CFOs Say Yes to Carbon Removal Deals with Long-Term Agreements

Corporate buyers of carbon removals have successfully signed deals covering over 40 million metric tons of nature-based carbon removal in the past three years, thanks in part to long-term offtake agreements. However, getting CFOs to say 'yes' to such deals was a challenge that required creative strategies.

The Trellis Group notes that carbon markets have transformed significantly over the past five years, with updated standards and rigorous due diligence frameworks giving sustainability leaders more confidence in project design.

One key strategy employed by Symbiosis, a buyers coalition representing Google, Microsoft, Meta, McKinsey, Salesforce, REI, and Bain, was to carefully evaluate delivery risk. This involved examining factors such as project developer financing, track record, and pilot implementation to mitigate the risk of failed deliveries.

Applying the renewables playbook also helped CFOs become comfortable with carbon removal offtakes. By making an analogy between renewable energy purchases and long-term forward purchase contracts, buyers could provide price and volume certainty for early-stage projects.

Finally, incorporating buyer protections into contracts, such as minimum delivery thresholds paired with replacement credits or other forms of compensation, helped align incentives and protect buyers in underdelivery scenarios.