The Carbon Forty-Niners

Challenges faced by start-up NBS project developers

In 1848, a carpenter named James Marshall was building a sawmill near the Sacramento River in eastern USA when he noticed traces of a shiny metal in the mill’s water wheel. And so begun the California Gold Rush. In the 7 years that followed, over 300,000 people from all over the world, known as “forty-niners” (a reference to 1849, the peak year for the Rush), flocked to the region to get in on the act.

Today’s emerging carbon market isn’t so different. Instead of gold, the prize is CO2. Instead of extraction, the aim is sequestration. But otherwise, similarities abound: markets are unregulated and evolving fast, operators hustle for land and early-stage financing, and as mentioned, large numbers of new entrants are drawn in to a unique, emerging opportunity.

However, unlike sieving for gold in a riverbed, taking a nature-based carbon project from a patch of land to a credit generating asset is no mean feat. This is especially true for new entrants just starting out in their nature restoration efforts. We’ve spoken to dozens of such teams and learned first hand about the challenges they’re facing. Today’s blog aims to share those learnings. So, if you’re also a small or early stage team getting started in nature restoration, this one’s for you.

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Establishing credibility with investors to raise funding

Despite there being a fast growing pool of capital looking to be deployed into nature, raising financing for nature-based projects is still a hard sell. You need to convince investors to part with their hard earned cash that will be used to finance forests, grasslands, and peatlands. These projects need to last 30+ years to ensure the desired environmental impacts and financial returns are achieved. In the meantime, they could go up in smoke (literally), are vulnerable to any number of damaging human interventions, and are at the whim of a volatile and embryonic carbon market. This is tough enough for some of the established NBS developers who’ve been around for decades. For start-ups like yours, without a track record to point to, it’s a whole new level of difficulty.

To attract funding and provide assurances, you’re prioritizing transparency, rigorous reporting, and the setting up of systems (both tech-enabled systems at the organisational level and incentive-based systems on the ground) that help ensure the longevity and integrity of your projects. Over here at Cecil we want to make this as seamless as possible so have built tools that enable you to share dynamic project summaries with your investors via a simple URL link or embedded portals in your website. Save time, prove your credentials, and demonstrate to investors that you have the systems in place to scale.

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Originating and assessing high-quality projects

Before securing funding, you first need to identify potential NBS projects. Whereas established players can often add new projects adjacent to existing projects, or leverage their extensive experience and network to quickly find the best opportunities, you’re often tackling this issue from a cold start.

Where to begin? There’s 0.9 billion hectares of available land around the world that’s suitable for reforestation - that’s roughly equivalent to the entire land mass of the USA…Once you’ve whittled this down somewhat to, say, a few dozen opportunities, you must then start the process of assessment to understand which opportunities are worth pursing and with which partners. This analysis requires both technical work to assess carbon potential, biodiversity outcomes, cashflow forecasts etc, and analysis of qualitative factors such as political and market risk.

As they say, “rubbish in, rubbish out”. This first stage of the project pipeline is key to ensuring high quality projects that the market now demands. We’ve heard about the growing need that early-stage teams like yours have to better manage and asses these project opportunities. This is why we’ve been building our upcoming “Prospect management” tools, which we’re excited to release later this year. Watch this space.

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Navigating the long and complex process of verification

Setting up and successfully certifying a carbon project can take several years and requires a lot of process to satisfy all the complex, ever-changing certification requirements. Errors and omissions in the certification submission can cause months of delays.

Given all the different project types across different certification standards, there’s no step-by-step recipe to follow. No one-size fits all. Many established project developers consider their honed and codified processes as a valuable part of their IP - this is something that you may not yet have and must gradually build over time as your experience grows.

Sadly there’s no shortcut for experience, but creating structured processes and having the ability to assess the efficacy of those processes over time, can rapidly accelerate learning. New project developers are using systems like Cecil that can codify learnings, create process templates, and track operational performance, so that progressing each new project through its life cycle becomes easier than the last.

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Telling your project’s story to potential buyers

Investors aren’t the only stakeholder that you need to convince. Buyers of your credits, usually corporations, also need to be satisfied as to the quality of the project. Thanks to the sector’s fair share of controversy surrounding phantom credits and downright fraud (and comedy talk show hosts bashing the entire idea of carbon offsets), these buyers are rightly much more discerning about the credits they purchase than in the past.

Again, with no history to point to, you’re looking for unique and compelling ways to prove the validity of your credits. A carbon credit is an intangible good, so creatively telling the stories of your unique projects can help bring them to life. Think drone footage of luscious green jungles in the Amazon, photos of rare big cats caught by a hidden camera trap, and interviews with indigenous community members who make a living by maintaining and protecting the project.

As a start-up ourselves, we understand how hard it can be for new teams to get noticed in among all the noise. Which is why a core focus of Cecil’s is to empower you, as a new player in this space, to share ongoing project updates, build your brands, and show off the hard work you’re doing to help attract the high value you deserve for your credits.

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Reporting to external stakeholders including investors and auditors

You’ve raised the money, you’ve certified the project, you’ve sold the credits. Time to sit back and relax - sadly not!  Reporting on nature based projects is a never-ending but key component to the whole process. You have auditors, investors, buyers, partners - all of whom are in regular need of up-to-date information in easily digestible formats. As much as you love talking to all these wonderful people, gathering information from endless sources, and creating PowerPoint presentations, there are only so many hours in the day, and you have a fast growing business to run.

With Cecil’s stakeholder reporting tools, you can put high-quality reporting on autopilot. The relevant data is extracted from your portfolio in the Cecil platform and shared with the recipient in engaging and dynamic microsites and documents. Stakeholders can access the information whenever they choose, and there isn’t a slide show or a long email chain in sight.  Build trust, increase transparency, and save your team hours.

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Providing the pickaxes

The hard truth is that we can’t reach our net zero targets without a rapid acceleration in the supply of high quality nature-based solutions. It’s all hands on deck. And so every new team, every new project, every new bright mind that joins this market helps us drive towards our common goal of large scale nature restoration.

Cecil’s role is to empower you to scale high quality projects, fast. So, to help you hit the ground running, we’re providing the tools you need to build trust with investors, market and report on your projects, and manage the project pipeline from preliminary assessment through to credit issuance.

As the Carbon Forty-Niners roll up their sleeves and prepare for decades of inspiring work, we will continue quietly building the pickaxes. The regeneration rush has begun.