Since January, Workday has signed three new offtake agreements with carbon projects and committed to purchase more than 300,000 carbon credits over the next six years. By securing future demand, enterprise software providers are helping to close the funding gap that is holding back many high-impact carbon projects.
Project includes: forest protection Carbon dioxide removal in the Amazon using remote sensing Namibia biochar Innovative approaches to solving isolated problems oil and gas wells.
Joining us in 2023 is Workday frontier climateis a coalition of more than a dozen companies committed to collectively purchasing $1 billion in durable carbon removal (CDR) by 2030 to help scale the removal industry.Frontier signed a contract new offtake agreement It was announced on May 1 with the aim of removing more than 150,000 tonnes of carbon over the next three years.
weekday climate goals has long been one of the most ambitious companies in the industry, aggressively reducing its supply chain emissions and compensating for residual emissions through carbon credits, and moving beyond its value chain to contribute to global net zero. Combined project support. The company achieved cloud carbon neutrality in his 2017 year. In 2020 he started sourcing 100% renewable electricity, in 2021 he reduced the company's entire historical emissions and now he will move to eliminate his entire portfolio of carbon credits by 2031. It's a schedule.
„The carbon removal part is where we are now, but we've been on this journey for a long time…this is kind of a natural evolution of that journey,“ said Workday's Chief Sustainability Officer. said Eric Hansen.
Why carbon footprint matters
Many projects have the potential to reduce greenhouse gas emissions or remove carbon from the atmosphere, such as preventing methane emissions from landfills, restoring native ecosystems, and building direct air capture hubs. ) requires upfront capital for development and scaling. But until a project proves its ability to provide verified carbon credits, it will be difficult to raise that upfront investment.
„Without demand signals, these projects often don't have viable financing terms,“ said Brennan Spellacy, co-founder and CEO of carbon credit marketplace Patch. ” he said. As a result, many climate change projects are stuck in a never-ending cycle of funding for years.
Offtake agreements can help close this climate finance gap. In these contracts, carbon buyers commit to purchasing carbon credits in the future from a specific project once the credits have been verified. Contracts often span several years and help carbon buyers secure a predictable, long-term supply of carbon credits. With an offtake agreement in hand to secure the end purchaser, carbon project developers will find it easier to secure development funding to get up and running.
How to enter into a carbon emissions agreement
While some carbon buyers with large sustainability teams source, vet, and contract early-stage carbon projects themselves, most carbon buyers do not handle the entire capture process internally. yeah. Instead, buyers join offtake coalitions like Frontier or use third-party platforms to facilitate deals.
![Two diagrams comparing carbon credit purchase forms](https://www.greenbiz.com/sites/default/files/2024-05/Carbon%20offtake%20diagrams.png)
![Two diagrams comparing carbon credit purchase forms](https://www.greenbiz.com/sites/default/files/2024-05/Carbon%20offtake%20diagrams.png)
patchThe Carbon Credit Marketplace is one such platform. We support buyers throughout the buyout process, from project evaluation and selection, to contract delivery, terms negotiation, payment processing, and carbon credit retirement management. It also facilitates the offtake of innovative project types that require minimal investment and for which methodologies are not yet established.
The patch now allows us to deliver the latest Workday offtakes for the next six years. The company says it is seeing an increase in offtake deals like Workday. Based on the volume of inquiries so far this year, Patch estimates that inquiries about offtake contracts from carbon buyers will be three times as high in 2024 as they were in 2023.
Advantages of offtake agreements
Workday has pursued carbon emissions agreements for three main reasons.
- Access to world-class climate expertise: By pooling resources with other carbon buyers and entering into long-term offtake agreements, Workday is able to collaborate with world-class project due diligence teams. That was the main reason Workday joined Frontier. Technical review committee Scrutinize and evaluate projects in the Frontier portfolio. For the technology review team, „it was a natural fit to partner with Frontier,“ Hansen said.
- Catalytic climate impacts: By facilitating early-stage project financing, offtake can help launch carbon projects that otherwise would not be able to get off the ground. „Buyers understand that by offering bankable contracts, they will have the essential capital to really scale these solutions,“ Spellacy said.
- Increased project transparency: Multi-year offtake agreements allow carbon credit buyers and project developers to build long-term relationships that foster greater insight into project development and progress. “Multi-year offtakes typically allow for greater transparency at project milestones, which is always a benefit for corporate buyers,” Hansen said.
Integrity is the North Star
Stories of over-financing and low-quality projects continue to plague voluntary carbon markets. This has left many companies grappling with the reputational concerns of using carbon credits in their climate change strategies. Some countries have completely withdrawn from ongoing emissions reductions.
That wasn't the case with Workday. “I think integrity is the north star on the path to stakeholder trust,” Hansen said. The company continues to make science-based emissions reductions, and emissions reductions are the next step in supporting quality climate action, and as we scale up catalytic projects that move the planet towards a net-zero future, Close the funding gap.