Most carbon project ideas that look promising on a credit yield basis become marginal or unviable once development costs, verification fees, registry charges, monitoring costs and realistic credit prices are all included. Feasibility modelling is the process of putting all of these together to find out whether the project is worth pursuing before significant resources are committed.
The four feasibility questions
1. What is the break-even credit volume?
The minimum number of credits that must be issued annually to cover total project costs including development, validation, annual verification, registry fees and monitoring. Projects generating below this threshold cannot sustain themselves financially from carbon revenue alone without subsidy or co-revenue streams.
2. What is the break-even credit price?
Given a realistic credit volume projection, what price per credit is needed to cover total costs and generate a reasonable return? If the break-even price is above the realistic market range for that project type, the project is not commercially viable without a guaranteed buyer at a premium price.
3. How sensitive is the project to price and volume assumptions?
Feasibility models should be stress-tested. A project that shows acceptable returns at the base-case price but becomes loss-making at the conservative price is a different risk profile to one that works across the full range. The credit pricing tool lets you model revenue across scenarios; feasibility connects that to the cost side.
4. What is the payback period and IRR?
The time to recover development and validation costs from net carbon revenue, and the internal rate of return over the project lifetime. Carbon projects typically have front-loaded costs (PDD development, validation) and back-loaded revenue (credits are not issued until after first verification, typically 18-30 months after project start). The payback period is longer than it may appear from annual revenue figures.
Try the feasibility modeller
Use the full tool in The Carbon Workbench to save your model, adjust cost assumptions and run multiple scenarios across project lifetimes.
Open full Feasibility ModellerThe inputs that matter most
| Input | Typical range | Sensitivity |
|---|---|---|
| Annual credit volume | 500 - 50,000+ tCO2e | Very high - fixed costs spread over more credits improves margin sharply |
| Credit price | £3 - £120/t depending on type | Very high - linear impact on revenue; model conservative and base case |
| Validation cost | £8,000 - £35,000 | Medium - large one-off cost but spread over multi-year project life |
| Annual verification cost | £5,000 - £20,000/yr | High - recurring cost that determines minimum viable scale |
| Project development cost | £15,000 - £80,000 | Medium - affects payback period but not ongoing margin |
| Crediting period | 5 - 30 years | Medium - longer periods improve ROI but increase uncertainty |