“For me, carbon is really as important as the industrial revolution because we really have the opportunity to change completely the economic and social paradigm,” noted Alexis Leroy, CEO of Allcot, speaking at the Airline Economics’ Sustainable Aviation Fuel and carbon financing conference day in Dublin. “Carbon projects beyond the CORSIA obligation are an incredible opportunity for the aviation sector.”
Charles Bedford, chief impact officer at Carbon Growth Partners, believes the sector has shifted from a climate focus perspective to a global impact-focused perspective. “We see that many countries are open for business, so they are more willing to settle the corresponding adjustment which is really the backbone of CORSIA eligibility,” he highlighted, adding that this is conditional on the high-integrity project under development ensuring a high benefit for the host country. “It’s remarkable to me though, that there hasn’t been much more activity on carbon credit financing from the aviation industry because it’s stepped forward so dramatically,” he mused.
“Our investors are pretty long minded” added Bedford, confirming that carbon is an “asset class”. “There generally are investors or private individuals, family offices, small institutional investors, looking at … the curve and planning the job that needs to get done from a climate perspective.” With the “writing on the wall” at the Paris Agreement, an increasing number of investors have moved into the space as ""whether you’re an airline industry, a company, a bank… we’re all short of carbon”.
“On the upside, we’ve got the corporate offtake which guarantees that market risk and essentially allows for… the ability to match risk with the right capital so that we can grow the pie and people can achieve their environmental outcomes,” highlighted ShanMae Teo, chief financial officer of Climate Impact Partners. Voluntary carbon markets are a big part of the company’s activity, with Teo recognising an emerging trend moving towards forward uptake agreements. “We’re managing both opportunity to make impact but also risk,” she concluded, with Impact Partners working with corporates to construct their portfolios.
“The role of banks is to facilitate partners on the ground,” suggested Suraj Vanniarachchy, vice president of global carbon, Macquarie Group. “We know how to de risk project risks, and we can help them structure the project as well as channel the finance.” He added that Macquarie Group “sees more tools are there to quantity the carbon and do the monitoring and reporting verification,” as well as seeing “international… and national policymakers gearing up and understanding more the need and the urgency of climate financing”.
Although Bedford perceives CORSIA as having given the aviation industry “very clear guidance about where to go and how much to go there far"" (although without a set of “essentially clear guidelines""), the targets in question are huge – 64 million tonnes a year. “I would encourage you to get your feet wet, get in as quickly as you can, both from an educational perspective and financial perspective,” he concluded. “You definitely want to make CORSIA happen – you don’t want to have CORSIA happen to you”.
Considering the carbon project investment landscape
