Chestnut Carbon, a nature-based carbon removal developer, has announced the successful closing of a landmark non-recourse project finance credit facility of up to $210m – a first-of-its-kind bank financing for a US voluntary carbon removal afforestation project.

Led by J.P. Morgan and a syndicate of leading lenders including CoBank, Bank of Montreal and East West Bank, this transaction marks a pivotal step towards achieving increasing commercial scale for both the company and the broader voluntary carbon market and US afforestation space.

This innovative credit facility uses the long-term carbon removal supply agreement executed earlier this year between Chestnut and Microsoft Corporation which reflects one of the largest carbon removal agreements in the US. The success of the financing also demonstrates that this asset class can be structured as investable, bankable assets, like more established infrastructure classes.

Drawing on elements from traditional sectors, most notably renewable power projects, the deal’s structure, underpinned by the long-term offtake contract with Microsoft, brings credit discipline, rigorous underwriting and scalability to a relatively new asset class. Chestnut, Microsoft, and the lending syndicate collaborated with a strong team of advisors to adapt proven infrastructure finance frameworks for large-scale nature-based carbon removal.

Advising firms included ERM, Marsh, McDermott Will & Emery and Milbank. This alignment has produced a robust and scalable facility, with the potential to enable broader institutional investment and growth in the voluntary carbon market.