordian Knot Strategies is supporting the development of the Impact Investing Program. We encourage you to read the Endowment’s press release here, review the RFP materials here, and share the information with your network. This is a great opportunity for companies and project developers seeking capital on reasonable investment terms.

Please note: this is not a grant making endeavor.

There will be an informational webinar about the opportunity in early December; registration information is provided in the RFP materials here.

✍️ Carbon Direct recently published a 2023 State of the Voluntary Carbon Market report. It offers carbon credit buyers, project developers, and policymakers insights into key market trends. Key takeaways include a fivefold increase in purchases by quality-focused, removals-oriented carbon credit buyers from 2021 to the first three quarters of 2023, rising from 3.1 million tonnes to 15.1 million tonnes. Concurrently, reductions in REDD+ and renewable energy volumes have led to declines in issuances and retirements within the voluntary carbon market.

✍️ Every year the Climate Policy Initiative (CPI) reports on the accumulative climate finance action around the world. Their Global Landscape of Climate Finance 2023 report reviews financial flows in 2021/2022. Although climate finance breached $1 trillion USD for the first time ever, current flows represent about only 1% of global GDP.

✍️ The 2023 State of Climate Action from the World Resource Institute (WRI) and others offers a comprehensive roadmap for bridging the gap in global climate action to limit warming to 1.5°C. Despite recent efforts, the report emphasizes that progress toward 1.5°C-aligned targets is insufficient in both speed and scale. It underscores the urgent need to accelerate action in the coming decade to reduce greenhouse gas emissions, expand carbon removal, and boost climate finance.

Photo by Pixabay

Below is a recap of November’s most exciting climate finance deals.

Barbados “Debt-for-Climate” Swap Backed by $300 Million USD EIB, IADB Guarantee

The European Investment Bank (EIB) and Inter-American Development Bank (IDB) will jointly guarantee $300 million for Barbados in a “debt-for-climate” swap to enhance water infrastructure. The arrangement allows Barbados to issue $295 million in sustainability-linked debt, with the EIB and IDB each offering $150 million in guarantees.

Global Carbon Market Hits $800 Billion USD Despite Dwindling Trade Volumes

Bloomberg New Energy Finance (BNEF) projects that major compliance carbon markets will surpass $800 billion this year, marking a 5% year-on-year increase. Despite declining trade volumes due to the Russia-Ukraine conflict, the growth is attributed to rising allowance prices driven by reforms aimed at leveraging carbon markets. However, concerns about energy affordability and security have tempered this expansion.

Climate-Tech Startups Amass $7.6B in Q3, Setting New Record for VC Funding

In Q3 of this year, climate-tech startups specializing in carbon and emissions technology secured a record-breaking $7.6 billion in venture capital (VC) funding, surpassing the sector’s previous record by $1.8 billion. Despite a general fundraising downturn, government assistance provided significant non-dilutive financial support for decarbonization firms, allowing them to navigate VC challenges.

BlackRock Places $550M Bet on Occidental’s DAC Project STRATOS

BlackRock Inc. is committing $550 million on behalf of clients to Occidental Petroleum’s STRATOS, the world’s largest Direct Air Capture (DAC) plant in construction in Texas. This significant investment represents approximately 40% of the total $1.3 billion cost of the DAC project, making it one of the most substantial investments in carbon capture technology.