Is it possible to build cutting-edge technology that makes sustainability profitable? Climate technology, or climate tech, is at the centre of this transformation, bridging the gap between environmental sustainability and commercial viability. One of the most promising areas of growth is in carbon markets, where new tools and platforms are emerging to bring efficiency, transparency and trust to an industry often plagued by inefficiencies.

With a background spanning finance, venture capital and carbon project development, Allen Fan has firsthand experience in the complexities of carbon markets. His journey led him to co-found CarbonHQ, a platform designed to streamline and digitize the carbon credit generation process. His insights shed light on the pressing challenges in carbon markets and the transformative potential of technology in addressing them.

With enough repetition, successful exits and scaled solutions, we can break the stigma that climate-positive outcomes come at the expense of profitability.

“I started my career in accounting and finance in 2015, exploring different roles to find what truly excited me,” Fan shares. “In 2021, after moving to Sydney, I joined a carbon project developer as its first investment team hire, tasked with raising capital for high-impact carbon projects. That experience gave me an inside look at the challenges behind the scenes – and it was eye-opening. Carbon projects were chaotic, with critical data buried in Excel sheets, emails, and PDFs. This inefficiency meant that getting carbon credits verified and issued could take over 36 months.”

Recognizing these inefficiencies, Fan took action. “We built CarbonHQ to digitize and automate the end-to-end carbon project management process. Today, many carbon projects still rely on spreadsheets and scattered emails, making verification slow and inefficient. With our platform, developers can centralize project data in one place, eliminating the need for manual tracking across multiple sources. The platform streamlines verification and reporting, reducing delays in credit issuance and ensuring that project data is transparent and auditable.”

At its core, CarbonHQ aims to solve three major issues in carbon markets: efficiency, transparency and trust. “With a structured approach to data management, CarbonHQ helps buyers gain confidence in the quality of the credits they purchase, ultimately strengthening trust in carbon markets.”

What Investors Look for in Carbon Projects

Fan has a clear perspective on the role of climate tech in addressing the global climate crisis. “Over time, climate tech has evolved into an investment category within the VC and private equity space. Because of this, I define climate tech as technology that delivers commercial value while benefiting the climate, in that order.”

According to Fan, the critical role of climate tech is in proving that commercial success and climate impact are not mutually exclusive. “With enough repetition, successful exits and scaled solutions, we can break the stigma that climate-positive outcomes come at the expense of profitability. Instead, we can position climate tech as a category where profitable businesses drive real, lasting climate impact.”

Having worked on investment structures totaling over $50 million, Fan understands what investors prioritize in carbon-related projects. “Scalability is key. Investors look for projects that can grow efficiently and generate a meaningful volume of high-quality credits. Strong unit economics, operational feasibility and a clear plan for long-term financing are critical to scaling impact.”

Quality assurance is also a top priority. “With increasing scrutiny on carbon markets, investors seek projects with robust MRV (Monitoring, Reporting, and Verification), transparent data collection and proven additionality. The more credible and verifiable the credits, the more confidence investors have in a project’s long-term value.”

Yet, one of the most overlooked qualities is a developer’s ability to solve problems. “Investors understand that challenges will arise during project development, it’s how developers respond and adapt that matters. Prioritizing transparency and trust in communications, proactively addressing risks, and demonstrating a track record of problem-solving gives investors confidence in the project’s ability to succeed.”

The Next Frontier in Climate Tech

Fan sees the next frontier in climate tech as the evolution of carbon markets. “While they’ve existed for years, we’re only now seeing their full potential. As market infrastructure improves, carbon markets can scale, mature and gain widespread adoption, unlocking critical funding for high-impact climate solutions.”

Technological advancements will drive this transformation. “The convergence of voluntary and compliance markets will bring greater standardization and liquidity, making carbon credits a more reliable tool for decarbonization. Digital MRV (dMRV) will enhance transparency, reduce verification timelines and improve project quality, ensuring real climate impact. Meanwhile, AI advancements will optimize everything from risk assessment to remote sensing for project validation.”

As these trends take shape, Fan believes carbon markets will transition from being fragmented and uncertain to becoming trusted and scalable. “They have the potential to become a key force in the fight against climate change.”

The convergence of voluntary and compliance markets will bring greater standardization and liquidity, making carbon credits a more reliable tool for decarbonization.

Priorities and Action

If there’s one challenge Fan hopes the climate tech ecosystem will prioritize, it is ensuring that climate solutions are scalable and accessible in the Global South. “Many climate solutions are designed for developed markets, with high costs, complex infrastructure needs and financing structures that don’t work in emerging economies, where climate impact is most critical.”

To bridge this gap, he advocates for bespoke business models and financing mechanisms. “This means developing business models that work locally, creating financing pathways for smaller project developers and designing technologies that are cost-effective and resilient in different economic and environmental conditions.”

Carbon markets, he believes, offer a major opportunity in this regard. “By directing funding into clean cooking, reforestation, and regenerative agriculture, we can make a significant difference. However, to unlock this potential, we need better digital MRV, clearer credit standards, and financing mechanisms that support early-stage projects.”

“For climate solutions to drive real impact, they must be designed to scale where they are needed most, not just where they are easiest to implement,” Fan concludes.

Read the full story in the March 2025 issue of Impact Leadership magazine.