Ben Dell, an activist investor known for his work in oil and gas, is betting that carbon credits should be more than an abstract concept. His company, Chestnut Carbon, is working with brands like Microsoft and Mercedes Formula 1 to offset emissions in ways buyers can both see and measure.
Dell is best known as the cofounder of private equity firm Kimmeridge Energy Management Co., which specializes in oil and gas. At Chestnut, Dell said his mission is to turn carbon credits into tangible items. The company buys unused farmland and pastures, replants land with native hardwoods, and sells the resulting carbon storage as credits.
“I look at carbon as a commodity,” Dell told Business Insider during “The Resiliency Playbook” event in New York on Wednesday. “Ultimately, you have to be able to show that you’ve stored it, you’re getting paid to store it, and you have to show that it’s measurable and verifiable.”
For buyers like Microsoft, that means carbon credits coming from land that Dell’s team owns and manages. Microsoft’s deal is expected to result in 7 million metric tons of US-based carbon removal credits over a 25-year period.
“When a buyer comes to us, we commit to them that we’re selling the carbon units out of that forest. They can see it, we own it. They know it’s there in perpetuity,” said Dell.
Carbon credits aren’t new. Each token represents the equivalent of 1 metric ton of carbon dioxide reduced or removed from the atmosphere, through projects like tree planting and air capture. It’s a way for companies to show that they’re working to soften their carbon footprint.
As demand surged in recent years, questions have been raised around the quality of carbon credits.
Dell said he knows from experience how challenging it can be to reduce carbon emissions. His firm, Kimmeridge, set out to have net-zero emissions, and he said it was “extremely difficult” to find high-quality carbon removal credits. That inspired Dell’s work with Chestnut, which began about three years ago.
Chestnut has planted trees in almost 30,000 acres of land across Louisiana, Alabama, and Mississippi, Dell said. The company has purchased a total of 60,000 acres that will eventually be restored. Parts of Chestnut’s property are open to local communities who use the land for hunting and fishing.
“As you go and see our properties over time, they essentially look like national forests,” said Dell.
But scaling isn’t easy. Dell said the biggest challenge in running the organization is sourcing the trees themselves. Chestnut is focused on restoring land with native hardwoods, which have been difficult to find.
“We’re the largest buyer of hardwood seedlings and saplings in the southeast [US] right now,” Dell said. “Most of the nurseries are not designed for hardwood species.”
Dell said Chestnut is partnering with nurseries across the US to build a more reliable supply chain. Still, Dell acknowledges the challenges companies face in meeting their emissions goals with the current options on the market.
“It’s a sector where people spend a lot of time pontificating and there’s not a lot of doing,” Dell said. “If the industry got together and actually started to make things happen, we’d get a lot further.”
