On June 18, 2024, Brazilian investment bank BTG Pactual’s forestry arm announced a landmark deal with Microsoft Corp. Under this agreement, Microsoft will purchase 8 million carbon offset credits, marking the largest sale of such credits to date.
BTG Pactual Timberland Investment Group (TIG), the forestry division, generated these credits through its extensive forest restoration projects in Latin America.
While the financial specifics of the transaction were not disclosed, but press has deemed it as the most substantial carbon dioxide removal credit transaction recorded thus far.
Carbon offset credits are crucial tools in the fight against climate change, allowing companies to compensate for their greenhouse gas emissions by funding projects that reduce emissions elsewhere.
Each credit represents the reduction of one tonne of carbon dioxide emissions and can be instrumental in meeting corporate climate goals.
As of recent, the carbon credits market is on the rise. According to BIS Research, the carbon credit market for agriculture, forestry, and land use was valued at $6,283.0 million in 2023, and it is expected to grow at a CAGR of 31.49% and reach $97,100.4 million by 2033.
The credits sold to Microsoft are the product of BTG Pactual TIG’s ambitious reforestation and restoration initiatives in regions such as the Cerrado biome in Brazil.
BTG Pactual TIG is a subsidiary of the Latin American investment bank BTG Pactual and ranks among the world’s largest timberland managers. With over $7 billion in assets and commitments, the firm manages nearly 3 million acres of land across the U.S. and Latin America. Its $1 billion reforestation and restoration strategy aims to conserve, restore, and sustainably manage vast areas of deforested and degraded properties.
This strategy, developed with Conservation International as an Impact Advisor, focuses on both protecting natural forests and establishing commercial tree farms on previously deforested land.
The new agreement between BTG Pactual TIG and Microsoft will see 60% of the carbon removal credits coming from carbon sequestration in newly restored native forests.
The remaining 40% will be derived from carbon sequestration in newly established and sustainably managed commercial tree farms. This dual approach not only supports climate mitigation but also promotes biodiversity and sustainable economic development in local communities.
In a press release, Gerrity Lansing, Head of TIG, emphasized the critical role of institutional investors in scaling nature-based solutions for climate and biodiversity. He highlighted that the scale of TIG’s reforestation strategy enables significant carbon removal credit transactions, such as this one with Microsoft.
This transaction is part of Microsoft's broader initiative to become carbon negative by 2030. The tech giant has been actively building a diverse carbon removal portfolio, including recent deals with Mombak and re.green, focused on reforestation projects in Brazil, and a forest management-based agreement with Anew.
The partnership with BTG Pactual TIG exemplifies how reforestation and restoration can deliver substantial carbon removal while benefiting local communities and ecosystems. Moreover, working with industry leaders like Microsoft has helped develop a high-integrity carbon offset market, setting a precedent for other companies to follow.
The agreement between BTG Pactual TIG and Microsoft represents a significant advancement in carbon removal efforts.
It highlights the potential of large-scale nature-based solutions to address climate change and underscores the importance of corporate leadership in building sustainable and effective carbon markets.
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