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Two recent CDR debt deals point to the same gate, and it is not the offtake. Citi’s $72M note for Applied Carbon’s Texas biochar and HASI’s $34M term loan for Terradot’s rock weathering each put the real underwriting work on one question: who absorbs a tonne that never gets verified. They answer it in opposite ways.
The consensus: sign the buyer and the money follows
Fastmarkets’ Carbon Unbound coverage names bankable offtakes, alongside EU procurement timing and a wider buyer base, as key tests for scaling the market. CarbonCure Technologies (@carboncure.bsky.social on Bluesky) gives the policy version, noting Canada’s “exploration of an #ITMOs framework under Article 6 of the Paris Agreement, with the potential for greater investment.” Chris Bataille (@chrisbataille.bsky.social on Bluesky), writing about carbon pricing in general rather than CDR finance, wants “forced lead market takeup, a la the CARB ZEV.” Three voices, one instinct: guarantee the buyer and capital arrives.
The strongest case for it
A lender cannot model cash flows from a spot market this thin. A fixed-price, multi-year purchase agreement turns a hope into a receivable, and demand channels do move: durable removal contracts went from 0.6 Mt in 2022 to about 30 Mt in 2025, roughly fiftyfold in three years. No credit committee underwrites a project with no buyer. That part is correct.
The break: Citi’s note does not even lead with an offtake
The public descriptions of the $72M, 3.5-year principal-protected note, structured by Citi with Nuveen participating, do not mention a purchase agreement at all. Investors forgo traditional coupons. Their return is linked to Applied Carbon’s verified biochar credits. On my reading of that structure, it is a delivery bet in bond clothing: principal is safe, upside exists only if the tonnes clear verification. If buyer demand were the binding constraint, the headline feature would be a contracted purchaser. Instead the headline feature is who carries delivery exposure.
What the consensus glosses over
HASI’s $34M senior secured term loan for Terradot’s enhanced rock weathering (ERW, spreading crushed silicate rock on farmland so it reacts with CO2) rests on fixed-price, multi-year purchase agreements plus carbon delivery insurance, and will finance spreading about a million tonnes of rock on farms in the US and Brazil. The offtake was signed and still was not enough on its own. As I read the release, the lender wanted an insurer standing between it and a shortfall.
So the parallel does real work. One deal has no disclosed offtake and hands delivery risk to note buyers. The other has offtakes and hands delivery risk to an insurer. Neither hands it to the project’s own balance sheet, and neither treats the purchase agreement as the thing that closed the deal.
The gap they are built around is visible in the volume data. Biochar, the pathway one industry summary calls the delivery leader, shipped 563,000 tonnes of CDR in 2025. Contracted volume across durable removal sat near 30 Mt the same year. The two figures come from different sources with different scopes, so this is a rough comparison only. But the distance between a signed tonne and a verified tonne is where measurement, reporting and verification (MRV) uncertainty lives, and it is the distance both structures price.
Where the consensus is partially right
HASI’s loan does rest on its offtakes. Bataille’s point about guaranteed uptake holds for price risk: a fixed price removes the fear that credits sell for less than cost. The Citi note’s silence on offtakes does not prove none exist, only that they were not the feature anyone chose to lead with. Offtakes are necessary. They are the entry ticket.
What changes if this read is correct
The real negotiation is over who absorbs a shortfall in verified tonnes, and biochar and ERW carry very different MRV uncertainty. Biochar’s carbon sits in a product you can weigh. ERW’s removal happens in soil and water over years. A credit-linked note suits buyers who want delivery exposure; insured senior debt suits lenders who want none. Buyers like Climeworks are already spreading pathway risk across portfolios, and lenders are now doing the same within single deals.
Developers pitching debt should decide which risk-holder their pathway can credibly attract before chasing more offtake volume. The test comes when Applied Carbon or Terradot publish verified deliveries against contracted volumes, and when the next CDR loan copies one of these wrappers. Which structure priced a missed tonne correctly is the number worth waiting for.
Citations
- Fastmarkets — bankable offtakes
- Bluesky — @carboncure.bsky.social on Bluesky — Bluesky post
- Bluesky — @chrisbataille.bsky.social on Bluesky — Bluesky post
- Substack (jeetjoshi) — 0.6 Mt in 2022 to about 30 Mt in 2025 — Substack post
- Cleanthesky — $72M, 3.5-year principal-protected note
- Stocktitan — $34M senior secured term loan
- Bestongroup — shipped 563,000 tonnes of CDR in 2025