CPP Investments Commits Up to US$30 Million to The Amazon Reforestation Fund
Canada’s largest pension fund has joined a project to produce carbon credits by planting more than 100 native tree species on degraded land in Brazil’s Amazon region.
Canada Pension Plan Investment Board will invest as much as $30 million in a reforestation fund managed by Sao Paulo-based Mombak Gestora de Recursos Ltda., said Peter Fernandez, chief executive officer of the carbon-removal startup.
The investment from the Canadian pension fund, and a smaller outlay from the Rockefeller Foundation, brings Mombak’s first reforestation fund to its $100 million target, Fernandez said. The Canadian fund will also invest $500,000 in Mombak.
The startup is tapping a shift in voluntary carbon markets where buyers pay more for projects that actually remove carbon, rather than so-called avoidance offsets that, for example, generate credits by keeping existing trees standing.
“The price of carbon credits went high enough to scale a business,” Fernandez said in an interview, adding that Mombak is focused on selling credits to high-end buyers who want “no question whatsoever” that carbon removal occurred.
It is already pre-selling carbon credits at more than $50 each, a premium in voluntary markets. Carbon credits represent a ton of removed carbon or avoided emissions. Mombak will continue raising money for Amazon reforestation projects and expects to deploy $1 billion in the next three to five years.
The Amazon Reforestation Fund also includes AXA IM Alts and Bain Capital Partnership Strategies. The end buyers of the credits, not the investors, use them to offset their emissions.
“We expect that the value of high-quality, verifiable, nature-based carbon removal credits such as the ones produced through The Amazon Reforestation Fund will continue to rise,” said Bill Rogers, the global head of sustainable energies at CPP Investments, as the Canadian pension fund is known.
Private Capital Journal also reports CPP Investments invests in Amazon Reforestation Fund and fund manager:
Canada Pension Plan Investment Board (CPP Investments) has signed a definitive agreement to invest in The Amazon Reforestation Fund, managed by Mombak Gestora de Recursos Ltda.
CPP Investments will make a US $500,000 equity investment in Mombak and will commit up to US $30 million to The Amazon Restoration Fund.
In December 2022, Mombak announced the launch of its US $100 million Amazon reforestation strategy to capture millions of tons of carbon by restoring large areas of degraded land with native tree species.
Mombak launched The Amazon Reforestation Fund III, LP in May 2023. Mombak has also launched three Ontario domiciled feeder funds, Amazon Reforestation Investment Fund Feeder I & II in 2022, and Feeder III in July 2023.
Led by founders, CEO Peter Fernandez and CFO Gabriel Silva, São Paulo, Brazil based Mombak is working to become the world’s largest carbon removal company, starting by reforesting the Amazon. Mombak is backed by Bain Capital Partnership Strategies, Kaszek Ventures, Union Square Ventures, CI Ventures, and Byers Capital.
Earlier today, CPP Investments put out a press release stating it will commit up to US$30 Million to The Amazon Reforestation Fund Managed by Mombak:
Brazilian startup creates high-quality carbon removal credits by reforesting the Amazon using native and diverse species, in partnership with local communities
Toronto, CANADA and São Paulo, BRAZIL (August 22, 2023) – Canada Pension Plan Investment Board (CPP Investments) announced today that it has signed a definitive agreement to invest in The Amazon Reforestation Fund, managed by Mombak Gestora de Recursos Ltda. (Mombak). Mombak is a venture-backed carbon removal startup investment manager focused on reforesting the Amazon.
Under the terms of the agreement, CPP Investments will make a US$500,000 equity investment in Mombak and commit up to US$30 million to The Amazon Restoration Fund.
Based in São Paulo, Brazil, Mombak’s business model is centered on the creation, verification and sale of carbon removal credits. Through The Amazon Restoration Fund, it will reforest Brazilian pastureland using native and biodiverse tree species to rebuild the forests of the Amazon. The additional carbon abated from the atmosphere from these new forests produces high-quality carbon removal credits. The credits are then sold globally via both spot sales and long-term customer offtake agreements.
“The global economy transition is well underway, and we expect that the value of high-quality, verifiable, nature-based carbon removal credits such as the ones produced through The Amazon Reforestation Fund will continue to rise,” said Bill Rogers, Managing Director, Global Head of Sustainable Energies at CPP Investments. “This investment is consistent with our efforts to expand our investments in important and growing industries that support decarbonization while continuing to deliver long-term risk-adjusted returns for the CPP Fund.”
CPP Investments’ Sustainable Energies group is active across the global energy system, with net assets totaling approximately C$32 billion as at June 30, 2023, including investments in renewables, utilities, and energy technology. This is the group’s third investment in vehicles that pursue scaling nature-based carbon solutions and its first investment in Brazilian reforestation.
“Reforestation in Brazil is one of the most scalable carbon removal opportunities globally given the substantial deforestation that has occurred here over the last half-century,” said Mombak CEO Peter Fernandez. “In CPP Investments, we have found a partner who understands the long-term value of working with local communities, scientists, farmers and others to create the highest integrity carbon removal credits available on the market.”
About CPP Investments
Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Fund in the best interest of the more than 21 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At June 30, 2023, the Fund totalled $575 billion. For more information, please visit www.cppinvestments.com or follow us on LinkedIn, Instagram or Twitter.
About Mombak
Mombak was founded in 2021 by Peter Fernandez (former CEO of Brazil’s first unicorn, 99) and Gabriel Silva (former CFO of Brazil’s first “decacorn”, Nubank). They teamed up to leverage their tech backgrounds to solve one of humanity’s most important problems: climate change. Mombak is working to become the world’s largest carbon removal company, starting by reforesting the Amazon rainforest. Mombak has partnered with some of the world’s largest and most sophisticated investors to remove carbon from the atmosphere and mitigate climate change, reaching an initial dry powder in excess of $100 million, including coinvestment commitments. For more information, visit Mombak’s website or connect with Mombak via Linkedin.
So, CPP Investments will make a US $500,000 equity investment in Mombak and will commit up to US $30 million to The Amazon Restoration Fund.
I would invite my readers to learn more about Mombak here:
Our team combines leading experts in science, technology, forestry and carbon markets.
We marry our expertise with technology to pioneer a new model of carbon removal.
We find solutions that most effectively remove atmospheric carbon at scale. We bring together the best from science, technology, forestry and carbon markets, putting our skills to the most important cause of our time. We know our mission will take time and we’re in it for the long run. This is just the beginning of our journey.
We're committed to the most important cause of our time.
And learn about how they do it:
We use a powerful combination of science, technology, forestry and community engagement
We execute large-scale native, biodiverse reforestation projects, starting in the Amazon rainforest. Our forests remove and store atmospheric carbon while creating the ideal habitat for a diverse set of plants and animals to thrive. We turn our forests into natural preserves to keep carbon out of the air for as long as possible.
Why we are unique
Carbon removal is our only business: Our economic incentives are purely aligned with generating the highest integrity carbon removal services.
We leverage natural regeneration: This increases biodiversity, the durability of our forests, and the scalability of our operations.
We are fully vertically integrated: We directly control every step in our value chain from the land to the sale of the carbon credit, allowing us to guarantee the quality of our carbon removal and achieve economies of scale.
We preserve our forests for the long term: After we complete our projects, the land can never legally be deforested again.
We restore native flora and fauna biodiversity: Our projects bring environmental benefits, including the conservation of endangered species.
We support local communities: We enhance the social and economic wellbeing of communities living near our projects.
We seek climate justice and economic balance
Respecting the rights of the local communities and protecting biodiversity is core to our values. We recognise that climate change can have a disproportionate impact on communities that are more socially vulnerable, so we engage with local communities and NGOs to make them a part of our projects.
Through partnerships, we provide assistance to neighboring farmers to intensify their productivity, both guaranteeing that our projects do not affect regional food production and increasing farmers’ incomes.
Mombak didn't only catch the interest of CPP Investments.
In late July, Gabriel Araujo of Reuters reported that AXA fund to invest $49 million in Brazil reforestation projects:
An alternative investment vehicle controlled by French insurer AXA (AXAF.PA) said on Tuesday it will inject $49 million into reforestation projects in Brazil led by local startup Mombak.
AXA IM Alts, which has over 185 billion euros ($208 billion) under management, will take a minority stake in the startup to help scale up operations and technology.
Mombak, which is also backed by Bain Capital, will lead projects to reforest over 10,000 hectares of degraded pastureland, generating up to 6 million carbon credits.
"We are building the largest carbon removal projects in the world," Mombak co-founder Peter Fernandez said in an interview. "The single largest opportunity that humanity has to do reforestation is in Brazil."
Mombak buys degraded land from farmers and ranchers or partners with them to replant native species in the world's largest rainforest, which has been increasingly destroyed in recent years.
That business model, ultimately generating CO2 removal credits that can be sold in carbon markets, helps Mombak shield itself from some of the risks non-governmental organizations face to reforest the Amazon, Fernandez said.
Critics of carbon offset markets, including Greenpeace, say they allow emitters to continue to release greenhouse gases.
Reuters reported last month that although experts see reforesting the Amazon as a promising bulwark against catastrophic climate change, the non-profits attempting it face a series of challenges including illegal land-grabbers and tight budgets.
"The land purchase model gives Mombak the ability to execute on all its quality procedures and also assure the long-term permanency of the forest being created," AXA IM Alts' natural capital lead Adam Gibbon said. "But it does require capital."
"This is our first investment in Brazil," he noted. "We would like to significantly scale up our deployment in Brazil and other Amazon basin countries."
Importantly, Mombak buys degraded land from farmers and ranchers or partners with them to replant native species in the world's largest rainforest, which has been increasingly destroyed in recent years.
As AXA IM Alts' natural capital lead Adam Gibbon states: "The land purchase model gives Mombak the ability to execute on all its quality procedures and also assure the long-term permanency of the forest being created, but it does require capital."
This is where AXA, Bain Capital and now CPP Investments come in, as permanent capital which will allow Mombak to scale its operations in Brazil.
In April, Bryan Harris and Camilla Hodgson of the Financial Times reported that Brazil is looking to start-ups in battle to reforest the Amazon:
Standing in front of a vast stretch of Amazonian grassland, the forest visible only on the horizon, Renato Crouzeilles and his team attract curious looks from a trickle of passers-by, unaccustomed to seeing strangers in such a remote corner of Brazil.
As director of science at Mombak, a two-year-old reforestation start-up, Crouzeilles is planting 3mn trees across almost 3,000 hectares in the country’s Pará state, in one of the largest such projects aimed at restoring forest in the Amazon biome.
“The biggest challenge in the region is to change the culture. It is not a forest culture, they don’t think about reforestation. What they did in the past was to deforest and then put cows here,” he said.
The Amazonian rainforest absorbs vast amounts of carbon and is a crucial buffer against climate change. But the region has been ravaged by deforestation linked to illegal cattle ranching, gold mining and timber exports. Last year, forested land equivalent in size to 3,000 football pitches was razed every day, according to non-profit environmental group Imazon, with the then-government led by rightwing populist Jair Bolsonaro accused of turning a blind eye.
But with the election in October of President Luiz Inácio Lula da Silva, who has pledged to end illegal deforestation, environmental protection is again centre stage.
While government efforts have so far focused on bolstering enforcement to prevent the destruction, a series of private companies are working on reforestation. They purchase or lease land, plant trees and generate revenue by selling carbon credits, which buyers use to compensate for pollution produced by their activities. Each offset represents a tonne of emissions avoided or removed from the atmosphere.
At about 400mn hectares, Brazil’s section of the Amazon rainforest represents the world’s largest opportunity for reforestation. More than 54mn square hectares of the biome — an area 1.3 times the size of California — is pastureland, which is suitable for planting trees.
“Reforestation of tropical forests could make an important contribution to alleviating . . . [global emissions] and the Brazilian Amazon is the largest tropical forest on the planet,” said José Scheinkman, a professor of economics at Columbia University and a member of the Amazon 2030 project, a Brazilian initiative to sustainably develop the rainforest.
According to scientists at Project Drawdown, a US-based non-profit organisation that advises on greenhouse gas reduction, reforestation of tropical and temperate forests could remove up to 113 gigatonnes of carbon from the atmosphere between now and 2050.
This is more than twice the potential of silvopasture — the integration of trees with livestock — which is considered the next most effective method, according to Project Drawdown. Global carbon emissions reached almost 38 gigatonnes in 2021, according to international database EDGAR.
Pedro Brancalion, a reforestation specialist at the University of São Paulo, said creating and maintaining forests could bring global, regional and local benefits, including mitigating climate change, protecting the air currents known as “flying rivers” that carry water from the Amazon across Latin America, supporting agriculture and industry. Locally, it can create jobs and generate income from carbon credits and forestry products.
But reforestation initiatives in Brazil have been beset by difficulties, notably the complexity of land rights and ownership claims, said Brancalion.
Verra, a US-based carbon credits standards body, said it had received numerous allegations of aggressive behaviour by reforestation project developers related to land ownership, but added it had so far found no evidence of wrongdoing.
“Land is the number one issue, specifically finding land that has full legal titles,” said Peter Fernández, chief executive and co-founder of São Paulo-based Mombak.
“There is more than enough land to be used. However, finding it and evaluating that it is [legally compliant] takes a lot of effort,” he said. Mombak did not buy smallholder land or land near indigenous areas to avoid disputes, he added.
Fernández said the company planned to expand its project to 50,000 hectares with the goal of removing 1mn tonnes of carbon from the atmosphere each year by 2030: “We need to create a reforestation industry that is at the scale of the pulp and paper industry. This is not artisanal. This is not an NGO job.”
One bottleneck is a shortage of tree seeds. But a broader concern is the credibility of the carbon credits market, which underpins the reforestation business model. Mombak initially received venture capital funding before securing a $100mn investment from Bain Capital and others and intends to generate revenue by selling the credits.
But the market has long attracted controversy, with critics saying projects do not always deliver the promised environmental benefits. They say that some credits cost less than $5 each, which does little to give incentives to companies to reduce pollution, and that it can be difficult to distinguish between high and low quality credits in what is an unregulated and often opaque market.
But Fernández said the market was necessary and if it did not scale up, efforts to remove carbon would likewise not increase, “which means the world will heat up. It’s just that simple.”
Reform efforts are under way. The Integrity Council for the Voluntary Carbon Market, an international task force initially spearheaded by former Bank of England governor Mark Carney, is this year expected to announce a set of rules for what a “good” market looks like.
Another concern is ensuring that reforested areas are permanent and carbon is not re-released into the atmosphere. Richard Kelly, co-head of Foresight Sustainable Forestry Company, which is developing carbon credit projects in the UK, said keeping the forests healthy and protecting them from fire — an increasing risk as climate change intensifies — was a challenge.
Meanwhile, clad in shin guards to protect from snakes and wide-brimmed hats to stave off the sun, Crouzeilles and his team traverse the Pará site in pick-up trucks.
The region was chosen carefully, Crouzeilles said. One factor was that “there is a lower risk of fire here [because of regular rainfall]. It is a region facing lower climate change risk.”
Despite lack of awareness about reforestation in an impoverished area focused on cattle-rearing, Crouzeilles said his team had been warmly welcomed by locals, who were eager to know about jobs with the project.
“It is a process to change minds and cultures,” he said. “But fortunately we are being very well received.”
Fortunately indeed, the reforestation of the Amazon is critically important in combating climate change.
A recent study published in Nature found that natural forest regrowth can capture an even higher rate of carbon emissions than previously estimated by the U.N. Intergovernmental Panel on Climate Change.
It's important to note that Mombak isn't the only one looking at reforesting Brazil's Amazon.
For example, the Peugeot-ONF Forest Carbon Sink project, implemented more than 20 years ago in northwestern Mato Grosso state, within the “arc of deforestation” of the Brazilian Amazon, has achieved significant ecological restoration and carbon sequestration results.
Bruno Vander Velde of Conservation International also recently reported on a bold initiative to regrow 73 million trees in the Brazilian Amazon which has made substantial progress despite some unexpected hurdles, according to an upcoming report.
All these efforts are necessary to prevent the ongoing ravages from deforestation of the Amazon.
And now, CPP Investments is committed to helping this Brazilian start-up in its mission to produce carbon credits by planting more than 100 native tree species on degraded land in Brazil’s Amazon region.
Below, CNN Brazil reports on an unprecedented global project is reforesting the Amazon in Brazil:
The world currently produces 50 billion tons of greenhouse gases a year. Since the Paris agreement in 2015, the goal is for that number to drop to 10 billion. Entities and society in general have been striving to achieve this goal. But to ensure carbon neutrality by 2050 and control the advance of global warming, it will be necessary to remove part of these gases from the atmosphere every year.
In Brazil, a remote area of the state of Pará is home to one of the largest carbon removal projects in the world. The CNN team traveled nearly 3,000 kilometers to see the site.
Brazilian startup Mombak specializes in the carbon removal market. The company has an initial investment of US$ 100 million for the restoration of forests in the Amazon.
They buy land or form rural partnerships, plant trees and generate revenue by selling carbon credits to companies that need to offset greenhouse gas emissions.
A carbon credit is equivalent to a ton of carbon dioxide that has stopped polluting the atmosphere.
Trees store carbon naturally during the process of photosynthesis and remove large amounts of carbon dioxide, which pollutes and promotes global warming.
“To measure the amount of carbon stored by a tree, you need to measure height, width and analyze the species”, says Renato Crouzeilles, director of science at the company.
The carbon market, although new, has grown a lot in the last four years and already moves almost US$ 1 trillion a year worldwide.
North American Peter Fernandez, founder of Mombak, has lived in Brazil for 12 years and has worked as an executive at Google in Latin America, in addition to being the former CEO of app transport company 99.
At one point in his career, he began to study environmental restoration. Two years ago, he teamed up with Gabriel Haddad, who is the former CFO of Nubank, to create Mombak.
“Investment in environmental restoration is now attractive because it generates revenue. It used to be just philanthropy. Now, investors have a financial return and this increases interest, consequently benefiting nature and combating global warming”, says Peter.
The startup's idea is to buy large deforested land. For this reason, businessmen chose Brazil, as the Amazon has the largest tropical forest in the world and the largest deforested area. About 20% of the forest has already been devastated, according to the Mapbiomas monitor.
The first land purchased by Mombak was a farm in the interior of Pará, with around three thousand hectares, equivalent to the size of three thousand soccer fields.
"It's a huge area that was deforested because of livestock."
Brazilian law mandates that, in this region, farms have 50% of the area covered by forest. But that's not what usually happens.
“Brazil has tens of thousands of lands like this, which could be better used. The greatest opportunity for reforestation and carbon removal is here”, explains Peter Fernandez.
Mombak's idea is to plant three million trees of 68 different species over the next 11 months. Production is in industrial series, with 40 people working on site. In four weeks, they planted 123,000 seedlings.
These seedlings are raised in nurseries in São Paulo and Bahia and then taken to be planted in Pará.
The goal is that, in five years, the company will be able to remove one million tons of carbon dioxide from the atmosphere per year.
The work also generates local revenue for small municipalities in Brazil and will increase biodiversity in the region.
“Brazil has the potential to be a protagonist in the carbon removal market. Here is the biggest, most scalable opportunity to do so,” says Peter.
Also, deforestation in Brazil's Amazon rainforest fell over 30% in the first half of 2023, preliminary government data showed, hitting its lowest level in four years as President Luiz Inacio Lula da Silva institutes tougher environmental policies.
Third, scientists fear the Amazon may be approaching a tipping point that would have global consequences. But Brazil was once hugely successful at tackling deforestation there. Can the country do it again? Watch this DW Planet documentary.
Lastly, I embed two must watch interviews with two top US climate scientists.
First, Steven Koonin is one of America's most distinguished scientists, with decades of experience, including a stint as undersecretary of science at the Department of Energy in the Obama administration. In this wide-ranging discussion, based in part on his 2021 book, Unsettled: What Climate Science Tells Us, What It Doesn't, and Why It Matters, Koonin gives a more refined look at the science behind the climate issue than the media typically offers, guiding us through the evidence and its implications. As Koonin explains in this interview, he was “shaken by the realization that climate science was far less mature than I had supposed” and that the “overwhelming evidence” of catastrophic implications of anthropogenic global warming wasn’t so overwhelming after all.
Second, Dr Jordan B Peterson and Dr. Richard Lindzen dive into the facts of climate change, the models used to predict it, the dismal state of academia, and the politicized world of “professional” science.
Richard Lindzen is a dynamical meteorologist. He has contributed to the development of theories for the Hadley Circulation, hydrodynamic instability theory, internal gravity waves, atmospheric tides, and the quasi-biennial oscillation of the stratosphere. His current research is focused on climate sensitivity, the role of cirrus clouds in climate, and the determination of the tropics-to-pole temperature difference. He has attained multiple degrees from Harvard University, and won multiple awards in his field of study such as the Jule Charney award for “highly significant research in the atmospheric sciences”. Between 1983 and 2013, he was the Alfred P. Sloan Professor of Atmospheric Sciences at MIT where he earned emeritus status in July of 2013.
HOOPP's former CEO and member of AIMCo's board Jim Keohane brought Dr. Lindzen's interview to my attention stating this:
Dr. Lindzen was the head of climate science at MIT and considered the top climate scientist in the world. He has since been “cancelled” because his scientific findings did not align with the Biden administration's narrative on climate.
It is a great discussion of the actual science of climate. He was part of the UN climate studies and he says in this interview that the conclusions and particularly the press releases from the UN don’t match the science that is in the full document.
He also states that most scientists would agree that putting carbon into the atmosphere does cause warming but that almost no credible scientist would say that it is an existential problem. There is also a good discussion around the causes of glaciation.
Jim added this:
Another event that Steven Koonin mentions in the interview is the underwater volcano that erupted in Tonga. This was one of the biggest volcanic eruptions in the history of the earth and injected a huge amount of water into the atmosphere. Large volcanic eruptions like this can influence global weather for up to five years yet this got virtually no coverage in mainstream media. The only explanation for the lack of coverage is that it doesn’t fit with the climate alarmist narrative.
Indeed, Canadian investigative reporter Diane Francis wrote an excellent comment on this called The Big Heat which I recommend you read carefully.
When it comes to climate change, let's let top credible scientists guide us, not the politicians and let's stick to what we know and be humble enough to admit there's a lot we still don't know.
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