Portfolios have been central to Klimate's advisory services from the beginning. In line with our mission to support the scaling and development of carbon removal projects and technologies, portfolios offer key benefits: They diversify impact, manage risk, and tailor investments to meet organisational goals. In a relatively young industry like CDR, new projects and technologies emerge constantly. So, it makes sense that climate leaders would "travel every road possible" to support climate solutions in our fight against climate change.

How does a CDR portfolio benefit your company's climate goals?

When approaching CDR investment, portfolios attract buyers for several reasons. Instead of picking one project, where buyers often need to sign long-term and large-scale agreements, portfolios offer a more flexible approach. Companies interested in CDR investment can also maximise impact, tailor their spending to meet specific goals, and balance risk. Ultimately, portfolios ensure that companies actually achieve their intended climate goals. Here's how:

1. Maximise and diversify impact

Most investment portfolios encourage diversification. In the case of CDR portfolios, diversification enables buyers to maximise their investment and provides a crucial balance between technologies and credit delivery timelines.

Carbon removal methods vary significantly in price, from €30 to €1,000 per tonne. And, ex-post credits, representing a tonne of already-removed carbon, are typically more costly than future deliveries from the same method or project. In terms of risk, some nascent technologies or up-and-coming projects—although essential to support—may not be a good fit for companies prioritising the certainty of delivery. This balancing act enables buyers to access projects they wouldn't otherwise be able to invest in, so that budget doesn't limit ambition.

2. Align with your organisation

Investing via a portfolio allows companies to make specific, tailored choices, regardless of their company size or budget. Deciding your own priorities and investing accordingly is a great way to boost the resonance of a CDR strategy in your organisation.

Some priorities may include how durably carbon is stored, catalysing nascent tech, or boosting specific co-benefits such as biodiversity. Companies can also consider the other vital areas beyond just 'carbon' to decide what makes a project 'good'.

Furthermore, some projects or locations may align perfectly with a company's story or industry. For example, Real Estate Company A is drawn to credits from a carbon mineralisation project where the carbon is actually injected into cement. Company A can support the development of an early-stage project that may benefit the carbon management of their industry in the long run, and at the same time, engage with nature-based solutions that contribute to biodiversity, another key metric of their ESG agenda. This choice balances cost, certainty, and impact.

3. Effectively manage risk and balance trade-offs

The CDR space is full of proven, scalable solutions and in this early stage of developing carbon markets, no single solution has emerged as the 'winner'. As new approaches and projects continue to emerge, there can be risks ranging from technological delays to failure to secure the necessary finance for business operations. The portfolio approach mitigates this risk, as it's easier to replace a portion of the investment, as opposed to the entire investment.

Additionally, all projects have strengths and weaknesses. A rigorous due diligence process is an essential step to gain awareness of both delivery risk and a given project’s trade-offs. Balancing a given solution’s trade-offs through a diverse portfolio further secures the positive impacts your investment can have.

The numerous impactful projects that exist are indeed worth supporting in their early stages, and they are all a part of the climate toolkit necessary for achieving net zero.

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Portfolios designed to best-fit client needs

Part of CDR strategy 101 is understanding what motivates the purchase, so you can align a procurement pathway that looks and feels like your organisation. These questions can help determine the composition of the portfolio and where the decision-making process will go:

• Are you looking for a specific number of tonnes or need a particular delivery timeline to meet your net zero commitments?
• Are you interested in specific impacts (permanence, co-benefits like biodiversity, jobs), locations, or SDGs?
• To what degree would you like to support nascent technologies versus established NBS/hybrids?

Any given strategy can and should evolve. As buyers become more knowledgeable or find their organisational goals shift with changing goalposts, portfolio distributions can easily adjust along with them. By starting with and well-balanced portfolio, companies can effectively price their residual carbon emissions and prepare for a net-zero future.

How portfolios help meet climate goals and create a functioning, mature CDR market

By developing a global marketplace that balances established projects and emerging technologies, we can scale important climate pathways and build the necessary market infrastructure. In the end, the climate doesn’t care where in the world a tonne of carbon is removed. Exploring and supporting diverse locations opens up the possibility of creating greater impacts. Looking beyond carbon helps address the multiple interconnected environmental crises, while the portfolio approach lowers barriers to entry, ultimately contributing to creating the robust market we need to achieve net zero goals. Supporting a diverse portfolio of projects with balanced costs and co-benefits across the globe is the most effective way to reach our shared climate goals.

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