August 2025

It is no secret that coral reefs worldwide are under significant duress from a multitude of factors, the most significant of which is climate change. Reefs are prehistoric, diverse habitats, providing nearly twenty-five percent of marine species with the resources necessary to thrive, including food and shelter. Even humans rely heavily on reefs for protection from coastal erosion, as well as seafood production, tourism, and medicine. The threat of coral extinction, therefore, presents dire consequences for aquatic and terrestrial life alike. 

Corals often take hundreds of years to become fully formed and therefore cannot reproduce quickly enough to compensate for the vast amount of damage that has already been done. Fortunately, researchers have been working to determine how to rebuild these marine environments at more rapid rates. Last summer I had the opportunity to visit a land-based coral-and-crab nursery in Puerto Morelos, where scientists are trying to restore these vital ecosystems by developing coral nurseries. You can read more about this important work in my blog.

Another prominent tactic to restore or create a reef ecosystem is the production of sanctioned artificial reefs by purposefully sinking ships and other equipment. According to NOAA researchers, artificial reefs are installed both to create new habitats and restore degraded ones. Once an item of human-made origins sinks, a fresh ecosystem instantaneously begins to develop around the entity. Initially, the sunken vessel is colonized by a community of fish, starting out small and gradually growing in complexity. In this time, the surface of the object becomes populated with algae and invertebrates such as coral and sponges. 

The surrounding currents may also push plankton into the area, resulting in the arrival of small forage fish, which in turn attract larger predators like sharks, tuna, and barracuda. Eels and groupers may be found hiding out in the secluded holes and crevices of the wreck as well. As the wreck evolves into a vibrant reef, a new, unfamiliar species finds itself drawn in: humans.

Following my volunteer conservation adventure in Mexico last year, I was fortunate to once again represent the Global Climate Finance Accelerator on an exploration of these artificial reefs. I dove through the wreck of a 165-foot freighter ship called the Pamir in Barbados, which was intentionally sunk in 1985 off the country’s west coast. Resting in 60 feet of water, the Pamir’s wreck is now home to a diverse ensemble of marine life: Various sponges and corals have attached themselves to the walls and floors of the wreck, drawing in fish, cephalopods, crustaceans, and more. 

Barbados offers three other spectacular wreck dive sites, the largest of which is the SS Stavronikita, a 365-foot freighter sunk in 1978 with the intention of creating an artificial reef. Another popular site is Carlisle Bay, which boasts six shipwrecks of varying ages and sizes, though only four were sunk deliberately. Each wreck offers a unique habitat of marine life, making this site a particular favourite. The final site is the Friars Crag, a sister ship of the Pamir that, when sunk, broke into three mangled pieces. Still, the wreck manages effectively as an artificial reef. 

Barbados is only one of many examples of a nation contributing to this habitat restoration process, though much remains to be learned about its impact on the natural ecosystem. To illustrate, researchers are still working to determine whether the abundance of fish on artificial reefs results from genuine population growth, or if the animals merely redistribute themselves from previous habitats. It is also critical to note that any sunken object is not automatically a good home for marine life; in fact, if not treated with proper care, a wreck can become a source of water pollution.

While Barbados shows the potential of artificial reefs for ecosystem restoration, not every wreck is successful. In 1991, a ship went down in the Palmyra Atoll, a remote coral ecosystem just south of Hawaii. The atoll is protected as a National Wildlife Refuge and is renowned for its thriving reefs and abundant wildlife. Unfortunately, around 2007, researchers in the area observed an outbreak of a type of marine cnidaria called corallimorphs, eventually determined to be a result of the wreck settled on the seafloor. The researchers hypothesized that iron runoff from the chains mooring the ship caused an explosion of algae, as algae requires iron, not typically plentiful in this environment, to grow. 

Found within many marine invertebrates, including corallimorphs, is zooxanthellae, a symbiotic algae, which seemed to have fed off the iron to simulate an overgrowth of corallimorphs on the reef surrounding the shipwreck. As the corallimorphs spread, it smothered the existing coral, causing significant habitat degradation. After being identified as the root cause of the overgrowth, the shipwreck was removed, and efforts have since been made to remove the remaining corallimorphs. It will be a long and difficult restoration process, made more challenging with rising water temperatures allowing for corallimorphs to reproduce faster. Researchers thus emphasize the importance of taking immediate action to address unintentional or improperly placed wrecks in marine environments.

The value of artificial reefs ultimately depends on us – on whether we choose to pursue restoration responsibly, invest in research, and protect the remaining natural reefs. It is crucial to remember that, although the ocean sustains us, it is not a commodity, nor should its resources be treated as disposable. Without coral reefs, the ocean cannot thrive, and without the ocean, neither can we. As we navigate the uncertain waters of climate change, artificial reefs represent a hopeful experiment in restoring ecosystems and strengthening coastal resilience.

Nicole Zavagno is an incoming first-year science student at Dalhousie University with plans to major in marine biology. She is a PADI open water certified diver and holds a Canadian national lifeguarding certification.

Susan McGeachie joins the Mantle Developments team for a tour of the University of Toronto’s mass timber building, a first of a kind construction in Toronto demonstrating sustainable design.

A recent roundtable with leading venture capital investors convened by MaRS Discovery District surfaced key insights around the persistent financing gap for first-of-a-kind (FOAK) projects.

MaRS’ Tyler Hamilton and Leah Perry opened up the discussion with a recent CTVC newsletter highlighting what many in the industry already know: First-of-a-kind (FOAK) projects remain a major funding cliff, with 69% of respondents expecting investment in FOAK deployments to decline. The survey identified a particular pinch point in the $40M–$100M project range, often called the “missing middle within the missing middle,” where financing is hardest to secure. The two primary reasons for the decline are:

• High Risk, High Uncertainty: Without a proven track record or risk-sharing structure, these projects struggle to attract traditional VC, PE, or project finance.
  
• Policy Volatility: Investors cite “policy whiplash” as their #1 fear for early projects, adding to perceived risk.

This decline underscores the persistent gap between promising pilot projects and commercial-scale execution. As the challenge becomes more acute, it’s critical to identify and investigate practical, creative strategies ventures are using to bridge the FOAK gap. While philanthropic and catalytic capital players are stepping in to bridge funding for these early deployments, creating a cohesive financial architecture that unlocks broader participation across venture, growth equity, and long-term institutional lending is needed to mobilize the magnitude of capital required.

Philanthropic catalytic capital is uniquely positioned to absorb early risk and validate emerging models, helping to unlock later-stage private and institutional investment in FOAK projects. According to ClimateWorks’ Funding Trends 2023 report, climate philanthropy reached approximately USD 4 billion in the US – more than 50% of global climate-focused giving – compared to less than CAD 100 million in Canada. The UK and Europe reached approximately USD 1 billion combined, revealing a significant disparity in philanthropic firepower. To bridge this gap in Canada, coordinated efforts are needed to deploy catalytic capital strategically de-risking FOAK deployments, support platform-based investment models, and anchor blended finance structures that invite broader market participation.

Early equity investors play a critical role in FOAK deployments, as they understand these projects won’t deliver the same returns as second-, third-, or later-of-a-kind investments. To attract VC capital, FOAK projects must be structured as platforms, with the option for follow-on participation and first right of refusal on future deployments. The investment model is built on ‘plug-and-play’ modules that standardize the financial structure, site assessments, EPC contracts, risk allocation, project milestones, performance guarantees, and monitoring. A robust pipeline of LOIs and long-term partnerships with clients, offtakers, and suppliers, designed for replication across multiple projects, is essential to scale. Blue Reef Capital illustrates a proposed funding structure in Figure 1, below.

Figure 1: Proposed Funding Structure for Scaling FOAK Projects

The financial modelling required to raise hybrid funding must have both consolidated Holdco equity metrics/projections, with specific and project-level metrics and projections (demonstrating the Holdco + project ‘equity’ investor % participation in the project SPV). FOAK project finance is generally equity, not debt. Equity and project equity alignment is vital as, for the first few years, the project equity investor will receive a significant preferred return from the project SPV until they hit their equity hurdle rate, and then SPV distributions are split based on Holdco/project equity ownership.

While standardizing investment structures is key to scale, most EPC contracts will be prohibitively expensive at the FOAK stage. Companies need to leverage the assessments and performance metrics from similar technologies and have fully committed service providers in place with a track record of delivering. By the second-of-a-kind (SOAK) project, they will need an EPC.

The KEY criteria for getting FOAK funding is to have a corporate/strategic partner who has either commissioned/sponsored a paid pilot, committed to an offtake, or featured on the cap table. Governments can support this effort by requiring a FOAK decarbonization project as a requirement for federal funding.

Finally, technical fluency is essential, as few investors are willing to absorb technology risk, especially in the wake of recent valuation corrections following early market hype. To bridge this gap, technical and investor expertise must be integrated to help the cap table better recognize and underwrite the opportunity.

The FOAK financing gap is a key focus in the Global Climate Finance Accelerator’s 2025–2030 programming. By convening academia, business, government, and finance, and engaging graduate students in finance, engineering, policy, and science, we will pilot FOAK projects to co-develop the capital models and de-risking strategies required to bring these projects to market.

Thanks to MaRS and their network of VCs and intermediaries for sharing practical, implementable examples of FOAK financing from their own experiences.

About the authors

Susan McGeachie is CEO of the Global Climate Finance Accelerator, which convenes partnerships across business, finance, government and academia on strategies, policies, procedures, and tools to finance the deployment of technically viable climate solutions. 

Marc Oppenheim runs Blue Reef Capital, an elite corporate finance boutique that raises blended capital for world-leading climate tech companies.