The USAID/Mozambique PLANETA program, implemented by CrossBoundary, releases the Carbon Finance Playbook
There has arguably never been more capital available nor greater collective focus on climate finance, yet projects in emerging markets continue to face significant barriers to investment. The Carbon Finance Playbook aims to help address this disconnect by demystifying the investment process for carbon projects. It focuses on nature-based projects such as reforestation and conservation, and nature-adjacent emissions-reducing products such as cookstoves and solar irrigation pumps that sell carbon credits in the voluntary carbon market (VCM). The Playbook builds on learnings from the USAID PLANETA program, a first-of-its-kind investment facilitation platform for carbon projects in Mozambique, implemented by CrossBoundary.
The Carbon Finance Playbook covers many of the key elements and activities involved in raising capital for carbon projects. It starts by framing the discussion around the various archetypes of carbon projects from a cash flow and investment need perspective. It then dives into the carbon markets and the considerations involved in evaluating historical and projected pricing for carbon credits. Next it discusses some of the guiding principles and best practices when designing community benefit sharing agreements, an essential part of nearly any land-based, emerging markets carbon project. The Playbook then lays out some of the key risks involved in carbon project development and the mechanisms and tools available to developers to help mitigate those risks. Next there is a detailed discussion of the typical investment structures and types of capital used to finance carbon projects, as well as the key terms that project developers are likely to encounter as they negotiate with investors. The Playbook concludes with a deep-dive into the Mozambican carbon project development ecosystem with an eye to risks and opportunities in the country.