Chestnut Carbon, a nature-based carbon removal startup, has announced the acquisition of a $210 million project finance credit facility. This facility is led by J.P. Morgan and is backed by a significant forest-focused carbon removal offtake agreement with technology giant Microsoft.
This agreement represents the first financing of its kind for a U.S. voluntary carbon removal afforestation project. Chestnut, alongside Microsoft and J.P. Morgan, emphasises its potential to offer a new funding pathway for large-scale nature-based carbon removal projects, utilising low-cost, mainstream capital. This model mirrors those used in established infrastructure sectors.
Greg Adams, Chief Financial Officer at Chestnut, expressed enthusiasm for the transaction, highlighting its role in accelerating afforestation and carbon removal initiatives. He noted its potential to establish a replicable model for sustainable finance within the voluntary carbon sector, which he believes could transform both Chestnut Carbon and the wider industry.
Founded in 2022 by energy sector-focused alternative asset manager Kimmeridge, Chestnut Carbon aims to mitigate carbon emissions through the development of long-term forest projects in the U.S. These projects create biodiverse ecosystems and provide community benefits by acquiring marginal crop and pasture lands. The company collaborates with local foresters, nurseries, and community members to develop optimal forest ecosystems based on native tree species, soil, drainage, and community land use.
Chestnut’s Sustainable Restoration Project generates carbon credits to support sustainability-focused corporations committed to decarbonisation and net zero objectives. The company has set a target to restore over 100,000 acres of forest by 2030, aiming to remove 100 million tonnes of carbon from the atmosphere.
Earlier this year, Chestnut announced a [25-year offtake agreement with Microsoft](https://www.esgtoday.com/microsoft-inks-7-million-ton-nature-based-carbon-removal-megadeal/), providing the tech giant with over 7 million tonnes of nature-based carbon removal credits from its forest projects in the Southern U.S. This agreement marks the largest voluntary corporate investment in conservation forestry in the U.S.
The new credit facility, supported by the Microsoft offtake contract, involved collaboration between Chestnut, Microsoft, and a lending syndicate. Advising firms included ERM, Marsh, McDermott Will & Emery, and Milbank, adapting proven infrastructure finance frameworks for large-scale nature-based carbon removal. Other lenders in the syndicate included CoBank, Bank of Montreal, and East West Bank.
Vijnan Batchu, Global Head of the Center for Carbon Transition at J.P. Morgan, stated that this type of financing provides developers with the necessary resources to succeed at an attractive cost of capital, allowing them to focus on delivering significant carbon projects and fulfilling contracts. He expressed pride in J.P. Morgan’s role in this significant deal and its contribution to the growth of carbon markets.
Chestnut highlighted that the new facility will enable the expansion of its afforestation footprint and carbon removal capacity, supporting climate and biodiversity goals, while providing Microsoft with carbon credits to meet its carbon-negative commitments.
Brian Marrs, Senior Director of Energy & Carbon Removal at Microsoft, remarked that the transaction is a meaningful step forward in demonstrating how nature-based carbon removal can scale through structured, high-integrity financing. He stated that Microsoft remains committed to advancing the voluntary carbon markets through long-term offtake agreements that foster investment and innovation.