J.P. Morgan has arranged a $210 million credit facility for U.S.-based Chestnut Carbon, a developer of large-scale forest carbon removal projects.
The facility is backed by one of the largest carbon removal offtake agreements in the United States, signalling the potential for project financing to deliver lower-cost capital for carbon developers as they expand operations.
Greg Adams, chief financial officer at Chestnut, said the deal would accelerate the firm’s afforestation and carbon removal initiatives while creating “a replicable model for sustainable finance in the voluntary carbon sector”.
This marks one of the first uses of commercial project finance at such scale in the carbon credit market. The transaction shows how long-term supply contracts for carbon removals — such as Chestnut’s — can be structured into investable assets.
“Providing this kind of financing gives developers the runway they need to succeed at an attractive cost of capital,” said Vijnan Batchu, global head of the Centre for Carbon Transition at J.P. Morgan. “We are extremely proud to contribute to the growth of the carbon markets at large.”
Chestnut’s projects involve planting native trees on unused farmland across the southeastern U.S., measuring carbon absorption, and selling credits into the voluntary market. States involved include Alabama, Arkansas, Mississippi and Louisiana.
In January, Chestnut signed a 25-year agreement with Microsoft to supply over seven million tonnes of carbon removal credits — a deal underpinned by the planting of more than 35 million hardwood and softwood trees across 60,000 acres.
This agreement formed the basis of the J.P. Morgan-led financing. JPMorganChase, itself an active buyer in the voluntary carbon market, said the transaction illustrates how innovative finance can provide competitively priced capital and attract a broader range of investors to nature-based carbon removal projects.
