Quantum Commodity Intelligence – Canada-based developer Carbon Done Right Developments is confident in securing new investors to expand its flagship rewilding project in Sierra Leone, after BP Carbon Trading did not exercise an option to pre-purchase carbon credits from the expansion.
Company Chief Executive James Tansey said BP’s decision is “disappointing given the time we have spent working with them”, but new investors could come on board as early as June.
“We have several companies in due diligence and I expect a decision in the next month, and we have been approached by two more in recent weeks,” he told Quantum.
Earlier this month, the company announced that BP Carbon Trading is not taking up the option to increase its investment in the Rewilding Maforki project (VCS4255) from 5,000 hectares (ha) to 25,000 ha.
Declined
“The offtaker has declined that option and has a final outstanding pre-purchase payment under the terms of the original agreement that the company considers to be overdue,” it said in a statement.
In June 2023, Carbon Done Right, then known as Klimat X, announced a $2.5 million pre-purchase deal with a “Fortune 100” company — later revealed to be BP Carbon Trading — for up to 1.9 million credits from the initial 5,000-ha project over 30 years.
Under the terms of that deal, there was also a time-limited ‘Right of First Offer’ to pre-purchase credits from a planned 20,000-ha expansion in the project area, which would create up to 15 million credits over the full 25,000-ha development’s lifespan.
BP declined to comment on what it said is “commercially sensitive” information. In February, the oil major announced it was reducing its activities in the low-carbon space and increasing spending in oil and gas.
The expansion of the rewilding project is now dependent on Carbon Done Right finding new partners and new pre-purchase agreements, but this was expected, said Tansey.
“We always planned to bring in new partners given that the total plantable area in Sierra Leone is so large,” he said. “We started the project by raising equity but that has been more challenging over the last two years, so project finance with offtakers seems to be the way to go.”
The dialogue is with “bigger players” in the market “given we want up to 25,000 ha planted and that is a big commitment”, he added. “It is reassuring to see evidence that there are still investors looking to support restoration projects,” Tansey said.
A factor in favour of the project’s expansion is it is validated to the 25,000-ha scale under US-based registry Verra’s VM0047 Afforestation, Reforestation, and Revegetation (ARR) methodology.
“We have one of the very few VM0047 projects through validation and it is very scalable, so we are getting a lot of interest in the project,” he said.
Costs
“The changes in the protocol to VM0047 definitely had a big impact on the production forecasts, so the cost base is significantly higher than when we started, but it appears there is still strong demand,” he added.
VM0047, which was launched by Verra in October 2023, applies to any activities that increase the density of trees or other types of woody vegetation. It uses remote sensing, such as satellite data, and enables developers to quantify the impact of their project by comparing it with a similar area in real time using dynamic baselines.
Unlike static baselines, used by most carbon credit project methodologies and that rely on the past as a predictor of future outcomes, dynamic baselines do not attempt to predict the future and rely instead on constant monitoring and frequent data updates.
VM0047 is also one of a handful of Verra’s methodologies that have received approval from Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles quality label.
The work to find new investors for VCS4255 has meant plans for a second ARR project in Sierra Leone covering about 32,000 ha are currently on hold. “The second rewilding project still has potential but it is on pause until we can properly fund the first,” said Tansey.
The company had also previously announced mangrove projects in Sierra Leone, as well as elsewhere around the world. Tansey said Carbon Done Right has made “significant” investment in the mangrove conservation and restoration project in the African country.
However, it is “difficult to find investors for conservation, which is frustrating because it makes sense to protect existing areas rather than just restore areas once they have been degraded”, he said.
A trial 15 ha has been successfully planted and so the company is still keen to move forward with the wider project, “if we can find interest in the market”, Tansey added.
One planned project by the company that now is not going ahead is a 100,000 tCO2e a year development in Ghana, announced during an investor update in March 2024.
Carbon Done Right had planned to finalise agreements on the 10,000-ha scheme by the end of last year. But, Tansey told Quantum, “we didn’t advance any further in Ghana”, without elaborating further.
On a more positive note the company announced this month that it has secured a “lease and initial environmental approvals” for a 5,000-ha mangrove restoration project in Suriname. The project launch took place on May 7 at an event including Tansey and Suriname Minister of Spatial Planning and Environment Marciano Dasai.
Other benefits
The project could deliver at least 3.64 million carbon credits from the first 5,000 ha, but this could grow significantly if the project expands to 30,000 ha, not to mention potential wider climate benefits.
“It is an interesting project because we have shown there is methane production at the site because the salinity levels are currently too low, so we may get the benefit of planting and reduced methane production,” said Tansey.
Meanwhile, another mangrove project in Mexico’s Yucatan is progressing but is now being led by an unnamed partner, he said. “It required a significant amount of legal work to clarify ownership and control of the site between the federal and state governments,” he added.
Carbon Done Right is also planning to carry out a “non-brokered private placement” to raise up to CAD100,000 ($71,000) through an offering of “common shares” priced at CAD0.015 each. “The company plans to utilise offering proceeds for continued investment into operations and corporate support for the company’s projects around the world,” it said.
The offering is expected to close on or about May 26 “subject to certain closing conditions including, but not limited to, the receipt of all necessary approvals including the conditional approval of the TSX Venture Exchange”.
The offering is the latest in a series of efforts by the company to raise money. In March, it closed a private share placement raising a total of CAD423,750 that will help support the reforestation project in Sierra Leone. The final amount means the developer has surpassed its overall target of CAD350,000 set in early January.
In November last year, the company announced that it had changed its financial year to the end of March from the previous year-end on December 31.
“The company believes this change of financial year-end will allow it to better align its financial statement reporting requirements with other reporting issuers and the availability of the company’s service providers,” it said at the time.
In August, Carbon Done Right announced that it was delaying a planned listing on the London Stock Exchange’s AIM market, until “market conditions in the UK and Canada improve”.
