Buyer Coalitions and Advance Market Commitments: Everything You Need to Know

The world of carbon credits and the voluntary carbon market is evolving rapidly, with new concepts like “buyer coalitions” and “advance market commitments” (AMC) gaining prominence. However, these terms can often be confusing, leaving many wondering what they truly mean and why they matter. To provide clarity around these developments, we’ve put together this guide.

What You’ll Learn From This Article:

• The role of buyer coalitions in promoting impactful nature-based projects.
• How advance market commitments are transforming the carbon credit market.
• Key benefits and challenges of joining a buyer coalition.
• Practical steps for organizations interested in joining or forming a coalition.

Why It Matters

With the global focus shifting towards sustainable development and carbon neutrality, the voluntary carbon market plays a pivotal role in financing projects that restore nature and remove or avoid emissions. However, a lack of regulation and common quality standards has led to a flood of lower-quality carbon credits in the market, resulting in a lack of trust from buyers into the nature-based solutions. 

Buyer coalitions and AMCs aim to reverse this trend by providing a strong demand signal for high-quality, impactful projects. This is not just about securing better deals—it’s about ensuring that the projects supported truly benefit nature, communities, and our shared climate goals.

The Rise of Buyer Coalitions in the Voluntary Carbon Market (Beyond Nature-Based Solutions)

Buyer coalitions are reshaping the voluntary carbon market, driven by growing corporate demand for high-quality, diverse carbon credits. Companies are increasingly joining forces to secure impactful carbon reduction and removal projects beyond traditional nature-based solutions, aiming to meet their sustainability targets with greater efficiency and transparency.

Few Example Key Buyer Coalitions and Their Unique Focus, which we Analyzed

1. Symbiosis Coalition: An up to 20M ton advance market commitment to support next-generation nature-based carbon removals by 2030, driving positive outcomes for people and the planet.
2. Frontier: A $925M advance market commitment funded by industry leaders like Stripe, Alphabet, Shopify, Meta, and McKinsey to accelerate the scale-up of permanent carbon removal technologies through 2030.
3. LEAF Coalition: A public-private partnership uniting forest governments, the private sector, and Indigenous communities to halt tropical deforestation by 2030, making tropical forests more valuable alive than dead.

The Unique Importance of Buyer Coalitions for Nature-Based Solutions

Investing in nature-based solutions is essential for achieving global climate goals, but these projects are often complex and resource-intensive. They demand significant investment in technology, research, community involvement, and benefit-sharing frameworks for Indigenous Peoples. Many companies struggle with budget constraints, and the market is flooded with low-quality carbon credits, making it difficult to identify impactful investments.

Buyer coalitions play a critical role in overcoming these challenges. By pooling resources and creating a strong, unified demand, coalition members enable project developers to focus on delivering high-quality, sustainable nature-based solutions. This collaborative approach ensures that investments lead to real, measurable impact, benefiting both companies committed to their climate goals and developers dedicated to meaningful environmental and community outcomes.

Navigating Buyer Coalitions and Advance Market Commitment: Your Key Questions Answered

As we navigate this landscape, we put together the most frequently asked questions:

1. Is Joining a Buyer Coalition Right for Your Company?
Whether you’re a global corporation or a growing business, joining a buyer coalition can enhance your sustainability strategy and ensure your investments create real, lasting impact. Joining a buyer coalition is ideal for companies that:

• Aim to Meet Ambitious Climate Targets: If your organization has set high standards for carbon compensation or net-zero emissions.
• Value Credibility and Transparency: For companies looking to invest in verified, high-impact projects with robust quality standards.
• Benefit from Shared Expertise and Resources: Companies of all sizes can leverage the collective knowledge, resources, and cost-sharing advantages of a coalition.
• Focus on Broader Social and Environmental Impact: Companies committed to not just reducing emissions but also enhancing biodiversity, supporting local communities, and promoting sustainable development.

2. What is an advance market commitment (AMC)?
An AMC is a promise to buy or subsidise a product if it is successfully developed. It is a pledge to support the development of innovative, supply-constrained public goods. It signals to suppliers that if they create high-quality products—like nature-based carbon credits—the buyer coalition will purchase them. It’s a concept that has driven success in areas like renewable energy and vaccines, and it’s now being applied to the carbon market. The idea of advance market commitments was developed by economists in the 2000s. This idea was first applied to finance the vaccines and has been adapted in the voluntary carbon market for the past years.

3. What is a buyer coalition?
A buyer coalition is a group of organizations that come together to pool their purchasing power. By collaborating, these groups secure better deals, bulk discounts, and more favorable contract terms for nature-based carbon projects. It’s like a “buyers club” that ensures quality and credibility in the projects it supports.

4. What are the benefits of a buyer coalition?
Buyer coalitions offer several key benefits for companies looking to invest in nature-based solutions. Here’s a breakdown:

• Offtake Commitment: Members commit to offtake by a certain time period to spur the development of new projects, bringing to market the volume that corporates and the world needs to meet climate goals.
  
• Unified Quality Criteria: The coalition clarifies what good looks like by uniting around a single, trusted quality standard that pulls from the latest data and science and builds on existing market standards. Read more about the goodcarbon quality framework.
• Joint RFP: The coalition will facilitate a joint Request for Proposal (RFP) on behalf of its members, simplifying the procurement process for high-quality, nature-based removals and sending a strong market signal to project developers.
• Reduced Costs and Resources: By purchasing in bulk and sharing administrative work and processes, coalitions reduce the financial and operational burden on individual members. Economies of scale streamline supply chain management, lower overall costs, and optimize resource use, saving time and effort across the board.
• Access to Expertise: Coalitions provide members with access to specialized expertise in areas such as project evaluation, procurement, and quality assurance that they may not have in-house. This shared knowledge base allows companies to make informed decisions and engage in high-quality projects without the need to develop extensive internal capabilities.
• Networking Opportunities: Access to strategic partnerships and networking opportunities within the coalition can lead to new collaborations and innovations in nature-based solutions.
• Forecast & Planning: The coalition will work with project developers and investors to build a pipeline of projects and unlock financing.

5. How to Choose the Right Buyer Coalition: Essential Criteria to Consider
When considering joining a buyer coalition, it’s essential for companies to evaluate several key criteria to ensure that the coalition aligns with their business objectives and sustainability goals. Here are some factors to consider for your company:

• Alignment with Sustainability Goals: Assess whether the coalition’s mission aligns with your organization’s environmental, social, and governance (ESG) targets. If the coaliton has conducted the RFP and agreed to projects already, it’s crucial that the projects supported by the coalition contribute to the specific climate and sustainability outcomes your company is committed to achieving.
• Quality Standards and Credibility: Verify that the coalition adheres to stringent quality standards for carbon credits and nature-based solutions. Look for coalitions that use recognized certification frameworks and are transparent about their project selection criteria.
• Financial Viability and Return on Investment: Analyze the financial structure of the coalition, including membership fees, expected returns, and cost-sharing mechanisms. Determine whether the potential benefits, such as cost savings from bulk purchases or access to exclusive projects, justify the financial commitment.
• Impact Potential: Evaluate the impact of the projects supported by the coalition beyond carbon sequestration: biodiversity conservation and community benefits.
• Regional Focus and Relevance: Consider whether the coalition operates in regions that are strategic for your company, such as Europe, Southeast Asia, or North America. For example, a coalition in the European market may offer advantages like alignment with EU regulatory frameworks, local networking, and participation in initiatives targeting local environmental priorities.

6. What’s the process to join a coalition?
The process to join a coalition starts with researching and exploring coalitions that align with your business goals and region. After evaluating potential benefits and cost savings, you can express interest or apply to join. Once companies align on a shared commitment, the RFP process can begin.

Take Action: Join the Conversation

The world of nature-based carbon credits is complex, but by working together, companies can unlock the potential for impactful, high-quality projects that make a difference. Joining a buyer coalition isn’t just about securing better deals—it’s about ensuring the projects we support genuinely benefit nature, communities, and our shared climate goals.

We invite you to be part of this movement: 
If you’re based in Europe, join us in the discussions with like-minded at the European CSO Roundtable. Get in touch.
If you are SEA based: Contact us to hear more about the Southeast Asia Carbon Coalition (SEACC), that we just launched in September 2024. Read more about SEACC.

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