In a landmark transaction for the voluntary carbon market, J.P. Morgan has led a $210 million credit facility for U.S.-based Chestnut Carbon, a company that generates forest carbon removal credits.
The credit facility, underpinned by one of the largest carbon removal offtake agreements in the U.S., shows how project financing could potentially help unlock a lower cost of capital for carbon project developers as they scale commercially.
“Not only does this facility provide the capital to accelerate our afforestation and carbon removal initiatives, it also establishes a replicable model for sustainable finance in the voluntary carbon sector. We believe this is transformative for Chestnut Carbon and for the industry as a whole.”
Greg Adams
Chief financial officer at Chestnut
A new financing model
This is one of the first applications of commercial project finance for a carbon credit project of this scale. The deal demonstrates that significant carbon removal initiatives such as Chestnut Carbon’s afforestation projects, backed by long-term supply agreements, can be structured as investable, bankable assets.
“Providing this kind of financing gives developers the runway they need to succeed at an attractive cost of capital, allowing them to focus on delivering significant carbon projects and fulfilling contracts. J.P. Morgan is extremely proud to be a part of this significant deal and to contribute to the growth of the carbon markets at large.”
Vijnan Batchu
Global head of the Center for Carbon Transition, J.P. Morgan
Scaling nature-based removals
Chestnut develops afforestation projects at scale by planting native trees on unused farmland across the southeastern U.S., measuring the carbon absorbed by the trees and then selling credits on the voluntary carbon market. The company has forests across states including Alabama, Arkansas, Mississippi and Louisiana.
In January, Chestnut announced a long-term offtake agreement with Microsoft to deliver over 7 million tons of carbon removal credits over 25 years. The project is estimated to restore roughly 60,000 acres of land by planting over 35 million native, biodiverse hardwood and softwood trees. This supply agreement was the basis for the J.P. Morgan-led credit facility.
Alongside emissions reductions, the voluntary carbon market is an important tool for supporting the transition to a low-carbon economy. In addition to providing innovative financing solutions for its clients, JPMorganChase participates in the market as a leading corporate buyer to address its operational emissions, purchasing credits from companies including Chestnut Carbon. In 2023, the firm also published a white paper on the role of the voluntary carbon market, current challenges and how it is working to drive progress in this space.
As the industry evolves, this deal is a prime example of how innovative financing can help support a path toward competitively priced capital and investor diversification.
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Investment Banking
Sustainability at J.P. Morgan
May 01, 2025
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