Renewable energy’s scale-up provides a blueprint for carbon removal

Climate Impact Partners, a well-established developer of carbon projects, recently inked a 30-year agreement with Microsoft. Under this deal, they will provide 1.5 million carbon removal credits sourced from the Panna project in India. Sheri Hickok, CEO of Climate Impact Partners and former head of international windfarm development at General Electric, described the project’s financial structure as similar to that of a wind farm. She believes that drawing lessons from the rapid growth of renewable energy could help accelerate the expansion of carbon removal projects.

The Panna project, a community-led forest restoration initiative in Madhya Pradesh, India, is set to restore around 50,000 acres of land and plant nearly 12 million native and fruit trees. This effort will remove an estimated 3 million tons of carbon dioxide from the atmosphere over the project’s lifespan. Microsoft has already secured half of these carbon credits, with the remaining credits to be sold to other buyers by Climate Impact Partners. Terra Natural Capital is providing project finance based on planting rates and community engagement milestones, with support from Kita, a carbon credit insurance company.

Drawing parallels with the success of renewable energy, Hickok emphasized the importance of long-term commitments and price certainty in driving investments in carbon removal projects. Just as government policies and corporate demand signals have fueled the growth of renewable energy, similar mechanisms can support the development of the carbon removal industry.

While the carbon removal sector faces its own set of challenges, including longer return timelines and uncertainties, early movers in this space stand to benefit from the opportunities presented. By standardizing finance structures and learning from the experiences of the renewable energy sector, stakeholders aim to drive further growth and investment in carbon removal projects.

In conclusion, the advancement of the carbon removal industry hinges on establishing financial standards and fostering long-term commitments from investors and buyers. By leveraging lessons from the renewable energy sector and addressing unique challenges, stakeholders aim to scale up carbon removal initiatives and drive positive environmental impacts.