Chestnut Carbon Lands $160M to Supercharge Nature-Based Carbon Credit Market

Chestnut Carbon, a nature-based carbon removal company, has raised $160 million in Series B financing. This funding will help expand its afforestation projects across the United States. 

Nature-Based Carbon Removal: A Booming Market

Nature-based carbon removal solutions are key to fighting climate change. Afforestation and reforestation play a big role in this effort. The global market for nature-based carbon credits could grow a lot soon. 

McKinsey reports that by 2030, demand for voluntary carbon credits may hit 1.5 to 2 gigatons each year. Nature-based solutions will likely play a big role in this growth.

Analysts estimate that the global carbon credit market could reach $100 billion by 2030 and $250 billion by 2050. Nature-based solutions could contribute a major share. 

As companies aim for net-zero targets, the need for verified carbon credits is growing. This trend highlights the role of Chestnut Carbon. The company commits to creating large, nature-based carbon removal projects.

Chestnut Carbon’s $160M Funding: A Game Changer

The $160 million funding round has existing investors, like Canada Pension Plan Investment Board. It also includes new investors, Cloverlay and DBL Partners. Additional support came from limited partners of Kimmeridge, Chestnut’s founding firm. These partners include university endowments, family offices, and institutional investors.

This funding will help Chestnut Carbon grow its Sustainable Restoration Project. The goal is to sequester 100 million metric tons of carbon over time.

Chestnut promotes biodiversity and supports ecosystem health by turning degraded farmland into forests. This work also makes a big difference in the VCM.

Chestnut’s Approach to Carbon Removal: Turning Land Into a Carbon Goldmine

Chestnut Carbon started in 2022 and focuses on afforestation. This means planting trees on unused farmland and pasture with the goal of capturing and storing carbon. The company distinguishes itself with these:

• Land Acquisition: Chestnut has acquired more than 35,000 acres in six U.S. states. These include Arkansas, Louisiana, Alabama, Mississippi, Oklahoma, and Texas.
• Gold Standard® Verified Carbon Credits: These credits meet strict quality and integrity standards. This makes them appealing to companies focused on sustainability.
• Chestnut uses special data tools and growth models. These help improve forest development and capture carbon effectively.
• Long-Term Sustainability: The company aims to create lasting, strong forests. These forests do more than store carbon. They also help restore soil, retain water, and protect biodiversity.

How the funding will be used

With the new $160 million, Chestnut Carbon will speed up its growth in three main areas:

1. Land Purchases: More land acquisitions will enable rapid expansion and project execution.
2. Technology Investment: Chestnut uses advanced data modeling and their own tech to track tree growth. This helps predict carbon sequestration rates and makes project development easier.
3. Talent Growth: The company will grow its team of experts in forestry, environmental science, carbon finance, and land management. This will help scale operations effectively.

Investors see Chestnut Carbon as a leader in the emerging nature-based carbon removal sector. Nancy Pfund, Founder and Managing Partner at DBL Partners, highlighted the promise of Chestnut’s model, saying:

“With our investment in Chestnut, we see the potential to raise the bar by helping to create the industry leader in providing high-quality carbon offsets at scale.”

Remarking on this massive fundraising, Ben Dell, CEO of Chestnut and Founder and Managing Partner of Kimmeridge noted:

“The Series B financing allows us to continue to build out our platform to meet the growing needs of sustainability-conscious organizations and advance our position as a leading provider in the international carbon markets.”

The Corporate Shift Toward Carbon Offsets

Chestnut Carbon is growing because more companies need high-quality carbon credits for their increasing corporate commitment to sustainability.

Companies in technology, manufacturing, and finance are investing in carbon offsets. They want to reduce their environmental impact and reach net-zero emissions.

In 2023, carbon pricing revenues hit a record $104 billion. This shows that more companies are using carbon credits for sustainability.

Microsoft leads the way by buying over 3.3 million tons of carbon removal credits. This is part of its goal to be carbon-negative by 2030. The tech giant recently signed a deal to buy 7 million carbon credits from Chestnut. 

• READ MORE: Microsoft Signs Groundbreaking 7MT Carbon Credits Deal with U.S.-Based Chestnut Carbon

Microsoft announced a big deal to help restore parts of the Brazilian Amazon and Atlantic forests. They will buy 3.5 million carbon credits from Re.green, a Brazilian start-up, over the next 25 years. This initiative seeks to reduce greenhouse gas emissions. These emissions are rising because AI and data centers need more energy.

Other major corporations are also making substantial investments in carbon credits. Delta Air Lines has bought millions of carbon credits. This helps offset its emissions. It shows the airline industry’s commitment to sustainability.

Also, companies like Alphabet (Google’s parent) and Disney are big buyers of carbon credits. Shell topped the list, followed by Microsoft last year. 

• RELATED: Shell and Microsoft Are The Biggest Carbon Credit Buyers in 2024: What Projects Do They Support?

In 2024, the voluntary carbon market was very active. Corporations used credits valued at $1.4 billion. This is just below 2022’s peak of $1.7 billion. It shows that companies are still committed to carbon-offsetting efforts.

These investments help companies reach their sustainability goals. They also aid global efforts against climate change. By backing projects that cut greenhouse gas emissions, corporations are key players in moving toward a sustainable future.

The Challenges Ahead—Can Chestnut Fix It?

Big afforestation efforts could help. However, challenges still exist in expanding nature-based carbon removal solutions, including:

• Land Availability: Securing large tracts of suitable land remains a key hurdle.
• Verification Delays: The carbon market often has slow verification processes. This can delay credit issuance and affect project financing.
• Market Maturity: The voluntary carbon market is still growing. It needs clearer standards and stronger buyer trust in credit quality.

Chestnut focuses on careful checks, quality credits, and sustainable practices. This helps them face challenges effectively. This approach sets a standard for future nature-based carbon removal projects.

Chestnut Carbon’s $160 million fundraising is a big milestone for the voluntary carbon credit market. As companies aim for net-zero goals, they will need more trusted, high-quality carbon credits. Chestnut’s approach sets a new standard in the carbon market, opening doors for large, sustainable solutions to remove emissions. 

• FURTHER READING: Carbon Credits in 2024: What to Expect in 2025 and Beyond ($250B by 2050)

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