Chestnut Carbon – Carbon credits Insurance

Marsh placed a carbon credit delivery insurance policy, underwritten by CFC, for Chestnut Carbon, a nature-based carbon removal developer that plants native hardwood/softwood trees on unused farmland across the southeastern United States. The policy protects against the risk of non-delivery of carbon removal credits under a 25-year offtake agreement with Microsoft for > 7 million tonnes. The insurance was mandated by the lending panel as a condition of a landmark US$ 210 million non-recourse project finance credit facility led by J.P. Morgan. By de-risking the carbon credit revenue stream, the insurance directly enabled financing for the acquisition/restoration of roughly 60,000 acres and the planting of > 35 million native trees. This represents the first such project financing in the voluntary carbon market and establishes a replicable model for channelling institutional capital into large-scale afforestation.