Sliced: The Importance of Carbon Credit Purchasing Coalitions
Gordian Knot Strategies
We are Igniting Climate Solutions: Mobilizing $1 Billion Per Year in Impact Investment by 2030!
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By: Jay Tipton
Two weeks ago, I was in Boulder, Colorado, for a forum on the voluntary carbon market (VCM). As I sat through sessions and chatted with the other participants over the course of two days, one message came through loud and clear – demand is essential to drive the market forward. Again and again, the conversation turned to carbon credit purchasing coalitions as a key tool to create that demand and help scale climate solutions.
Carbon credit purchasing coalitions are groups of companies, often spanning industries, that come together to purchase carbon credits. These credits represent verified reductions or removals of carbon dioxide from the atmosphere, typically generated through projects like reforestation, soil carbon sequestration, or innovative carbon removal technologies. By working together, these coalitions aggregate their purchasing power, send a clear market signal, and, ideally, unlock new climate action opportunities that wouldn't happen otherwise.
Why are these coalitions so important??
First, they drive demand for high-quality carbon credits. When big-name companies publicly commit to buying significant volumes of credits, they show project developers that there's a market for their work.?
Second, these coalitions help standardize the market, establishing guidelines and best practices to distinguish high-quality credits from lower-quality ones.?
And third, by pooling resources, these coalitions can take on more risk than individual companies might be willing to shoulder, enabling investment in newer, potentially transformative technologies.
This collective action doesn't just impact the buyers and sellers of credits – it shapes the entire market. When coalitions commit to purchasing credits in bulk, they can influence prices and increase market liquidity, making carbon finance more accessible to a broader range of projects. The scale of these commitments also encourages developers to launch new initiatives, knowing that there's a guaranteed buyer if they meet quality standards. Additionally, coalitions often work with independent standards bodies to strengthen verification processes, which helps build trust across the market.
The impacts extend beyond the abstract world of carbon accounting. In many cases, the credits these coalitions purchase come from projects rooted in local communities. These projects can provide direct benefits, such as jobs, improved infrastructure, and biodiversity conservation. However, the influx of carbon finance can also bring challenges. Responsible coalitions must work closely with local stakeholders to ensure that benefits are shared equitably and that the projects respect local land rights and cultural heritage.
Take the Symbiosis Coalition, for example. Formed by companies like Google, Microsoft, Meta, and Salesforce, Symbiosis focuses on nature-based carbon removal. The coalition has pledged to buy up to 20 million tons of high-quality credits by 2030, sending a clear signal to the market. Importantly, Symbiosis prioritizes projects that go beyond carbon removal to deliver biodiversity benefits and meaningful engagement with Indigenous Peoples and local communities.
Another standout example is the LEAF Coalition, which focuses on forest protection through jurisdictional REDD+ programs. In 2024, LEAF signed a groundbreaking $180 million deal with the state of Pará, Brazil, to purchase credits representing verifiable reductions in deforestation. The deal not only supports Brazil's climate goals but also provides funding for sustainable development efforts in local communities. More recently, the LEAF Coalition signed an agreement with the country of Ecuador to access climate finance. This $30 million agreement rewards Ecuador’s efforts to reduce greenhouse gas emissions in the forestry sector.?
And then there's Frontier, a coalition founded by Stripe, Alphabet, Meta, Shopify, and McKinsey to accelerate technological carbon removal. Frontier has committed over $1 billion to purchase permanent carbon removal credits by 2030. By encouraging future demand, Frontier hopes to give entrepreneurs and researchers the confidence to develop and scale innovative solutions like direct air capture and enhanced mineralization.
As I reflect on those conversations in Boulder, I'm more convinced than ever that carbon credit purchasing coalitions are fundamental to the future of the VCM. They reduce risk, provide crucial funding, and bring a much-needed sense of momentum to a market that can otherwise feel fragmented and uncertain. On top of that, they can also push entire industries (e.g., aviation, maritime transport, automotive, etc.) forward toward their decarbonization goals.?
If the market is to grow with integrity and deliver on its climate promises, we’ll need more coalitions like Symbiosis, LEAF, and Frontier – coalitions that lead with ambition, responsibility, and a collaborative spirit. The climate challenge is enormous, but as these coalitions show, there's power in coming together to meet it head-on.
The?U.S. Endowment for Forestry and Communities?has announced an RFP for their new Impact Investing Program. The program seeks to deploy up to?$5 million in 2024 through impact investments?in companies, funds, or projects that advance systemic, transformative, and sustainable benefits for the health and vitality of?working forests and forest-reliant communities in the United States.
Gordian Knot Strategies is supporting the development of the Impact Investing program. We encourage you to read the Endowment’s press release?here, review the RFP materials?here, and share with your network.
This is a great opportunity for companies and project developers seeking capital on reasonable investment terms. Please note that this is not a grant making endeavor.
An informational webinar about the RFP response process was held on January 15, 2025. A recording of the webinar is available?here.
Deadline for final submission:?Thursday, March 13, 2025 by 5pm PST
Please direct any questions to:?[email protected]
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