As the industry continues to develop, various carbon dioxide removal (CDR) market players, including ClimeFi, will continue to have a critical role to play in bridging the gap between buyers and suppliers.
Among these companies, however, there are various different business models emerging:
- Resellers/brokers. Revenue is generated from the supplier by taking a percentage of the sales.
- Traders. Revenue is generated between the spread of the price at which they buy and the price at which they sell.
- Buy-side advisors. Revenue is exclusively generated from the buyer.
At ClimeFi, we made the decision to build our business model to exclusively represent the interests of corporate buyers of CDR. And as a result, we work entirely on their mandate to secure access to the best projects, at the best terms, making sure that we steer clear of any potential conflict of interests.
The ClimeFi approach
The inherent incentive for intermediaries taking a fee from the supplier per credit is to sell more credits at higher prices. If a company has a vested interest in the supply-side, they have a motive to push certain solutions – even if they are higher priced or less suitable for the buyer. And consequently, they can fail to provide objective, independent project suggestions.
On the other side of the coin, buy-side advisors and CDR portfolio managers, like ClimeFi, have no financial incentive from the supply-side, nor any specific project interest. Instead, our revenue model is structured entirely to enable buyer success.
How do we generate revenue? ClimeFi takes fees solely from the buyer, and a service fee is always collected separately to provide further transparency. We never engage in credit trading or speculation, buyers always have access to the project pricing. This approach allows us to foster transparency and secure the best prices on behalf of our buyers.
We place a strong emphasis on independent project due diligence and transparent project evaluation, with our recently launched Analyst Ratings providing a comprehensive, forward-looking evaluation of the risks and opportunities of a CDR project.
This entirely objective model allows no room for conflicts of interest, and is fully aligned with sourcing the most suitable, fairly priced CDR projects specifically tailored to each buyer’s needs.
The one question CDR buyers need to ask
Faced with this fragmented market landscape, CDR buyers must tread carefully. Before engaging with an intermediary, buyers should always ask about their business models – and crucially, whether they have any financial incentive on the supply side.
By putting the buyer first, ClimeFi is able to give unbiased portfolio recommendations, foster increased trust, and build long-term partnerships.
Want to find out more about our business model? Reach out today.
