Growing a Greener Future: Microsoft inks carbon removal deal with offsets startup Chestnut

Microsoft has sealed a deal with the carbon offset startup Chestnut Carbon to acquire credits associated with carbon dioxide removal from the atmosphere, the two companies announced on Wednesday. The move is part of Microsoft’s efforts to achieve its sustainability targets.

While the financial details of the deal remain undisclosed, the credits acquired by Microsoft are estimated to equate to the removal of up to 2.7 million tons of carbon over the contract’s lifespan.

As part of the 15-year agreement, Microsoft will obtain carbon removal credits from Chestnut, specifically from trees planted in the Mississippi Alluvial Valley. The initial credits are expected to be delivered to Microsoft in three years, allowing the newly planted trees to mature.

Unlike conventional offset agreements focused on preserving existing trees, Chestnut employs a unique approach by planting new trees on previously farmed or unused land. According to Ben Dell, the founder of Chestnut, this initiative is poised to become the largest afforestation project ever registered in the United States, Reuters reported.

“This is, I believe, the largest U.S. afforestation project ever registered,” Dell said.

Brian Marrs, the senior director of energy & carbon removal at Microsoft, expressed enthusiasm about the collaboration, emphasizing the significance of nature-based solutions in the United States. Commenting on the partnership, Marrs said:

“We are excited to collaborate with Chestnut and its Sustainable Restoration Project for high-quality, nature-based solutions located in the United States.”

Microsoft views carbon removal initiatives as crucial to realizing its goal of achieving carbon negativity by 2030, actively contributing to the net removal of greenhouse gases from the atmosphere. In 2022 alone, the tech giant contracted for over 1.4 million metric tons of carbon removal through various methods, including afforestation and technological solutions like direct air capture.

This collaboration marks Chestnut’s debut, and the revenue generated will enable some of the initial $200 million capital commitment from private equity firm Kimmeridge Energy Management, Chestnut’s backer, to be reinvested in new land acquisitions for Chestnut. Ben Dell, also the managing partner of Kimmeridge, highlighted the positive impact of this revenue on furthering Chestnut’s Sustainable Restoration Project.

Sevier County, Arkansas where Chesnut purchased 878 Acres (Credit: Chestnut)

In recent years, there’s been a growing awareness of climate change, prompting governments and organizations to implement various measures to tackle global warming and the ongoing climate crisis. One effective method to combat climate change is through afforestation.

Forests play a crucial role in absorbing carbon dioxide (CO2). Forests absorb approximately 2.6 billion tons of CO2 annually, accounting for about a third of the total global CO2 emissions. Recognizing this, a fintech startup has introduced an innovative idea to mitigate the impact of climate change by planting more trees.

While planting trees is a valuable strategy in combating climate change, it’s crucial to recognize that it shouldn’t be the sole solution. Critics contend that depending solely on offsets might shift focus away from the urgent need to cut emissions at the source significantly. Nevertheless, Microsoft’s dedication to investing in both carbon removal and emissions reduction showcases a holistic approach to addressing the climate crisis.

Chestnut was founded in 2022 by New York-based alternative asset manager Kimmeridge. Ben Dell, who wears multiple hats as Chestnut’s founder and CEO, also serves as the Managing Partner at Kimmeridge. Chestnut operates as a nature-based carbon offset developer and collaborator, tackling carbon emissions through activities like planting and protecting forests.