J.P. Morgan has led a $210 million credit facility for Chestnut Carbon, marking one of the first large-scale uses of project financing in the voluntary carbon market, the U.S.-based carbon removal company said Tuesday.

The deal, supported by one of the largest carbon removal offtake agreements in the U.S., could help lower financing costs for developers as they expand commercial operations.

“Not only does this facility provide the capital to accelerate our afforestation and carbon removal initiatives, it also establishes a replicable model for sustainable finance in the voluntary carbon sector,” Chestnut Chief Financial Officer Greg Adams said in a statement.

Backed by Long-Term Supply

Chestnut develops afforestation projects across the southeastern United States by planting native trees on idle farmland, measuring their carbon absorption and selling credits in the voluntary market. The company operates projects in Alabama, Arkansas, Mississippi and Louisiana.

In January, Chestnut signed a 25-year supply agreement with Microsoft to deliver more than 7 million tons of carbon removal credits. The project, covering about 60,000 acres and more than 35 million trees, underpinned the J.P. Morgan facility.

“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 Center for Carbon Transition at J.P. Morgan.

Scaling Nature-Based Removals

Chestnut’s afforestation efforts aim to expand nature-based removals while restoring ecosystems. Alongside emissions cuts, the voluntary carbon market is seen as a tool to support the low-carbon transition.

JPMorgan Chase has also been an active buyer in the voluntary market to offset its own emissions. In 2023, it published a white paper on the role of carbon credits and industry challenges.

The bank said the Chestnut financing illustrates how new structures can help diversify investor participation and make large-scale projects bankable in a growing sector.

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