Structured Finance for Carbon Projects

1. Financing Gap Across the Project Lifecycle

Carbon‐credit ventures frequently encounter front-loaded expenditure profiles—baseline surveys, feasibility analyses, and stakeholder consultations—well before a single Verified Carbon Unit (VCU) is listed on a registry. Traditional lenders rarely underwrite that early-stage risk, while grant funding seldom scales. The result is a material liquidity gap that can stall high-quality projects or dilute sponsor equity.

2. Capital Allocation Framework

Financely Group structures a sequenced capital stack aligned with technical milestones and registry checkpoints, reducing cash-flow volatility and safeguarding sponsor economics. Each tranche is tailored to the prevailing risk posture, governance requirements, and visibility of future credit revenue.

• Concept & Feasibility – Seed equity or recoverable grants to prepare the Project Design Document (PDD) and pilot plots.
• Baseline Establishment & Validation – Carbon development loans converting to credit-linked notes upon verifier sign-off.
• Development Phase – Construction facilities released against defined work packages (nursery build-out, bore-hole drilling, biochar reactor commissioning).
• Monitoring & Verification – Revolving working-capital lines synchronized with monitoring timetables and field-team mobilisation.
• Issuance & Scale-Up – Forward sales (ERPAs) or prepays from corporate offtakers, locking revenue prior to credit minting.

3. Financing Instruments in Scope

• Carbon Development Loans – Margin ratchets step down at each registry confirmation, aligning lender exposure with risk reduction.
• Performance-Linked Notes – Coupon indexed to verified tonnage, creating transparent alignment between capital providers and developers.
• Pre-Issuance Revolvers – Drawdowns matched to operational burn rates during monitoring seasons.
• Forward Credit Sales & ERPAs – Price floors and volume commitments that stabilise project IRR in volatile spot markets.
• Credit & Political-Risk Wraps – Mitigation against counterparty default, expropriation, currency transfer restrictions, and contract frustration.
• Collateral Management Agreements – Third-party oversight of nurseries, biomass inventories, or REDD+ patrol budgets, providing lenders real-time asset assurance.

4. Engagement Protocol

• Pre-Screen – Sponsors submit draft PDD, baseline datasets, and financial model for preliminary assessment.
• Mandate – Advisory letter executed; due-diligence budget funded.
• Comprehensive Due Diligence – Site visits, biodiversity audits, legal title verification, registry eligibility review, and sanctions screening.
• Structuring & Placement – Bilateral or syndicated term sheets negotiated with lenders, insurers, and offtakers.
• Execution – Facility agreements signed, ERPAs executed, hedging booked, and reporting protocols activated.
• Ongoing Monitoring – Satellite imagery, field inspection reports, and credit-buffer calculations streamed to the project portal.

5. Our Value Proposition

• Direct connectivity to specialist climate lenders, carbon funds, and A-list corporate buyers across Europe, North America, and Asia-Pacific.
• Deal teams seasoned in buffer-pool clawbacks, registry arbitration, and Article 6 cross-border compliance.
• Compensation structure indexed to funding milestones—transparent, performance-oriented, and free of hidden mark-ups.
• Digital workspace integrating document flow, satellite data, and actionable risk alerts.

6. Transaction-Critical Failure Points

• Baseline reports anchored to obsolete satellite layers—verifiers reject them outright.
• Single-buyer ERPAs lacking step-in rights if corporate strategy pivots.
• Cash-on-delivery constructs when first issuance sits four to six years out—capital starvation risk.
• Cargo-style “all-risk” covers excluding wildfire, flood, or pest damage—the very hazards forestry credits face.

Financely Group provides structuring and risk-management services; we are not a deposit-taking institution. All mandates require KYC, sanctions screening, and an advisory retainer. Arrangement of loans, ERPAs, or risk wraps remains subject to third-party approval and executed documentation. Misrepresentation triggers immediate termination and reporting under AML & CTF regulations.