Nature-based carbon removal startup Chestnut Carbon has raised $160 million in Series B funding, the company told TechCrunch. Startups buy limits and degraded farmland, plant native trees on them, and harvest the resulting carbon credits.
Carbon credits are hot, especially among tech companies considering offsetting the surge in emissions caused by the fierce expansion of data centers serving cloud and AI customers. It is a product.
The new round included investments from Canada’s Pension Planning Investment Committee, Cloverley and DBL Partners.
For chestnut carbon, $160 million is actually a somewhat modest amount. When the company was founded, private equity firm Kimmeridge capitalized it by pledging up to $200 million. The company typically invests in oil and gas companies, but managing partner Bendel saw an opportunity to wager bills in the growing carbon credit market.
To make that happen, he acquired Forest Carbon Works. It was a startup founded by Kyle Holland, which helped families manage the forests and sell carbon credits. The Netherlands continued their chesnuts. That’s where he is currently the highest product manager.
With Chestnut, the team expanded their focus to include projects developed by the company as well as managing existing forests.
Chestnut currently owns more than 35,000 acres of marginal and degraded farmland and pastures in the southeastern United States. Part of the fundraising goal is to significantly increase chestnut holdings. The startup hopes to expand its carbon credit capacity to 100 million tons by 2030. This requires hundreds of thousands of acres to be converted into forests.
Last month, Chestnut sold 7 million carbon credits to Microsoft and paid a down payment on that target. (One carbon credit is worth a meter of carbon.) The 25-year contract will help rehabilitate 60,000 acres of chestnuts in Arkansas, Louisiana and Texas. Chestnut uses the gold standard to authenticate carbon credits for 100 years.
A new funding round should help startups dramatically expand their operations. According to the IEA, there is a lot of demand for high quality carbon credits today, but Chestnut’s goal represents just a small portion of its annual carbon emissions, reaching 37.4 billion tonnes in 2023.
Still, if Chestnut can secure foothold in the carbon credit market, planting and planting has great potential to curb the effects of climate warming pollution.
A 2019 survey found that the world could support 2.2 billion acres of forests than it is today. When these forests mature, they will retain 205 billion tonnes of carbon, or about a quarter of the carbon in the current atmosphere.
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