CDR Innovator Interview - Chestnut Carbon

'Unbound Showcase' is a globe-spanning series of interviews with pioneers of carbon dioxide removal (CDR). We’re questioning innovators, business leaders, policymakers, academics, buyers, and investors taking on the challenge of our lifetime—gigaton-scale carbon removal from the earth's atmosphere.

Today’s interview is with Shannon Smith , CCO of Chestnut Carbon .

"What is Chestnut Carbon?"

Shannon Smith - Chestnut Carbon is a nature-based carbon project developer delivering high-quality removal credits to sustainability-focused corporations.? Our carbon credits are distinctive in being US-based removal, with high durability, additionality and meaningful co-benefits for the local communities in which we operate.??

We develop two types of US-based credit products, Afforestation and IFM.? Our Chestnut Restoration Project is an afforestation development registered with the Gold Standard registry. Since 2022, we have acquired and planted 17,000 acres in the Southeast with over 12 million diverse native tree species.? Our goal is to restore 200,000 acres of marginal US crop and pasture land to native forest ecosystems, benefiting the local communities through improved air and water quality, economic opportunities and stakeholder engagement and support.? Our second product, the Chestnut Conserve Project, is an IFM conservation membership program enabling private landowners across the US to earn passive income from the carbon markets while protecting their family forests.??

"What was the inspiration that led to your carbon removal business?"?

Shannon Smith - In 2022, Chestnut was founded by Kimmeridge Energy Management Company, LLC, an alternative asset manager focused on the energy sector,? after committing to net zero in one of their investments and discovering the absence of quality carbon removal credits available in the market.?

Shortly after Chestnut launched, we acquired Forest Carbon Works (FCW), a 35-person IFM carbon credit developer and a forest conservation program operator, for their vast expertise in forestry, biodiversity, improved forest management, and proprietary carbon measurement technology. Pairing Kimmeridge’s capital, relationships and land expertise with FCW’s technology and carbon offset experience positions Chestnut as the leading US-focused nature-based carbon developer.

FCW is a 35-person IFM carbon credit developer and a forest conservation program operator for US landowners.? With FCW, Chestnut gained a team with deep expertise in forestry and carbon project development, measurement and registry.? We acquired our first 8,000 acres in 2022 in Arkansas and Alabama and partnered with ArborGen, the region's largest tree nursery, to supply hardwood and softwood seedlings.? We planted over 3 million trees in our first year of operation.? Since then, we’ve acquired 10,000 more acres and planted 9 million more trees across four states in the Southeast.??

"Can you share that 'aha' breakthrough in your business' journey that left you especially excited about its potential?"

Shannon Smith - The fact we have high-quality carbon removal credits to sell before 2030.? The market is quickly bifurcating avoidance and removal credits, and buyers are increasingly focused on high-quality removal.? When I realised how few suppliers actually have inventory available today meeting these needs – either nature or technology-based - I knew there would be demand in the market for our product.

"What have you found to be the best way of garnering investor or buyer attention?"

Shannon Smith — We are highlighting our US-based carbon removal. We are increasingly hearing that corporate buyers want US-based removal credits aligned with their operating footprint, and they are simply in incredibly limited supply from either nature-based or technology solutions. Both of our credit products, our afforestation project and our IFM project, are sourced entirely from US forest lands. They are highly additional and durable, making them quite unique in the NBS market.

“Microsoft’s 15-year purchase agreement with Chestnut Carbon for afforestation-based carbon removal credits is a positive step towards Microsoft’s carbon negative goals. We are excited to collaborate with Chestnut and its Sustainable Restoration Project for high-quality, nature-based solutions located in the United States.”

– Brian Marrs, Senior Director of Energy & Carbon Removal at Microsoft.

"How are you approaching scalability, and what tools or strategies have proven most effective in levelling up your solution?"

Shannon Smith - When I saw how Chestnut Carbon is leveraging proprietary technology to accelerate land acquisition and MRV, I knew we’d found a better way to scale forest-based carbon development and bring a unique US-based product to market.? We have cut time and cost from two critical components of our process, allowing us to bring a better product to market at a lower operating cost than most competitors.

On the MRV side, this industry has long depended on professional foresters with tape measures to report on tree growth for carbon assessment. Our Chestnut proprietary hand-held LIDAR device is simple and easy for our network of local contractors to use, to quickly obtain digital samples of the trees with which we create our carbon models. We use this for our IFM program measurements across the US, collecting vast amounts of data quickly and cost-effectively, and we’ll do the same with our afforestation developments once the trees are large enough to measure.??

On the land acquisition side, our data analytics team has built a robust digital land assessment tool through which we can quickly capture soil and tree data for every land parcel in the continental US and assess carbon productivity within a few hours, if not minutes.? This helps our land acquisition team optimize land targets with the highest profitability potential, and tailor offers for our forest conservation members to their specific forested land holdings.

“What's the biggest challenge your business is facing in 2024, and what do you think is required to solve it?”

Shannon Smith - Regaining trust in the NBS market.? There has been so much negative publicity about fake or worthless credits, that companies who buy them will be accused of greenwashing, it has many corporate buyers nervous so they’re sitting on the sidelines.? It’s up to market players, including the suppliers, registry and rating agencies, and carbon consultants, to help define “what good looks like”, align on standard criteria to assess value, and restore buyers’ trust in these solutions.? Companies committed to net zero will almost all need a portfolio mix of different types of credits to meet their removal needs, and most of these portfolios will need to have some nature-based credits as that’s where the near-term volume is.??

“What, from an industry perspective, should we be aware of in the next 18 months if we are to see the scale necessary to hit 2030 targets? It’s just 24 business quarters away.”?

Shannon Smith - “There are many market entrants selling carbon-related services, including marketplaces and “credit portfolios”, strategy consulting and rating agencies, with investor dollars flowing to fund them.? However, the market needs investment in the suppliers, who are developing the removal solutions to bring them to market.? If there aren’t enough removal credits to satisfy 2030 targets and beyond, all the consultants and trading platforms in the world can’t fill the gap.? Investors and buyers need to fund the developers across nature and technology solutions to ensure we have enough removal options for the companies who actually want to offset the emissions they can’t reduce.

Unbound Summits’ mission focuses on unrivalled connections, new insights, and unbound CDR opportunities. Learn more about Chestnut’s unique approach to building forests here .