The Brief

The Brief: Corporations seek higher-quality carbon credits

ImpactAlpha · February 3, 2025
Credit: Helion Energy

Greetings Agents of Impact!

In today’s Brief:

  • Demand for “carbon dioxide removal” credits
  • Stake in affordable eyecare in Africa
  • The near-term fusion future
  • Nature + livelihoods investing in Latam

Corporate buyers nudge voluntary carbon markets toward higher-quality projects. Corporate buyers are signing big carbon deals in spite of setbacks for climate policy and action. New offtake commitments from Shopify and Microsoft highlight some corporations’ growing interest in higher-quality – and higher-priced—credits in the “carbon dioxide removal,” or CDR, corner of the voluntary market. Microsoft last week inked deals with Re.Green in Piracicaba, Brazil, and Chestnut Carbon in New York for credits from reforestation and land restoration projects in Brazil and the southern US. Shopify agreed to buy credits generated from Houston-based Mati Carbon, which uses “enhanced rock weathering” to sequester carbon in the ground. Combined, the deals promise to remove nearly 11 million tons of carbon from the atmosphere.

Many more projects like these, which sequester carbon in soil, plants and rock, will be needed to make a meaningful dent in global CO2 emissions, which are still on the rise. CDR projects account for just 4% of credits in the voluntary carbon market; the rest come from “carbon avoidance” projects in renewable energy, forest management and nature conservation – many of which have struggled with credibility and transparency and now fetch less than $6 per ton. In contrast, carbon dioxide removal credits can fetch several hundred dollars per ton of carbon. Upfront offtake agreements like Microsoft’s and Shopify’s “are essential to scale a nascent CDR market,” finds a report from Carbon Direct, a carbon accounting software company. “For market-based mechanisms to meaningfully contribute to scaling up CDR, private sector demand must accelerate quickly.” 

  • Nature-based credits. Microsoft’s two recent agreements, covering 10.8 million tons of CO2 removal, are nature-based deals in forest restoration. Such projects often only guarantee carbon removal for up to a century, because they’re vulnerable to wildfire, deforestation and land-use changes, which would rerelease carbon into the atmosphere. More expensive are “high-durability” projects that can certifiably sequester carbon for thousands of years. Still, the scale of Microsoft’s carbon removal offtake agreements is “shifting this industry,” says Chestnut Carbon’s Shannon Smith. “They are starting to bring other people along with them.”
  • Highly durable. Shopify’s agreement with Mati Carbon to remove 5,000 tons of CO2 from the atmosphere this year is tiny compared to Microsoft’s purchase. But as one of the “largest initiatives of its kind,” it’s a milestone for the nascent market for high-durability carbon removal. It could also help demonstrate that high-durability removal projects don’t have to be capital intensive, and can have strong, measurable co-benefits. That could unlock crucial adaptation financing for climate-vulnerable communities in the Global South (for background, see “Carbon markets fall short as a climate solution, but go far in financing sustainable development”). Mati Carbon’s work will help 20,000 smallholder farmers in India generate additional income. “Smallholder farmers’ resilience is their primary mission,” explains Mati Carbon advisor Ashish Kumar. “Carbon removal is their way to do it.”
  • Fossil friendly. “You can’t just be buying offsets against your emissions,” says Kumar. “You have to be putting money and effort into reducing your emissions.” Some carbon removal project developers see things differently. “I would much rather create a product and help offset what we’re going to be continuing to use anyway,” says Chestnut Carbon’s Smith. The firm was  capitalized and launched by Kimmeridge, a New York-based asset manager that primarily invests in oil and gas projects. “For the foreseeable future, we’re going to continue to be dependent on traditional energy. It’s not a fast transition,” says Smith. A study in Nature, partially funded by Microsoft, found that without stringent emission mitigation efforts, nature-based carbon removal projects “would serve only to delay the occurrence of a given warming level, with no other long-term climate benefit.”
     
  • Keep reading, “Corporate buyers nudge voluntary carbon markets toward higher-quality projects,” by Jessica Pothering on ImpactAlpha. 

Situational Awareness. What we’re watching. Have something to share? 

  • Foreign aid freeze. The funding freeze and stop-work orders from the US Agency for International Development is shuttering humanitarian projects across the globe (and may be the end of USAID itself). An interactive Global Aid Freeze map is tracking country-by-country impact. (TechChange)
     
  • Trade war. It’s on. Quickly get up to speed with this good explainer. (Time)
  • Solar for All. The Environmental Protection Agency cut off access to funds for the $7 billion program meant to bring clean energy to low-income neighborhoods, part of the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. Another $20 billion in funding for two other GGRF financing programs had earlier been put on deposit at Citibank. (Politico’s E&E News) 
  • ERISA rules redux. The merry-go-round on Department of Labor rules on pension funds’ ability to take into account environmental and social factors in investment decision-making is taking another spin. From Bush I to Trump II, the guidance has already flipped at least five times. (Pensions and Investments)

Dealflow: Investing in Health

Creadev buys Saviu Ventures’ stake in African eyewear company Lapaire. Lapaire was founded in 2018 in Abidjan, Cote d’Ivoire, to provide affordable eye care, offering eyeglasses starting at 19,000 West African francs ($30), flexible payment installments and free vision tests. Africa-focused venture fund Saviu Ventures was an early backer, investing in Lapaire three times since 2018 and accruing a 22% stake in the company. Lapaire has expanded to 85 locations across Togo, Burkina Faso, Kenya, Mali, Benin and Uganda and has served more than 300,000 consumers. Now, Saviu has fully divested its stake to Creadev, an investment firm backed by France’s Mulliez family, which owns the Auchan chain of supermarkets and other brands. 

  • Venture exit. Creadev will support Lapaire’s expansion into Senegal, the Democratic Republic of the Congo and Tanzania. “Lapaire’s success is a reflection of the considerable need for affordable prescription glasses across the continent,” said Creadev’s Pierre Fauvet. He said the mission “resonates well with Creadev’s mandate in Africa to support essential goods and services for the many.” Lapaire closed a Series B round in late 2023 with participation from Beyond Capital Ventures. Last year, it landed close to $3 million from French development financial institution Proparco and AfricInvest’s Transform Health Fund. 

Helion Energy snags $425 million to commercialize fusion energy by 2028. Everett, Wash.-based Helion Energy has raised over $1 billion since 2013 from deep-pocketed investors, led by OpenAI’s Sam Altman, as it seeks to commercialize fusion energy. It is racing other well-funded fusion hopefuls, such as Pacific Fusion, Zap Energy and Commonwealth Fusion, to unlock the cheap, abundant and zero-carbon energy source. Helion has signed an offtake agreement with Microsoft with the ambitious target of delivering grid-connected fusion power by 2028 – and penalties for missing the target. Helion has an agreement with Charlotte-based steel producer Nucor Corp. to supply energy for steel manufacturing facilities in the US. “We are on the brink of delivering a transformative energy solution that can meet the world’s increasing electricity demands while preserving US energy leadership,” said Helion’s David Kirtley.

  • Heating up. The Series F funding round, about $75 million less than its 2021 Series E, will sustain Helion as it begins its seventh fusion prototype, Polaris. The company’s previous prototype, Trenta, achieved plasma temperatures of 100 million degrees Celsius, meeting the required operating temperature threshold for a commercial fusion power plant. The new round brings Helion’s valuation to $5.4 billion. 
  • Political support. Recent breakthroughs belie the significant engineering and technical hurdles that remain before commercial fusion becomes a reality. The Biden administration supported fusion development through tax credits and grants, including $107 million for six projects announced just days before Donald Trump took office. Fusion enjoys bipartisan support. “After extensive due diligence, we’re very confident in Helion’s technology and leadership as the company moves from research and development into commercial production,” said Ravi Mhatre of Lightspeed Venture Partners, which invested in Helion alongside SoftBank’s Vision Fund 2 and a major university endowment. Existing backers re-upped, including Altman, Nucor and Capricorn Investment Group.
  • More.

Dealflow overflow. Investment news crossing our desks:

  • New York-based Recycle Track Systems raised $40 million, with backing from Edison Partners, Volition Capital and StepStone Capital Partners, for AI-powered waste management for cities in the US and Canada. (Recycle Track Systems)
  • Allara Health secured $26 million in Series B funding from Index Ventures and Google Ventures to provide virtual care for women with chronic hormonal conditions linked to infertility, high-risk pregnancies, obesity and diabetes. (Allara Health)
  • Zurich-based climate tech venture Oxyle snagged €15.3 million ($16 million) in seed funding from 360 Capital, Axleo Capital and other investors to remove “forever chemicals” from wastewater. (EU-Startups)

Signals: Impact in Latin America 

Julia Santander on EcoEnterprises’ flexible finance for climate resilience (video). Most commercial and institutional investors have little understanding of how to profitably and sustainably invest in natural ecosystems. EcoEnterprises Fund, with offices in Costa Rica, Colombia and the US, has 25 years of experience. The firm’s first fund attracted international impact-first, socially-focused investors drawn to the firm’s livelihoods mission. Now, climate is “dominating the conversation,” EcoEnterprises’ Julia Santander told ImpactAlpha at last year’s GIIN Investor Forum in Amsterdam, where she was meeting with investors about the firm’s fourth fund. The targeted $150 million fund has backing from IDB Invest, Dutch impact fund of funds manager Wire Group, gender and climate-lens investor Heading for Change and others. “For us, it’s also about the underlying social equity,” Santander said. “We need a just transition.”

  • Growth pipeline. “We started out working with startups,” said Santander, who is based in Bogota. “We see a tremendous pipeline of investment opportunities in Latin America, with companies that are ready to scale up, to professionalize, be more ambitious,” EcoEnterprises deploys mezzanine debt, quasi-equity, and long-term financing for nature-based solutions and community resilience. “Our impact strategy is more meaningful than ever, with more attention being paid to biodiversity, climate and rural communities overall.”
  • Keep reading, and watch the interview. 

Agents of Impact: Follow the Talent

Don’t miss these upcoming ImpactAlpha partner events:

Cooperative Development Foundation names Julie Bosland, previously chief impact officer at Living Cities, as executive director… Ownify adds Jonah Cave of Dry Land Capital to its advisory board… Ocean Impact Organization’s Nick Chiarelli joins 1000 Ocean Startups as a part-time steering committee member… Investisseurs & Partenaires is looking for an ESG and impact manager for a fund of funds in Nairobi… Better Society Capital has an opening for a portfolio investment manager in London. 

Align Impact seeks an operations associate… Blue Earth Capital is hiring a New York-based impact investment analyst for its Americas private credit team… Heelstone Renewable Energy is recruiting a financial analyst and a finance manager in Durham, NC… Triodos Bank is on the hunt for a credit restructuring specialist in Brussels… Autodesk Foundation is looking for a portfolio engagement manager… Sorenson Impact Foundation has an opening or a portfolio management associate in Salt Lake City… Community Investment Management seeks an investment director in Mexico City.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Feb. 3, 2025