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Restoring Nature
Restoring Nature

8 challenges faced by teams developing carbon projects

April 6, 2022
Team Cecil

As the world’s net zero ambitions intensify, so too does demand for high quality carbon credits.

However, teams developing nature-based carbon projects face numerous daily challenges that inhibit their ability to scale. Over the last 12 months, we have worked alongside carbon project developers to better understand what stands in the way of their success - here are some of the most common obstacles that we’ve heard along the way.

Knowledge management

1. Many tools makes for many siloes

With workflows spread across spreadsheets, GIS tools and off the shelf salesforce software, project developers often struggle to manage fragmented data across discrete databases.

Information silos reduce opportunities to streamline operational tasks during project feasibility, design and ongoing monitoring. Without a system of record offering a holistic view of the project portfolio, compliance issues can also arise during project audits and verification events.

Project developers can waste hours searching for necessary information to deliver robust ongoing crediting reports, often forcing teams to deprioritise 'meta work' such as knowledge management throughout the project development process.

2. Manual data collection = less time setting up projects

Setting up nature-based carbon projects requires vast amounts of data. With a need to calculate accurate emissions and natural capital baselines at the beginning of each project, project developers struggle with manual data collection from project participants.

Lengthy, labour intensive email chains and follow ups are required to collect relevant details throughout the project lifecycle, making the task of showcasing environmental, social and financial outcomes difficult.

Manual data handling also increases the chance of human error. Projects face a premature ‘death by a thousand spreadsheets’, leading to gross inefficiencies and avoidable certification body delays during project set up. This leaves project developers with less time to focus on higher value development activities, limiting their ability to successfully scale project portfolios and impact in the process.

Stakeholder collaboration

3. An ever growing list of reporting requirements

Keeping stakeholders updated on progress is an ongoing challenge for project developers. Teams funding nature-based projects are often used to operating in mature financial markets and expect frequent, institutional grade reporting across assets they support.

This can leave project developers forced to succumb to administrative ‘service models’ to keep stakeholders happy. As portfolios scale over time, managing stakeholder communication can become so taxing that it requires a standalone work stream within project developer teams.

4. Scheduling delivery partners

Structured collaboration between nature-based project delivery partners (such as forest managers and ecologists) is not commonplace. Without a shared view of timelines and jobs to be done, project developers can struggle to manage partners effectively. A suite of email and calendar tools are used to schedule work across projects - creating operational inefficiencies and delays through a lack of real-time transparency.

With problems intensifying as NBS portfolios scale, ineffective collaboration means project developers can miss out on the opportunity to streamline project delivery timelines that take project outcomes from decent to exceptional.

Project operations

5. Lengthy project set up times create risk

Project developers take on significant risk when setting up nature-based carbon reduction projects, with cash flow often taking 2-3 years to be realised. To get a project underway, project developers must overcome a series of hurdles:

  • Feasibility analysis - complex feasibility studies are critical, but costly steps in any carbon project process
  • Funding - managing lengthy financier due diligence processes consume resources, as stakeholders take steps to ensure that all offsets created can be substitutes for genuine emissions reductions
  • Design - drafting a project design document is highly technical task that’s riddled with jurisdictional challenges

Poorly managed workflows across such setup tasks can lead to delays - adding unanticipated costs that most project developers cannot afford.

6. Selecting and managing technology providers is overwhelming

In the last decade, innovation in remote sensing technology has rapidly accelerated. Insights are now widely accessible from a growing marketplace of satellite imagery providers, flux towers and LIDAR imagery operators.

Whilst lauded as a useful way to reduce operational costs, by removing the need for frequent site visits, project developers are often left struggling to select from a wide range of complex monitoring tools. Once a selection is made, managing siloed information delivered by remote sensing providers can also cause issues - as many providers tend to specialise on tracking a select handful of ecosystem services.

Financial management

7. Managing credit inventories is taxing

As projects mature and deliver high quality outcomes, carbon credits are generated and sold. With a multitude of registries and credit types to consider, managing this process is no easy feat. As portfolio’s scale, project developers can find it hard to stay on top of complex credit reporting schedules, transaction records and variable buyer delivery timelines.

These inventory management difficulties will only intensify, as project developers begin to explore alternative incentives for restoring ecosystem services beyond carbon - such as improving biodiversity and water quality.

8. Securing early-stage funding

Project developers can struggle to secure funding for early stage nature-based project concepts for the following reasons:

  • Pre-feasibility requirements - a project’s potential upside is often unknown until costly feasibility studies are completed
  • Nature-based projects are capital intensive - transaction costs can be extremely high, particularly for small scale projects
  • Early-stage risk is often too great - financiers facing climate information asymmetry may be hesitant to fund complex or novel projects, particularly if coupled with regulatory uncertainty
  • Difficulties communicating upside beyond carbon - measuring project co-benefits such as biodiversity net-gain without established frameworks is challenging, leaving project developers unable to confidently communicate potential upside to investors

These challenges can result in the prioritisation of projects with near-term, measurable carbon value over those with potentially more significant, longer-term environmental and social outcomes.

To find out how Cecil is simplifying nature-based carbon projects - click here to book a demo.

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