INTERVIEW: Allcot pivot from trading triggers staff losses

Quantum Commodity Intelligence - Swiss climate firm Allcot has pivoted away from trading and put more resources into project development instead, triggering staff losses amid a wider industry slowdown, its chief executive Alexis Leroy told Quantum in an interview.

The developer operates more than 250 projects globally and has a large footprint in Latin America and Africa, as well as offices in Europe.

Earlier in the year, Allcot terminated some members of staff due to falling carbon market liquidity and increased difficulties in financing projects.

The losses occurred in the trading department, internal services and, in a few cases, project development because the company has had to ration resources, said Leroy.

Voluntary carbon market prices have fallen sharply across all categories in the past 18 months due to the energy crisis, a global economic slowdown and uncertainty around carbon standards.

"In the absence of external sources of financing, this company has reinvested all its capital in the development of triple-impact projects in Latin America and West Africa," said the firm in a statement sent to Quantum.

"However, the results of these projects are long term and the carbon market crisis has undoubtedly forced Allcot to reinvent itself to adapt to the market circumstances and ensure its sustainability and that of its projects."

Allcot is currently raising a $100 million fund to accelerate its work across more locations and said its focus is on very 'high-quality' projects and innovative solutions that give populations financial upside.

New model

The company said this includes the first mangrove restoration project in the world that has distributed funds even before the associated carbon credits are issued, in Senegal.

This model will soon be applied to a project in the Sierra Nevada de Santa Marta region, in Colombia.

"We no longer work with investors looking for an okay project story where they can quickly earn money," said Leroy.

"Forward financing has changed, it's no longer just about trading. Our aim is to find long-term financial partners looking for real impact on the ground."

"We're looking for $100 million because when you talk to the large banks and funds that invest money in this space, it's the minimum amount they're considering," he said.

The developer said it has memorandums of understanding in place with nearly 20 institutions in 11 countries, including Senegal, Argentina, Dominican Republic and Kenya, and has increased its engagement with stakeholders and built a training programme to share knowledge with local officials.

The CEO has been frustrated with ongoing delays at carbon standards, which have slowed financing for several of the company's projects, as well as what he describes as the lack of ambition of meta-standards, such as the Integrity Council for the Voluntary Carbon Market's Core Carbon Principles (CCPs).

The CCPs have generated uncertainty and slowed buying decisions in the last few months, making life more difficult for developers, he said.

"There is a lack of involvement from local indigenous groups and peasant communities, developing countries have been left out even as they're the main source of the carbon credits that are going to be generated," he told Quantum.

"The lack of unified mechanisms and regulations to establish a fair price on carbon that allows the development of high-quality projects creates volatility and financing uncertainties," Allcot said in its statement.

"The banking sector still does not understand carbon projects and therefore has not created adequate financial tools for the development of such projects."

Allcot says it is the only project developer certified under the 'B Corp' scheme for high social and environmental performance.