Green Star Royalties, the world’s first carbon credit royalty and streaming company boasts funding top-notch North American nature-based climate solutions. It’s a joint venture between Star Royalties Ltd. Agnico Eagle Mines Limited, and Cenovus Energy Inc. 

In a recent announcement, Star Royalties, via its partner Green Star, signed a “definitive royalty agreement” with NativState LLC to acquire several gross revenue royalties on a carbon offset-issuing portfolio of Improved Forest Management (IFM) projects in the southeastern United States. 

NativState, an Arkansas-based forest carbon project developer, offers small to medium landowners an opportunity to realize the full carbon potential of their forests. They aggregate them into IFM projects registered under the American Carbon Registry (ACR).

Green Star’s Royalty Portfolio: Unlocking the Investment Plan

Green Star expects the royalties to generate high-quality voluntary carbon offsets over 20 years. The total payment of $5.6 million will be made in several installments in U.S. dollars unless specified otherwise. 

The key strategies of the investment plan defined by Green Star are:

1. Expanding Green Star’s North American nature-based portfolio:

Acquiring the Royalties on NativState’s IFM projects enhances and broadens Green Star’s existing portfolio of North American nature-based carbon offset solutions.

2. First carbon offset-issuing royalty for Green Star

Green Star’s first carbon offset-issuing investment, Project ACR 783 in Arkansas, is projected to deliver around 180,000 carbon offsets in 2024. It includes approximately 120,000 carbon offsets upon closing. Green Star anticipates that about 75% of its share of carbon offsets from the Royalties will occur within the first five years.

3. Aligned and defensive royalty structure

Green Star and NativState have established defensive mechanisms, including minimum carbon credit volumes to be delivered throughout the 20-year royalty term.

4. Multiple Royalties with strong investment metrics

The Royalties encompass a 20% Royalty on Project ACR 783 and a 10% Royalty on an additional 60,000 acres across Arkansas, Louisiana, Mississippi, and Missouri, slated for development by NativState and registration as future ACR projects. At prevailing carbon offset prices, the Royalties are anticipated to yield significant net present value accretion and offer an attractive payback period.

5. Stable and rising demand for premium North American carbon offsets

Premium North American nature-based carbon offsets are witnessing increasing demand amidst limited supply. Current market pricing for these premium avoidance and removal carbon offsets are approximately $13-15/t CO2e and over $20/t CO2e, respectively.

6. Partnership with a rapidly growing carbon developer

NativState, managing over 300,000 acres, aims to become the largest U.S. aggregator of small-to-medium forest landowners. Green Star is pleased to forge a long-term partnership with NativState, financing American forest landowners eager to engage in both IFM practices and voluntary carbon markets.

Transaction Terms and Impact on Green Star’s Carbon Offset and Revenue Profiles

The transaction immediately provides Green Star with carbon offsets that can be monetized. Over the next 20 years, they’ll keep getting more offsets, with about 75% of them coming in the first five years. 

source: Green Star Royalties

However, the transaction terms and conditions are significant for the financial gains of both parties. They include: 

Green Star will acquire the Royalties for $5.6 million, with payments made in installments tied to ACR registration milestones.
In return for its investment, Green Star will receive a 20% Royalty on Project ACR 783 and a 10% Royalty on an additional 60,000 acres, slated for enrollment by NativState as ACR projects.
Each Royalty will span a 20-year term starting from the first carbon offset issuance date of the ACR project.
Carbon offsets will serve as the direct payment method for the Royalties.
Green Star and NativState have agreed to defensive mechanisms, including minimum carbon offset delivery requirements over the 20-year royalty period.

Enhancing Carbon Sequestration through Improved Forest Management (IFM)

Improved forest management encompasses methods that either reduce emissions from forests or enhance carbon removal and storage. Techniques such as decreasing harvest volumes, extending forest rotations, etc. lower emissions from forests. They generate credits for the curbed emissions. 

The conservation plans also elevate carbon storage above the baseline, guaranteeing excellent carbon sequestration.

From an economic perspective, 

These projects achieve increased net carbon stocks by either sequestering carbon through photosynthesis from expanded or maintained forest cover compared to the baseline or by curbing greenhouse gas emissions through reduced timber harvesting.
Acceptable IFM practices, like extending rotations, implementing thinning, adopting fire prevention methods, and altering harvesting techniques, must comply with the selected carbon registry methodology.

CarbonDirect reports,

“Improved forest management has the potential to increase total stored carbon annually by 200 million to 2.1 billion tonnes without compromising the wood product and ecosystem benefits that come with managed forestlands.”

 In the United States, timber harvesting is the most widespread disruption across forested areas, with most of the harvested timber sourced from private lands. Therefore, significant decisions about forest and land management can profoundly impact the capacity of forests to sequester carbon.

Presently, “premium avoidance carbon offsets” in the U.S. market are valued at about $13 to $15 per metric ton of carbon dioxide equivalent (t CO2e), while removal carbon offsets fetch over $20 per t CO2e.

Carbon Offsets and Habitat Protection: The Mission of Project ACR 783

Project ACR 783, also known as the S&J Taylor Forest Carbon Project spreads across 18,000 acres of sustainably managed forestland in Southcentral Arkansas. 

Forest project: work in progress

source: NativState

Green Star holding a 20% Royalty stake in Project ACR 783, is anticipating to produce ~ 1.5 million carbon offsets over the next two decades. 

Notably, Project ACR 783 focuses on maintaining forest carbon stocks through certified and sustainable management practices to achieve significant carbon sequestration in the designated areas. 

With its partner NativState, they are aiming to generate sustainable revenue streams through forest management and voluntary carbon markets (VCMs). The latter dedicates itself to conserving valuable hardwoods such as oak, gum, cypress, hickory, and pine forests within the Gulf Coastal Plain eco-region.

Besides carbon revenues, Project ACR 783 will also promote:

Landscape stability
Increased biodiversity, and 
Enhanced habitat protection for critical species

Alex Pernin, CEO of Star Royalties, has highly applauded NativState’s approach to the sustainable business model and its carbon offset issuance profile. He noted, 

“We are proud to announce this multi-royalty investment in NativState’s portfolio of high-integrity IFM projects in the southeastern United States. This thoughtful transaction transitions Green Star into free cash flow generation and provides desirable economic returns while expanding and diversifying our existing premium North American portfolio.”

FURTHER READING: US Department of Agriculture to Invest $300M to Boost Carbon Data in Agriculture and Forestry (carboncredits.com)

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Verra, a leading non-profit VCM registry in the US has recently released updates to its Verified Carbon Standard (VCS) Program. The latest release, VCS Standard v4.7, introduces enhancements to the existing framework.

The VCM program aims to bolster the credibility and effectiveness of carbon offset projects certified under the VCS Program. However, the Integrity Council for the Voluntary Carbon Market (ICVCM) is currently in the final stages of approving it, and they expect to receive the results either later this month or possibly in May.

VCS Program Updates: Alignment with CORSIA and ICVCM

Verra’s 4.7 updates aim to ensure full compliance with CORSIA’s first phase (2024–2026 compliance period) requirements, established by the International Civil Aviation Organization (ICAO)

Verra will submit these updates to ICAO for further assessment by the ICAO Technical Advisory Body.
The deadline for submission of the Material Changes form is on or before April 30, 2024

Furthermore, the VCS Program updates incorporate several amendments to its rules aimed at clarifying its alignment with the Core Carbon Principles set by the Carbon Market (ICVCM). As mentioned, the final review and approval process would take at least a month.

The provisions would prevent the double claiming of emission reductions and removals represented by VCUs used for CORSIA compliance. They would also enhance the host country’s Nationally Determined Contribution (NDC) under the Paris Agreement.

Verra’s Diverse Sustainability Initiatives

One of Verra’s most notable contributions is the development and oversight of the VCS program, which provides guidelines and protocols for certifying carbon offset projects.

These projects, ranging from renewable energy installations to reforestation efforts, undergo rigorous assessment to ensure they meet specific criteria for additionality, permanence, and emissions reductions.

In addition to the VCS program,

Verra manages other standards and programs aimed at promoting environmental sustainability and social responsibility. These include the Climate, Community & Biodiversity (CCB) Standards.
They further assess projects for their impacts on local communities and ecosystems, and the Sustainable Development Verified Impact Standard (SD VISta). It evaluates projects based on their contributions to sustainable development goals.

source: Verra annual report 2022

MUST READ: Revolutionizing Forest Protection: Verra Introduces New REDD+ Methodology (carboncredits.com)

Overview of VCS Program Updates (new version v4.7)

The Overview of VCS Program Updates and Effective Dates (PDF) provides a comprehensive list of changes, along with their effective dates and grace periods.

The updated documents mainly highlight the VCS Standard, VCS Program Definitions, the Verra Registry Terms of Use (ToU), and VCS Safeguard.

1. Updates Related to the VCS Safeguard

Mandate thorough risk assessments by project proponents, ensuring mitigation measures are proportionate to identified risks.
Mandates project proponents to identify, minimize, and mitigate impacts, including those stemming from chemical pesticides and fertilizers.
Clarifies that project proponents must also safeguard staff and contracted workers employed by third parties.
Specifies that demonstrating no adverse impact extends to areas crucial for habitat connectivity.

The revision is effective for all project requests submitted to the Verra Registry on or after January 1, 2025.

2. Updates Related to Registration under the GHG Program

Requires providing evidence of the project’s inactivity date, where applicable.
Stipulates that projects registered under another GHG program can only join the VCS Program after becoming inactive in the other program.

The revision is effective for all projects requesting registration or crediting period renewal under the VCS Program on or after January 1, 2025

3. Updates Related to Double Selling of VCUs

This section of the update references VCS Program rules on double selling of Verified Carbon Units (VCUs), which are covered in the Registry Terms of Use. Updates to the VCS Program Definitions will be effective immediately.

4. Updates Related to Methodology Development and Review Process

It clarifies that Verra selects a shortlist of eligible validation/verification bodies that meet all requests for proposal and VCS Program criteria. Updates to the VCS Program Definitions will be effective immediately.

5. Updates Related to VCS Standard and Registration and Issuance Process

Verra has updated all project templates to align with the revised requirements in the VCS Standard and Registration and Issuance Process. It’s effective for all project requests submitted to the Verra Registry on or after January 1, 2025.

Disclaimer: We have fetched a revised VCS program update from Verra’s April 2024 program update release.

Image: Verra’s VCM program issues billions of carbon credits.

source: Verra’s annual report 2022

Governments, businesses, and organizations worldwide widely recognize and utilize Verra’s standards as benchmarks for credible and transparent carbon credit exchanges.

In 2022, Verra’s VCS Program significantly issued its 1 billion carbon credit. Verra remains deeply committed to maintaining a high-integrity VCM that contributes to achieving the Paris Agreement goals. This commitment has been assured by Judith Simon, Verra President and Interim CEO, she noted,

“I feel the urgency and importance of all we must do—not just as an organization, but also in support of environmental and social markets. We have an enormous responsibility, and we take it seriously.”

FURTHER READING: Verra Holds Crediting for CDM Rice Cultivation Methodology (carboncredits.com)

The post Verra’s VCS Program Update: Navigating CORSIA and ICVCM Alignment appeared first on Carbon Credits.

The project developer of the prominent Rimba Raya REDD+ initiative expressed surprise over not being notified about the revocation of its forest license in Indonesia, as reported recently in the local media.

Indonesia’s Ministry of Environment and Forestry has reportedly suspended and revoked the operating license for the Rimba Raya Conservation project. This project could potentially be one of the largest nature-based projects in the voluntary carbon market (VCM). The reason cited is “carbon trading violations”.

Rimba Raya’s Carbon Regulatory Rift

Rimba Raya is situated on the southern coast of Borneo and plays a vital role in providing, preserving, and safeguarding hundreds of endangered mammal species. It’s also implementing community programs for nine villages.

Rimba Raya REDD+ project generates carbon credits by conserving High Conservation Value (HCV) tropical peat forests, housing over 350 million tonnes of carbon stored in its peat domes. The project holds the distinction of being:

The first validated REDD+ project ever under the Verified Carbon Standard (VCS),
The first REDD+ forest-carbon project globally to achieve triple-gold validation under the Climate Community and Biodiversity Alliance Standard (CCBA), and
The first REDD+ initiative to achieve the highest possible rating of contributing to all 17 UN SDGs.

The revocation poses a significant challenge to the Rimba Raya REDD+ project, which was the first to be listed under Indonesia’s new carbon registry, the Sistem Registrasi Nasional (SRN), in late 2022. The SRN carbon credit system adheres to internationally accepted standards (UNFCC guidelines).

However, it has not yet undergone full verification due to delays at the government level.

The status of numerous REDD+ projects in Indonesia has been uncertain for the past two years, as the government formulates its policies regarding carbon trading. In April 2022, the Indonesian government suspended validating some of the carbon projects as they failed to meet regulations. 

Though some of these initiatives are compliant, others still need to make necessary adjustments. The forestry ministry is firm about its rules and would take action against projects that don’t abide.

READ MORE: Indonesia Government Confirms Suspension of Validating Carbon Projects

As of now, no voluntary carbon projects have received full verification under SRN. Developers are hopeful that a new environment minister, following this year’s presidential election, will address this issue. However, if the reports about the license revocation are accurate, it could further hinder VCM projects.

Why the Indonesian Government Revoked the Project

The Director of Forest Utilization Business Control, Khairi Wenda, was quoted by news site Sabungmaruake.com. It states that the primary reason for revoking Rimba Raya’s permit was the transfer of the permit to a third party “without approval” from the Minister of Environment and Forestry, referred to in Indonesia as LHK.

According to the article, Rimba Raya engaged in carbon trading transactions that extended beyond its licensed area. Thus, it violates the cooperation agreement with Tanjung Puting National Park. 

Additionally, Rimba Raya was criticized for not paying Non-Tax State Revenue (PNBP) in accordance with applicable laws and regulations.

The revocation of the license is seen as an enforcement of regulations related to carbon trading in Indonesia. The move aimed at preventing double counting and double claims between countries in efforts to reduce carbon emissions in accordance with the Paris Agreement.

Indonesia initiated a carbon credit trading market in September last year. This is in line with its commitment to reducing carbon emissions and reaching net zero by 2060.

As the largest emitter in Southeast Asia, Indonesia has chosen the Indonesia Stock Exchange (IDX) as the platform for trading carbon credits. This exchange will facilitate carbon trading and also encourage the transition to cleaner energy sources, thereby mitigating the climate impact of the country’s heavily coal-dependent power sector.

RELEVANT: Indonesia Launches Carbon Credit Market In A Leap Toward Net Zero

Legal Limbo: InfiniteEarth’s Response to the Revocation

However, InfiniteEarth, the developer behind the project, stated that the legal framework for carbon projects in Indonesia remains uncertain. It mentioned that its business partner and concession holder, PT Rimba Raya, has not informed them about the alleged suspension.

InfiniteEarth clarified that the allegation of permit transfer is incorrect, asserting that PT Rimba Raya remains the concession holder. And InfiniteEarth has been the project proponent and owner of the carbon rights since the project’s inception. It highlighted its reaffirmation through audits and validations by SRN.

Regarding the project’s obligations, InfiniteEarth stated that some are beyond their control and are the responsibility of their partner, PT Rimba Raya Conservation. Expressing disappointment, InfiniteEarth affirmed its commitment to resolving the concession rights matter to ensure the project’s continuity.

Rimba Raya is anticipated to generate around 2.7 million carbon credits per year, according to one of its contracted offtakers, Canadian credit aggregator Carbon Streaming. 

In August 2021, Carbon Streaming’s agreement with Rimba Raya REDD+ developer aims to generate revenue from carbon credit sales. The income contributes to various initiatives, such as local community development, infrastructure projects, and the protection of the project area. 

But the recent news will largely impact the project activities and the benefits it brings to the community and the sector. 

The post Rimba Raya REDD+ Project Revocation Rattles Carbon Market appeared first on Carbon Credits.

Zefiro Methane Corporation announced that its common shares started trading on the Cboe Canada Exchange under the ticker symbol ZEFI. This milestone follows Zefiro Methane’s successful Initial Public Offering (IPO), as revealed in its April 11 press release.

Zefiro Methane is a private methane offsets originator dedicated to decommissioning orphaned and abandoned oil and gas wells in the United States.

Why Plug Wells?

Zefiro’s primary mission revolves around mitigating methane gas emissions, a greenhouse gas significantly more potent than carbon dioxide. Leveraging its expertise in asset retirement and environmental markets, Zefiro stands as the sole fully integrated provider dedicated to addressing the pervasive issue of methane leaks across countless sites throughout North America. 

Methane is the second most prevalent greenhouse gas (GHG) globally, trailing only behind CO2. It contributes to about 20% of total GHG emissions. Remarkably, its heat-trapping potency surpasses CO2 by at least 25 times, scaling up to over 8x.

Methane concentrations in the atmosphere have surged significantly. This prompted concerns among scientists who view escalating methane emissions as a formidable obstacle to maintaining global temperatures below the 1.5°C threshold. The Global Methane Initiative (GMI) forecasts that methane emissions from human activities will increase by 2030. 

The surge in methane pollution largely comes from human activities, with one prominent culprit – the abandoned oil and gas wells.

Recent estimates paint a troubling picture, indicating the existence of over 4 million orphaned oil and gas wells scattered across 26 U.S. states. A study sheds light on the distribution of these wells in Canada and the U.S.

These abandoned and unplugged wells serve as potent sources of methane leakage, posing grave threats to air quality. Government assessments equate the volume of leaking methane to the combustion of over 16 million barrels of oil, underscoring the magnitude of the environmental challenge posed by neglected well sites.

By decommissioning these wells, Zefiro Methane generates high-quality carbon offsets available for sale in voluntary carbon markets.

Zefiro’s Strategic Expansion in Environmental Services

Notably, a substantial federal allocation of US$4.7 billion has been earmarked for well site plugging, remediation, and restoration efforts, aiming to combat methane emissions. Throughout 2023, Zefiro expanded its operational framework as an environmental services leader through strategic acquisitions. These include Plants & Goodwin, Inc. based in Bradford, Pennsylvania, and Appalachian Well Surveys, Inc. in Cambridge, Ohio. 

RELATED: Methane Offsets Originator, Zefiro, Buys Plants and Goodwin

These acquisitions have positioned Zefiro as a fully integrated entity. Further underscoring its commitment, Zefiro secured a presale agreement for certified carbon credits with Mercuria Energy America, LLC, a significant player in the global energy and commodities landscape. 

Additionally, Zefiro played a pivotal role in the United Nations Climate Change Conference in Dubai, hosting a noteworthy event within the “Blue Zone.”

Reflecting on the bell-ringing ceremony, CEO Talal Debs expressed excitement for Zefiro Methane going IPO and its trajectory as an emerging environmental services powerhouse. He emphasized the company’s unique position as a comprehensive provider tackling the methane emissions challenge head-on, remarking:

“By leveraging our team’s decades of operational experience both in the field and in the boardroom, Zefiro is forging an innovative toolkit to reduce methane emissions and help remediate critical air, land, and water resources…and we will continue working with key public and private sector stakeholders to achieve these goals.”

Zefiro’s Public Debut Opens Doors for Green Trading

With Zefiro’s listing, institutional and retail investors alike gain access to the Active Sustainability movement. Looking ahead, Zefiro anticipates a dynamic future as a publicly traded entity on the Cboe Canada exchange.

Erik Sloane, Global Head of Corporate Listings at Cboe Global Markets commented on this celebratory event, saying:

“As governments across the world take steps to monitor and manage commitments to reduce greenhouse gas emissions, Zefiro Methane is positioning themselves with an expert management team, access to capital, and creating an interesting opportunity for investors.”

The company’s strategic partnerships with industry stakeholders, state bodies, and federal agencies are poised to bolster revenue and EBITDA growth for its shareholders. 

Investors keen on trading shares of ZEFI can do so through their usual investment channels, including discount brokerage platforms and full-service dealers.

Cboe Canada boasts over 270 unique listings, including some of the most innovative Canadian and international growth companies. It also trades ETFs from Canada’s largest ETF issuers, and Canadian Depositary Receipts (CDRs). The exchange facilitates over 15% of all volume traded in Canadian-listed companies and over 20% of all volume traded in Canadian ETFs.

Zefiro Methane Corporation’s IPO listing on the Cboe Canada Exchange represents more than just a financial milestone—it marks a significant step forward in the global effort to combat methane emissions. As the world grapples with the urgent need to address climate change, Zefiro’s mission to decommission orphaned oil and gas wells and mitigate methane leaks stands at the forefront of environmental stewardship.

READ MORE: Study Shows Landfill Methane Emissions Are 1.4x More Than EPA Estimates

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