Nature-based carbon removing startup Chestnut Carbon has raised $160 million in Series B financing, the corporate informed TechCrunch. The startup buys marginal and degraded farmland, crops them with native timber, and harvests the ensuing carbon credit.
Carbon credit have grow to be a scorching commodity, particularly amongst tech firms seeking to offset skyrocketing emissions brought on partly by the breakneck enlargement of knowledge facilities serving cloud and AI clients.
The new spherical included funding from Canada Pension Plan Investment Board, Cloverlay, and DBL Partners together with unnamed college endowments, household workplaces, funds of funds, and different institutional traders.
For Chestnut Carbon, the $160 million is definitely a considerably modest sum. When the corporate was based, personal fairness agency Kimmeridge capitalized it by pledging as much as $200 million. The agency usually invests in oil and fuel firms, however managing associate Ben Dell noticed a possibility to stake a declare within the rising carbon credit score market.
To make it occur, he acquired Forest Carbon Works, a startup based by Kyle Holland that helped households handle their forests to promote carbon credit. Holland continued with Chestnut, the place he’s at present chief product officer.
With Chestnut, the crew expanded their focus to incorporate initiatives developed by the corporate, not simply managing current forests.
Chestnut at present owns greater than 35,000 acres of marginal and degraded farmland and pasture within the southeastern United States. Part of the aim of the fundraise is to develop Chestnut’s holdings considerably. The startup is hoping to develop its carbon credit score capability to 100 million metric tons by 2030, which would require a whole bunch of 1000’s of acres to be remodeled again into forests.
Last month, Chestnut made a down fee on that focus on with the sale of seven million carbon credit to Microsoft. (One carbon credit score is value one metric ton of carbon.) The 25-year deal will assist Chestnut rehabilitate 60,000 acres in Arkansas, Louisiana and Texas. Chestnut makes use of Gold Standard to certify its carbon credit for 100 years.
The new funding spherical ought to assist the startup dramatically develop its operations. While there’s loads of demand for high-quality carbon credit immediately, Chestnut’s aim of 100 million metric tons represents a fraction of a % of annual carbon emissions, which hit 37.four billion metric tons in 2023, in line with the IEA.
Still, if Chestnut can safe its foothold within the carbon credit score market, afforestation and reforestation maintain nice potential to rein within the results of local weather warming air pollution.
A examine in 2019 discovered that the world can assist 2.2 billion acres extra forest than it has immediately. Once these forests matured, they might maintain 205 billion metric tons of carbon, or a few quarter of the carbon at present within the ambiance.
