ClimeFi conducts due diligence on carbon dioxide removal (CDR) projects under our coverage, either because they sit in a client's portfolio or because we believe they could be of interest to them at some point in the future. Due diligence is critical at this stage of the carbon removal market, as buyers navigate an evolving landscape and need to feel confident when allocating resources.
The challenge, in ClimeFi’s view, is that due diligence in the market is often static; a snapshot view taken at a single point in time, and assumed to hold true until credit delivery. However, many of the projects that buyers procure from are not yet operational, or are currently operating at a much smaller scale than they are expected to reach in the next few years. A static view therefore doesn’t account for the risk that can develop between now and delivery, which for some of our buyers is post 2030. Nor does it capture the improvements suppliers can implement to mitigate the identified risks.
Continuous project monitoring
Project monitoring allows ClimeFi to move from a static to a dynamic due diligence. ClimeFi continuously tracks each project in our coverage, formalised through regular check-ins with suppliers for information relevant to the project and the delivery timeline agreed with the client.
At the point of initial due diligence, we identify the key variables to track over a project’s lifecycle. Some concern integrity and what it will take to maintain high standards, while others sit on the delivery side, such as key partner contracts to be signed, regulatory milestones to be achieved, or environmental permits to be obtained. We check progress against these, then collect the information and synthesise it into a monitoring report for the client.
These reports cover positive developments as well as anything that could affect the delivery timeline and any portfolio actions we would suggest the buyer consider. They also include commercial updates, such as new volumes across vintages, so that buyers can act quickly if a project is performing well.
Beyond the reports, clients also have full access to the latest project updates via ClimeFi’s platform at any time.
How ClimeFi gathers the information
ClimeFi draws on several sources to collect the relevant data to inform monitoring. This runs through an integrated monitoring system that pulls data from each of the sources into one place, as opposed to being tracked case by case (see Figure 1 below).
Figure 1: ClimeFi’s integrated data collection and monitoring system
Sources include information received directly from suppliers; publications from the relevant standards bodies including verification reports; broader scientific and pathway-specific research; local and international media coverage; and site visits, to confirm our desk-based research.
ClimeFi analyses all direct supplier information and sets it against these external sources, never taking direct information at face value. This is central to our independent approach.
Why monitoring benefits buyers
Monitoring creates a buyer partnership, and allows ClimeFi to act as a trusted set of eyes throughout your procurement journey.
Corporate carbon removal buyers are often operating with limited resources, and often require a business case to justify any actions to internal stakeholders. Centralising all of the project updates into one report that covers project-specific developments, when invoices are expected, and when credits are expected can help with that.
Monitoring also allows ClimeFi to distinguish between a delivery delay and the risk of non-delivery altogether, as we are able to check in on projects regularly to see whether risks are being mitigated by the supplier or building up each quarter. If a project is delayed, as can often be the case in the carbon removal market, the earlier that a buyer knows, the earlier they can make an informed decision on whether to wait it out or complete a reallocation.
Why monitoring also benefits suppliers
The same process equally benefits suppliers.
Not only does ClimeFi's monitoring hold suppliers accountable to the milestones set out in their contracts, but it also holds them to a high integrity standard. By checking in regularly, we can get to the bottom of emerging risks early, giving suppliers the runway to put new mitigations in place before those risks affect delivery.
Where it leads
Dynamic due diligence through project monitoring isn't a nice-to-have; it's essential. If a buyer is purchasing kilotonnes of CDR for 2030 delivery from a project that's still pre-issuance, they can’t afford to sit and wait for the deadline. Being informed isn't a one-off check, but an ongoing commitment.
To learn more about ClimeFi's approach to project monitoring, please reach out today.
