Carbon Streaming Reports Strong Q2 Results: Can They Set a New Standard in Carbon Credits?

Carbon Streaming Corporation recently announced its financial results for Q2 and the first half of 2024, with several notable highlights, including carbon credit sales, a strategic partnership with Microsoft, and portfolio updates. Here are the company’s financial performance highlights and major carbon credit portfolio updates.

Financial Performance and Carbon Credit Achievements

Carbon Streaming(Cboe CA: NETZ) is pioneering the use of streaming transactions—a flexible funding model—to scale carbon credit projects. The company focuses on initiatives that generate high-quality carbon credits and positively impact the environment, local communities, and biodiversity.

Cash Position: The company reported a strong cash position with $43.5 million in cash and no corporate debt.

Revenue from Carbon Credits: In Q2 2024, Carbon Streaming generated $0.5 million from carbon credit streaming and royalty agreements, a significant increase from the $38,000 reported in Q2 2023.

Operating Loss: Despite this, the company incurred a net loss of $2.8 million, a substantial improvement from the $9.2 million loss in the same quarter last year. The adjusted net loss was $1.7 million, up from $0.8 million in Q2 2023.

Cost Optimization: The company continued its restructuring efforts, aiming to reduce ongoing operating expenses by over $1 million per year. This includes terminating consulting contracts and making changes in senior management and the Board (link here).

SEE MORE: Activist Investor Marin Katusa Overhauls Carbon Streaming Leadership

Carbon Credit Pricing and Sales Strategy

Source from company report

The average price of carbon credits sold by the company in Q2 has been at $6.85 per ton, up from $6.60/ton in the same period last year. This pricing reflects current market conditions, which have been volatile but show potential for growth as global demand for carbon credits increases.

Moreover, NETZ generated almost 23% more revenue from selling carbon credits in the second quarter ($54,000 Q2 2024 vs $44,000 Q2 2023). The same goes for the number of carbon credits sold by the company from the inventory it holds, which are separate from those delivered under its carbon streaming agreements. It increased by almost 16% to $7.9 million in Q2 2024 from $6.6 million in Q2 2023.

The results are even much higher when comparing achievements for the first half of 2024 versus last year.

The company expects to retain 15% to 25% of cash flows from the sale of carbon credits acquired through its streaming agreements, depending on specific terms and market conditions. This retention strategy is designed to maximize revenue while providing stability against market fluctuations.

Carbon Credit Deal with Microsoft

In a major deal, Carbon Streaming partnered with Microsoft and Rubicon Carbon Capital LLC to enter a carbon credit streaming agreement for the Azuero Reforestation project in Panama. Under this agreement, Microsoft has committed to purchasing 100% of the carbon credits delivered by Carbon Streaming until 2040.

This long-term offtake agreement underscores Microsoft’s commitment to achieving its sustainability goals and highlights the growing demand for high-quality carbon credits.

Key Portfolio Updates and Outlook

Rimba Raya Stream: The company’s Rimba Raya project in Indonesia faced a legal challenge when its Forest Utilization Business License was revoked by the Indonesian Ministry of Environment and Forestry (MOEF) in April 2024. However, a court ruling temporarily reinstated the license, allowing project activities to resume. The situation is still uncertain, with the MOEF appealing the decision. Carbon Streaming is exploring legal options to protect its investment.

Community Carbon Stream: The company revised the terms of its Community Carbon Stream in May 2024, focusing on its strongest projects, which include cookstove and water purification initiatives in various regions. The project also secured a historic authorization from the Tanzanian government for the first-ever carbon credits under Article 6 of the Paris Agreement.

Sustainable Community Stream: The company terminated its agreement with Will Solutions in July 2024 due to unmet milestones and project delays. Discussions are ongoing, and Carbon Streaming intends to enforce its legal rights.

Key Milestones:

Significant upfront payments were made for the Community Carbon, Sheep Creek Reforestation, and Feather River Reforestation projects as they reached their respective milestones.
A pilot program was initiated in India for the Nalgonda Rice Farming project, using advanced monitoring technology to enhance project efficiency.
The Enfield Biochar project in Maine achieved its first biochar production milestone, with the project moving toward full operational capacity.

Strategic Outlook:

Carbon Streaming aims to solidify its position as a leader in carbon credit financing, focusing on high-quality projects and strategic partnerships. It is positioning itself for long-term success by focusing on cash flow generation and portfolio optimization, per NETZ’s report.

The company continues to seek out high-quality carbon removal and avoidance projects, leveraging its strong relationships with project developers and carbon credit buyers like Microsoft.

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