Project Developer or Carbon Asset Developer?
Clarifying Roles in the Evolving Carbon Market
In a previous article, I examined the increasing risks encountered by project developers—those individuals and organizations responsible for the on-the-ground implementation of carbon projects. However, I intentionally omitted a critical layer of complexity: the often-overlooked distinction between project developers and carbon asset developers. This distinction, outside the carbon market ecosystem, rarely existed, and stakeholders often used the two terms as synonyms. It was common practice to market projects where an intermediary, who only handled the carbon side, was presented as the project developer.
Historically, carbon asset developers maintained primary relationships with clients and investors. They were instrumental in structuring deals, marketing carbon credits, and frequently served as the public face of projects. In contrast, project developers remained in the background, focused on executing activities in the field. This division of labor made sense during the early stages of carbon markets, when the ecosystem was less sophisticated, lacked rigorous rating systems, and was not subject to intense scrutiny. At that time, buyers and investors did not demand comprehensive due diligence; their primary concern was the acquisition of carbon credits from ICROA-recognized standards.
The contemporary landscape, however, has transformed significantly. Buyers and investors now pose more probing questions, seek greater transparency, and demand direct engagement with the entities that own the assets, manage associated risks, and bear ultimate responsibility for delivering results. In response, many project developers have established internal carbon teams, while some technical consultants have expanded their roles to encompass project management and even ownership.
For an extended period, the identity of the credit seller was of little consequence to buyers and investors, provided that pricing and other criteria were satisfactory. I recall the challenges faced in marketing our inaugural Gold Standard cookstove project in Maputo in 2012, which we developed and financed directly. Despite our direct investment and on-the-ground development efforts, the market failed to acknowledge the added value of our involvement, focusing instead on factors such as price, vintage, location, and marketing materials.
Today, the scenario has shifted. Investors and buyers have become more discerning, no longer content with purchasing carbon credits without thorough understanding. They seek direct access to the projects they support, aiming to comprehend the communities involved, assess delivery risks independently, and ensure the authenticity of the impacts they finance. Merely providing certified credits is now insufficient; the capacity for real implementation holds far greater significance than technical intermediation.
This paradigm shift has also altered expectations around responsibility. Buyers often presume that those managing the carbon aspects also guarantee delivery. However, many carbon asset developers continue to function solely as technical intermediaries, lacking ownership or direct control over projects. When unforeseen issues arise—such as a drought impacting reforestation outcomes—carbon asset developers often deflect accountability to project owners. Nevertheless, buyers expect that carbon developers will uphold the integrity of the credits sold, leading to frustration and mistrust.
Carbon asset developers now face a pivotal decision. While they continue to offer substantial value through their expertise in methodologies, standards navigation, and market connectivity, remaining relevant will require an expansion beyond traditional technical services. This evolution involves moving closer to the assets themselves—investing directly in projects, assuming partial risk ownership, and actively participating in project delivery. Strategies may include acquiring equity stakes, co-financing early-stage initiatives, or structuring contracts where their success is directly tied to project outcomes. Those who persist solely in technical capacities risk marginalisation, as the market increasingly favours entities that embrace operational risk and deliver real projects on the ground.
This transition should not be perceived as a threat but rather as an opportunity. It compels the market to adopt greater transparency concerning roles and responsibilities, ensuring that rewards are commensurate with the risks undertaken. Such alignment will foster increased confidence among buyers and investors regarding the climate outcomes they support.
Advancing a more robust carbon market requires enhanced transparency, enabling buyers to clearly discern whether they are engaging with project owners or intermediaries. It also requires equitable risk allocation, ensuring that those who control outcomes share appropriately in both the risks and rewards.
Drawing from my own experience in both on-the-ground project development and carbon asset development for clients, one conclusion is evident: success in the carbon market will favour those who own the assets and assume the associated risks.
In the foreseeable future, the distinction between project developers and carbon asset developers may become obsolete. The market is likely to comprise entities that develop projects, invest in them, and manage on-the-ground risks, alongside a growing number of consulting firms offering carbon asset development as a standardised service. With advancements in artificial intelligence, digital MRV, and increasing competition, these services are poised to become more cost-effective and outsourced to countries with lower labor costs.
This evolution goes beyond semantics. The future of the carbon market will be shaped by those who can deliver high-quality projects on the ground. Ultimately, the true value will lie with those who develop the assets and take responsibility for delivery risk.