Citigroup has completed the issuance of a $72 million, 3.5-year principal-protected Carbon Removal-Linked Note to fund the expansion of Applied Carbon’s mobile biochar infrastructure across agricultural regions in Texas.
The financial instrument introduces an outcome-based structure where bond investors forgo conventional coupon payments. Instead, an upfront capital allocation directly finances Applied Carbon’s operational deployment, with subsequent investor returns linked to the generation, verification, and delivery of carbon removal credits.
Institutional investor Nuveen participated as a primary buyer of the note, citing the asset’s relative valuation, environmental impact reporting, and credit backing from corporate off-taker Microsoft, which executed a long-term carbon credit purchase agreement with Applied Carbon in 2022.
Applied Carbon’s proprietary technology utilises mobile pyrolysis platforms to process agricultural crop residue directly in farming fields. The single-pass machinery converts agricultural waste into biochar—a stable carbon matrix—which is applied back into the soil to achieve permanent carbon sequestration while improving soil moisture retention and nutrient availability.
Key features of the transaction and technology include:
- Capital markets innovation: Structures voluntary carbon market investments into a principal-protected outcome bond to align capital markets with long-term project finance needs.
- In-field processing technology: Mechanised mobile pyrolysis units process residue directly in-field or at field edges, offering operational flexibility throughout harvesting cycles.
- Corporate off-take backing: Verified carbon credits generated by the biochar deployment will be delivered to Microsoft under an existing long-term off-take contract.
- Institutional investment: Nuveen’s Global Fixed Income team managed the institutional investment allocation, targeting high-permanence carbon removal paired with contractually secured cash flows.
Sonia Battikh, Global Head of Carbon Offsets Trading at Citi, stated that outcome-linked debt structures are essential to bridge financing gaps in the voluntary carbon market and provide institutional investors with direct exposure to verifiable environmental assets.
Jason Aramburu, Founder and Chief Executive Officer of Applied Carbon, added that the transaction demonstrates how engineered carbon removal and biochar assets can be structured under standard capital market frameworks to scale nature-based climate solutions.
