TPG-Backed Carbon Credit Firm Rubicon to Raise $1B

A TPG-backed carbon credit firm Rubicon Carbon announced it would raise $1 billion in capital and be run as a separate entity.

Rubicon Carbon was initially backed by a leading alternative asset manager TPG Rise Climate with $300 million. The carbon credit firm seeks to source and fund projects that remove carbon and sell the credits to other companies.

Rubicon was developed by TPG’s impact investing strategy to deliver innovation and greater scale in the carbon market. It is also to meet the growing demand for high-integrity emissions reduction solutions.

Bank of America, JetBlue Ventures, and NGP ETP will be among the major co-investors in Rubicon’s initial equity financing. With their funds and TPG Rise contributions, the carbon credit firm targets a total capital raise of $1 billion.

TPG will remain the majority owner of Rubicon after the funding but there’s no disclosure on how much is the stake.

Making Access to the VCM Easier

The voluntary carbon market (VCM) is an important mechanism for ramping climate actions. Trading in this market reached around $2 billion in 2021, according to Ecosystem Marketplace. And that could hit $50 billion by 2030, as per McKinsey estimations.

But despite the addition of new carbon credit marketplaces, rating agencies, brokers, and exchanges, some issues remain persistent.

In particular, insufficient project financing, limited supply, and lack of accessibility cause problems in the VCM. To help fix this, Rubicon aims to provide easier access to the carbon market by vetting projects and their credits.

More importantly, the firm will provide a technology-driven method of analyzing, monitoring, and reporting that lowers costs for companies.

Rubicon’s initial product, the Rubicon Carbon Tonne (RCT), provides enterprise customers access to proprietary sets of both nature-based and industrial-based carbon credits. RCTs will be backed by an initial inventory of verified carbon credits amounting to 20 million tonnes of CO2 removed from the air.

All RCTs will include a suite of services, offering a unique end-to-end solution that reduces costs of producing credits.

Moreover, the carbon credit company is developing a financing solution called Rubicon Carbon Capital. This will enable the firm to work with developers and help fund new projects. A portion of the $1 billion will be for establishing this initiative.

According to the firm’s Chairwoman, Anne Finucane, former Bank of America Vice Chair:

“Rubicon is designed to be the market-based solution that allows both the supply and demand side of the global carbon market to scale responsibly. We look forward to working in cooperation with a growing consortium of businesses, governments, and foundations to accelerate the flow of capital to real emissions reduction solutions.”

Rubicon will be partnering with Anew Climate, Pixxel, Planet Labs PBC, and Rialto Markets.

Leading the Carbon Credit Team

Chief Executive Tom Montag, the former chief operating officer of Bank of America, will led Rubicon’s management team.

Remarking on the announcement, Montag said:

“To deliver on net zero and… to balance any remaining emissions that cannot otherwise be eliminated right now, we must scale high-quality carbon credits in parallel. Rubicon addresses several market pain points and offers exceptional ease-of-access to vetted, high-integrity credits to further accelerate emissions reduction globally…”

Dr. Jennifer Jenkins, who won a Nobel Peace Prize on climate change, will be the Chief Sustainability Officer. She noted that as demand for carbon credits grows, “so too should the size and quality of the projects that underpin the carbon market.”

Rubicon joins TPG Rise’s diverse portfolio of climate solutions focused on carbon credit reductions and removals. These include collaboration with Anew, the leading developer and marketer of carbon credits in North America. Anew is Rubicon’s supply partner and manages sourcing and procurement for the firm’s carbon credit inventory.

The company also formed a coalition of corporate sustainability leaders to help guide its platform and product development. They include Aon, Bain & Company, Cushman & Wakefield, Dow Inc., J.P. Morgan, Kirkland & Ellis LLP, McKinsey & Company, SMBC, among many others.

Rubicon Carbon is not a replacement for aggressive carbon emissions reduction, according to the founding partner of TPG Jim Coulter. Instead, it’s an end-to-end solution for entities that choose to include high-quality carbon credits as part of their net zero strategy.