Carbon Streaming Announces Landmark Reforestation Project With Rubicon Carbon & Microsoft

Carbon Streaming Announces Landmark Reforestation Project With Rubicon Carbon & Microsoft - Carbon Herald

Carbon Streaming Corporation (“Carbon Streaming” or the “Company”), in collaboration with Microsoft Corporation (“Microsoft”) and Rubicon Carbon Capital LLC (“Rubicon”), is pleased to announce that it has entered into a carbon credit streaming agreement (the “Azuero Reforestation Stream”) with Azuero Reforestación Colectiva, S.A. (“ARC”), a wholly owned subsidiary of leading project developer Ponterra Ltd. (“Ponterra”), for the ARC Restauro Azura project (the “Azuero Reforestation Project” or the “Project”) located in Panama.

The Azuero Reforestation Project is expected to restore 10,000 hectares of degraded tropical forest on the Azuero Peninsula in Panama that has been converted to low-density cattle ranchland over the last century. The expected IRR from the Project is consistent with Carbon Streaming’s target IRR for other investments, and the addition of a long-term carbon credit offtakeeedbanks, and deep community involvement.

The Project will enable over 100 local landholders to participate in and earn an income from the reforestation activities through long-term annual payments and a share of carbon credit sales. Ponterra expects to plant over six million trees and create more than 300 permanent local jobs in the local community. The Project has been designed to target the following UN Sustainable Development Goals: 1 (No Poverty), 4 (Quality Education), 8 (Decent Work and Economic Growth), 13 (Climate Action), 15 (Life on Land), and 17 (Partnerships for the Goals). Given these strong social and environmental co-benefits, Verra has selected the Project to participate in their new SD VISta Nature Framework.

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The Azuero Reforestation Project is expected to remove 3.24 million tonnes of carbon dioxide equivalent (“tCO2e”) and generate an equivalent number of carbon credits under Verra’s newest Afforestation, Reforestation & Revegetation (ARR) methodology, VM0047. The Project is being funded by an investor group composed of Carbon Streaming, Microsoft, and Rubicon. The Project has the potential to expand 5-10x, and the investor group has a right of first offer to fund Project expansions. Initial carbon credit issuance from the Project is expected in 2027.

“Ponterra’s mission to restore biodiversity and uplift local communities by designing and operating high-integrity nature projects comes to life today. We are thrilled to be working with Carbon Streaming, one of the most respected and experienced investors in nature-based carbon credits in the market, to reach the scale needed to meaningfully impact the twin biodiversity and climate crises,” said Ponterra CEO Celia Francis.

In one of the largest nature-based carbon removal offtakes to date, Microsoft is expecting to receive approximately 1.6 million carbon credits from the Project, a portion of which will come from a long-term offtake agreement to purchase 100% of carbon credits that Carbon Streaming receives from the Project through 2040 –approximately 311,500 carbon credits. This is the second multi-year offtake that Carbon Streaming has signed with Microsoft in the last year.

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Justin Cochrane, CEO of Carbon Streaming, expressed his enthusiasm about the deal, stating, “This stream with Ponterra represents a transformative step for Carbon Streaming, illustrating our commitment to high-quality carbon removal projects. By joining forces with esteemed co-investors and securing pre-contracted cash flows, we’re demonstrating a deal structure that promises significant environmental impact and predictable future cash flows.”

Brian Marrs, Senior Director of Energy and Carbon Removal at Microsoft said, “Microsoft is happy to support the Azuero Reforestation Project in collaboration with Ponterra, Rubicon Carbon, and Carbon Streaming. This project has been designed with a community-first approach building on the good work of long-time conservation leaders, Pro Eco Azuero, ensuring the project’s positive impacts not only directly benefit local communities but endure.”

Under the terms of the Azuero Reforestation Stream, Carbon Streaming, alongside Rubicon and Microsoft, will fund 100% of project costs over seven years. Carbon Streaming will make an initial upfront deposit of US$0.315 million, with additional milestone payments of up to US$6.750 million as the Project achieves planting and sapling survival milestones.

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Carbon Streaming will receive 13.5% of total credits, which is expected to be approximately 438,000 carbon credits through 2052. Closing of the Azuero Reforestation Stream is subject to customary conditions with closing expected to occur by the end of Q2 2024.

The Project is the first streaming agreement where a majority of the carbon credits Carbon Streaming will receive are pre-contracted through an offtake agreement at closing, an investment model that the Company expects to replicate in the future.

Carbon Streaming has also entered into a marketing agreement with ARC, pursuant to which Carbon Streaming has been appointed as sole marketer of ARC’s carbon credits for the life of the Project, other than those already committed to the co-investors in the Azuero Reforestation Stream.

The expected IRR from the Project is consistent with Carbon Streaming’s target IRR for other investments, and the addition of a long-term carbon credit offtake partner in Microsoft has significantly de-risked cash flows.

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