Chestnut Carbon gets $160M to turn old farms into forests

Nature-based carbon elimination startup Chestnut Carbon has raised $160 million in Sequence B financing, the corporate advised TechCrunch. The startup buys marginal and degraded farmland, vegetation them with native timber, and harvests the ensuing carbon credit.

Carbon credit have turn out to be a sizzling commodity, particularly amongst tech corporations trying to offset skyrocketing emissions brought on partly by the breakneck growth of information facilities serving cloud and AI prospects.

The brand new spherical included funding from Canada Pension Plan Funding Board, Cloverlay, and DBL Companions together with unnamed college endowments, household places of work, 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 sometimes invests in oil and fuel corporations, however managing accomplice 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 presently chief product officer.

With Chestnut, the group expanded their focus to incorporate tasks developed by the corporate, not simply managing present forests.

Chestnut presently owns greater than 35,000 acres of marginal and degraded farmland and pasture within the southeastern United States. A part of the objective of the fundraise is to develop Chestnut’s holdings considerably. The startup is hoping to broaden its carbon credit score capability to 100 million metric tons by 2030, which would require a whole bunch of hundreds of acres to be remodeled again into forests.

Final month, Chestnut made a down fee on that focus on with the sale of 7 million carbon credits to Microsoft. (One carbon credit score is price 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 Commonplace to certify its carbon credit for 100 years.

The brand new funding spherical ought to assist the startup dramatically broaden its operations. Whereas there’s loads of demand for high-quality carbon credit at present, Chestnut’s objective of 100 million metric tons represents a fraction of a p.c of annual carbon emissions, which hit 37.4 billion metric tons in 2023, according to the IEA.

Nonetheless, 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 study in 2019 discovered that the world can assist 2.2 billion acres extra forest than it has at present. As soon as these forests matured, they might maintain 205 billion metric tons of carbon, or a couple of quarter of the carbon presently within the ambiance.