Nature-based Carbon Removal Startup Chestnut Carbon Raises $160 Million in Series B Financing
Nature-based carbon removal startup Chestnut Carbon has raised $160 million in Series B financing, the company announced to TechCrunch. The startup specializes in purchasing marginal and degraded farmland, planting them with native trees, and harvesting the resulting carbon credits.
Carbon credits have become increasingly valuable, particularly among tech companies seeking to offset rising emissions linked to the rapid expansion of data centers serving cloud and AI customers.
Investment and Growth
The latest funding round saw contributions from notable investors such as Canada Pension Plan Investment Board, Cloverlay, and DBL Partners, as well as undisclosed university endowments, family offices, funds of funds, and other institutional investors.
While $160 million may seem modest, Chestnut Carbon initially received up to $200 million in capital from private equity firm Kimmeridge. This investment marked the firm’s foray into the carbon credit market, diverging from its usual focus on oil and gas companies.
In a strategic move, Chestnut Carbon acquired Forest Carbon Works, a startup founded by Kyle Holland that assisted families in managing their forests for carbon credit sales. Holland now serves as the chief product officer at Chestnut.
Expansion Plans
With a current ownership of over 35,000 acres of marginal and degraded farmland in the southeastern United States, Chestnut aims to significantly increase its holdings. The startup plans to expand its carbon credit capacity to 100 million metric tons by 2030, necessitating the transformation of hundreds of thousands of acres into forests.
Recently, Chestnut secured a deal with Microsoft, selling 7 million carbon credits. This 25-year agreement will aid in rehabilitating 60,000 acres across Arkansas, Louisiana, and Texas, with certification from Gold Standard for a century.
Impact and Potential
While Chestnut’s goal of 100 million metric tons of carbon credits is a fraction of global emissions, the startup plays a crucial role in the carbon credit market. Afforestation and reforestation offer significant potential in combating climate change.
A 2019 study highlighted the capacity for 2.2 billion more acres of forest worldwide, potentially storing 205 billion metric tons of carbon, a quarter of current atmospheric levels.
FAQs
Q: What is Chestnut Carbon’s primary focus?
A: Chestnut Carbon specializes in nature-based carbon removal by purchasing degraded farmland, planting native trees, and harvesting carbon credits.
Q: Who are some of Chestnut Carbon’s investors?
A: Investors in Chestnut Carbon include Canada Pension Plan Investment Board, Cloverlay, and DBL Partners, among others.
Q: What is Chestnut Carbon’s long-term goal for carbon credit capacity?
A: Chestnut Carbon aims to expand its carbon credit capacity to 100 million metric tons by 2030, requiring the transformation of hundreds of thousands of acres into forests.
Q: How does Chestnut Carbon contribute to combating climate change?
A: Through afforestation and reforestation efforts, Chestnut Carbon plays a vital role in sequestering carbon and mitigating the effects of climate change.
Credit: techcrunch.com
