Bringing transparency to CDR portfolio construction 

ClimeFi has published its Rating Methodology, applied in all carbon dioxide removal (CDR) project analyses, credit transactions, and portfolio construction. The methodology outlines ClimeFi’s approach to identifying high quality CDR, the analytic process, and the risk factors assessed. Through its publication, we aim to bring greater transparency to the market and as a result, foster increased trust in CDR credit transactions

While the durable CDR sector is currently small in scale, it looks set to experience significant growth in demand. To date, durable CDR purchases total 7.6 MtCO₂, with forecasts suggesting growth of up to 40-200 MtCO₂ by 2030. Needless to say, CDR is quickly becoming an integral part of the net zero equation. For all buyers, identifying high quality CDR with a high likelihood of delivery is critical: buyers want to know that they are financing solutions that will make it to operations.

However, with over 500 durable CDR suppliers currently offering credits, choosing those with the highest quality can often prove challenging. Before engaging with the market, buyers need to ask themselves: how can we successfully identify the most promising projects on the market? And how can we be confident in both our transactions and the projects we support, while also de-risking our net zero journey?

ClimeFi: on-hand to help 

This is where ClimeFi comes in. ClimeFi partners with buyers in the CDR market, helping them to assess and mitigate the risks associated with CDR projects. How do we achieve this? In short – we take a three-stage analytical approach, helping buyers to answer three key questions: Is the project high quality? Is the project going to deliver? And is the project right strategically?

The specifics of this approach are outlined in further detail in our Rating Methodology – accessible here.

Providing the tools for success 

Leveraging this analytical approach, we are able to support portfolio development for any buyer, at any stage of their journey. As it stands, we have already successfully provided end-to-end support to several buyers in the market through this analytical approach, including the LEGO Group, ADYEN, and BCG, among others. 

By publishing our Rating Methodology we aim to: 

— Give our buyers the tools to navigate CDR decision-making. At ClimeFi, we have in-house expertise, external scientific expert partnerships, and market intelligence tools that we apply to support our buyers in the CDR decision-making process. By applying these assets — in tandem with this analytical Rating Methodology — we can identify high-quality CDR in a streamlined and scalable fashion. We want this methodology to be accessible to our buyers and partners so that they can have the tools to understand and navigate the emerging CDR sector with our support. 

— Provide transparency and trust to CDR decision-making. To scale CDR supply, we must first scale CDR demand. And to give buyers the confidence to engage in a future technology sector, we must implement the tools to mitigate risk. By releasing our analytical approach and providing transparency to the market, we aim to foster trust, generate confidence and facilitate effective CDR decision-making. Our approach to CDR project selection and identification of high-quality projects is accessible; a market cannot be built on a black box.

Alternatively, if you are interested in accessing our Extended Rating Methodology which digs deeper into our approach, please do reach out to procure@climefi.com.

Download the full methodology to understand our approach.