CPPIB joins startup in $100-million Amazon reforestation fund
Canada’s largest pension fund has joined a project to produce carbon credits by planting more than 100 native tree species on degraded land in Brazil’s Amazon region.
Canada Pension Plan Investment Board will invest as much as US$30 million in a reforestation fund managed by Sao Paulo-based Mombak Gestora de Recursos Ltda., said Peter Fernandez, chief executive officer of the carbon-removal startup.
The investment from the Canadian pension fund, and a smaller outlay from the Rockefeller Foundation, brings Mombak’s first reforestation fund to its US$100-million target, Fernandez said. The Canadian fund will also invest US$500,000 in Mombak.
The startup is tapping a shift in voluntary carbon markets where buyers pay more for projects that actually remove carbon, rather than so-called avoidance offsets that, for example, generate credits by keeping existing trees standing. These forest-protection projects often come under criticism for managing trees that aren’t in danger of being felled, which doesn’t remove additional carbon beyond the status quo.
“The price of carbon credits went high enough to scale a business,” Fernandez said, adding that Mombak is focused on selling credits to high-end buyers who want “no question whatsoever” that carbon removal occurred.
It is already pre-selling carbon credits at more than US$50 each, a premium in voluntary markets. Carbon credits represent a ton of removed carbon or avoided emissions. Mombak will continue raising money from investors for Amazon reforestation projects and expects to deploy US$1 billion in the next three to five years.
The Amazon Reforestation Fund also includes Paris-based AXA SA and Bain Capital Partnership Strategies. The end buyers of the credits, not the
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