JPMorgan Chase Commits to a Decade-Long Carbon Removal Partnership with Oxy's 1PointFive
JPMorgan Chase Invests in Carbon Removal with $210 Million Loan
In a significant move towards addressing climate change, JPMorgan Chase has announced a landmark carbon loan of $210 million to support Chestnut Carbon, a US-based afforestation company. This financing is structured as non-recourse project financing, backed by future carbon credit revenues from extensive forest planting projects across the US, expected to last for 25-30 years.
Chestnut Carbon's Sustainable Restoration Project
The project, named the Sustainable Restoration Project, aims to restore over 100,000 acres of forest land by 2030. The goal is to remove 100 million tonnes of CO₂ from the atmosphere. Forest projects will primarily be located in Arkansas and Texas in the southern US.
Carbon Credits and Offtake Agreement
The generated carbon removal credits will be verified and sold on the voluntary carbon market (VCM) over the next three decades. Microsoft has committed to purchasing over 7 million tons of nature-based carbon removal credits from Chestnut Carbon under a 25-year offtake contract, significantly reducing investment risk.
Financing Syndicate and Advisors
Besides JPMorgan Chase as lead lender, other participants include CoBank, Bank of Montreal, and East West Bank. Environmental consulting firm ERM, legal advisors such as McDermott Will & Emery, and others helped structure the deal.
Significance of the Deal
This is the largest-ever carbon loan in the voluntary carbon market and the first time traditional infrastructure project finance has been applied at this scale in the US carbon credit market. JPMorgan Chase aims to position itself as a leader ("carbon bank of choice") in financing nature-based carbon removal.
JPMorgan's Ongoing Carbon Removal Efforts
This agreement is part of JPMorgan Chase's strategy to address operational emissions and aligns with its ongoing efforts to help scale the growth and development of carbon removal technologies. It follows a 450,000 ton carbon removal deal announced last month with CDR project developer CO280.
Direct Air Capture Technology
In a separate development, JPMorgan Chase has agreed to purchase 50,000 metric tons of carbon dioxide removal (CDR) credits over 10 years from a new Direct Air Capture (DAC) plant in Texas. This plant, developed by 1PointFive, is expected to start up this year and, when fully operational, will capture 500,000 tonnes of CO₂ annually.
The IEA lists DAC technology as a key carbon removal option in the transition to a net-zero energy system. Oxy, through its DAC subsidiary 1PointFive, is developing a series of carbon removal and sequestration projects in the US, including the STRATOS facility in Texas, which is expected to be the largest DAC facility in the world to date.
In conclusion, JPMorgan Chase's investments in both afforestation and Direct Air Capture technologies demonstrate its commitment to combating climate change and supporting the growth of carbon removal technologies. These initiatives are not only significant for the US but also for the global transition towards a net-zero energy system.
The Sustainable Restoration Project, financed by JPMorgan Chase's $210 million loan, follows an aim to decarbonize the environment by removing 100 million tonnes of CO₂ through extensive forest planting projects over the next three decades. This project, involving technology such as Direct Air Capture, is part of JPMorgan Chase's ongoing strategy to position itself as a leader in financing nature-based carbon removal and align with the science and environmental-science strategies to combat climate change.
