Canada Pension Plan Investment Board has joined a project led by Mombak Gestora de Recursos to produce carbon credits through reforestation efforts in Brazil’s Amazon region. The Canadian pension fund will invest up to US$30 million in Mombak’s reforestation fund, which aims to reach a target of US$100 million. The investment reflects a growing demand for carbon removal projects in voluntary carbon markets, as buyers increasingly favor initiatives that actually remove carbon rather than simply avoiding emissions. Mombak plans to raise additional funds to finance Amazon reforestation projects and hopes to deploy up to US$1 billion over the next three to five years.

Canada’s largest pension fund, the Canada Pension Plan Investment Board, has partnered with Mombak Gestora de Recursos to invest in a reforestation project in the Amazon region of Brazil. The Canadian pension fund plans to contribute up to US$30 million to Mombak’s reforestation fund. This investment will help Mombak achieve its target of US$100 million for the fund. In addition, the Canada Pension Plan Investment Board will also invest US$500,000 directly in Mombak.

The project aims to produce carbon credits by planting over 100 native tree species on formerly degraded land in the Amazon. Unlike traditional carbon offset projects, which aim to prevent the destruction of existing trees, this initiative focuses on actively removing carbon from the atmosphere. This approach has gained popularity in voluntary carbon markets, where buyers are willing to pay a premium for carbon credits that prove carbon removal actually occurred.

Mombak has already started pre-selling carbon credits at a price of more than US$50 each, indicating strong demand in the voluntary market. Carbon credits represent a ton of removed carbon or avoided emissions. The startup plans to use the funds raised to finance reforestation projects in the Amazon. Over the next three to five years, Mombak aims to deploy up to US$1 billion for reforestation efforts in the region.

The investment from the Canada Pension Plan Investment Board and the Rockefeller Foundation highlights the increasing interest in sustainable projects that actively address climate change. This collaboration between financial institutions and environmental startups paves the way for more investments in projects that prioritize carbon removal and reforestation.

Definitions:
– Carbon credits: A unit that represents the removal of one ton of carbon dioxide or the reduction of one ton of CO2 emissions.
– Voluntary carbon market: A market where companies or individuals voluntarily purchase carbon credits to offset their own emissions. These credits are typically used to fund projects that remove or reduce carbon emissions.
– Reforestation: The process of replanting trees in an area that has been deforested or experienced a significant loss of tree cover.
– Amazon region: The area encompassing the Amazon rainforest, the largest tropical rainforest in the world.

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