Nature-based carbon removal startup Chestnut Carbon announced that it has secured a new $210 million project finance credit facility, led by J.P. Morgan and backed by a massive forest-focused carbon removal offtake agreement recently signed with tech giant Microsoft.
The agreement marks the first financing of its kind for a U.S. voluntary carbon removal afforestation project, with Chestnut, Microsoft and J.P.Morgan highlighting its ability to provide a new route to fund the development of large-scale nature-based carbon removal projects with low-cost, mainstream capital, replicating similar models used for established infrastructure classes.
Greg Adams, Chief Financial Officer at Chestnut, said:
“We are thrilled to have completed this first-of-a-kind transaction. Not only does this facility provide the capital to accelerate our afforestation and carbon removal initiatives, but it establishes a replicable model for sustainable finance in the voluntary carbon sector. We believe this is transformative for Chestnut Carbon and for the industry as a whole.”
Launched in 2022 by energy sector-focused alternative asset manager Kimmeridge, Chestnut helps reduce carbon emissions by planting and developing long-term forest projects in the U.S. that create biodiverse ecosystems and community benefits. Chestnut acquires marginal crop and pasture lands, and partners with local foresters, nurseries, and community members to develop an ideal forest ecosystem based on native tree species, soil, drainage, and community land use.
Chestnut’s Sustainable Restoration Project generates carbon credits to support sustainability-oriented corporations committed to decarbonization and net zero goals. The company has set a goal to achieve more than 100,000 acres of restored forest by 2030, and to remove 100 million tonnes of carbon from the atmosphere.
Earlier this year, Chestnut announced a 25-year offtake agreement with Microsoft, providing the tech giant with more than 7 million tons of nature-based carbon removal credits, generated from its forest projects in the Southern U.S., marking the largest-ever voluntary corporate investment in conservation forestry in the U.S.
The new credit facility is underpinned by the Microsoft offtake contract, and involved a collaboration between Chestnut, Microsoft and the lending syndicate with advising firms including ERM, Marsh, McDermott Will & Emery, and Milbank to adapt proven infrastructure finance frameworks for large-scale nature-based carbon removal. Additional lenders in the syndicate included CoBank, Bank of Montreal, and East West Bank.
Vijnan Batchu, Global Head of Center for Carbon Transition at J.P. Morgan, said:
“Providing this kind of financing gives developers the runway they need to succeed at an attractive cost of capital, allowing them to focus on delivering significant carbon projects and fulfilling contracts. J.P. Morgan is extremely proud to be a part of this significant deal and contribute to the growth of the carbon markets at large.”
Chestnut said that the new facility will help it to expand its afforestation footprint and carbon removal capacity, supporting climate and biodiversity goals, and providing Microsoft with carbon credits to meet its carbon negative commitments.
Brian Marrs, Senior Director of Energy & Carbon Removal at Microsoft, said:
“This transaction marks a meaningful step forward in demonstrating how nature-based carbon removal can scale through structured, high-integrity financing. We’re encouraged to see new financing models emerge that support the growth of durable carbon removal supply. Microsoft remains committed to advancing the voluntary carbon markets through long-term offtake agreements that help unlock investment and innovation.”
