U.S.-based private investment fund Climate Trust Capital, an independent entity of the long-standing, mission-driven nonprofit The Climate Trust, today announced it has reached agreement on its first carbon investment in the grassland conservation sector. The $260,000 commitment is among the first investments from Climate Trust Capital’s $5.5 million Fund I. The Fund I pilot launched in October 2016, and was seeded by a Program-Related Investment from the David and Lucile Packard Foundation and supported by a Conservation Innovation Grant awarded in 2015 by the USDA’s Natural Resources Conservation Service. Fund I’s investment thesis is to identify and invest in carbon offset projects that produce attractive risk-adjusted returns.
Ranch owners, Dan and Suzy Probert and family, have teamed up with The Nature Conservancy (TNC) and the Natural Resource Conservation Service (NRCS) to ensure the ranch will be managed to benefit both ranching livelihoods and the native habitat and wildlife it supports. The agricultural conservation easement on the property allows for livestock grazing that follows a grazing management plan created with TNC.
The 12,225-acre Lightning Creek Ranch project is part of a larger effort to conserve North America’s largest remaining intact bunch grass prairie habitat, while also supporting the local ranching community. Located in Oregon’s Wallowa County, the project area is considered some of the most unique and ecologically important land in the country.
Climate Trust Capital has made an eleven-year commitment to invest in the project, which is estimated to keep 55,000 tons of carbon emissions out of the atmosphere by preventing native grassland from being converted to crop production. An agricultural conservation easement, which prevents conversion of the property for residential or commercial energy development or crop production, ensures the grassland will remain intact in perpetuity.
Fund I’s investment amount is based on the anticipated ten-year value of carbon credits from the project. The bulk of Climate Trust Capital’s investment helped TNC pay for the conservation easement, with a small portion reserved to cover the costs associated with developing and verifying the carbon offset project. Climate Trust Capital will actively manage the carbon offset portfolio for the project during its investment term.
“Lightning Creek Ranch is the first grasslands project to join our Climate Trust Capital Fund I portfolio, and we are elated to be able to provide capital to this charismatic project in our own backyard,” said Mik McKee, land asset manager for The Climate Trust. “The environmental benefits to be gained from preserving native grasslands are vast, with impacts ranging from improved water quality and soil erosion prevention to the safeguarding of carbon stored in the ground. This investment grade project reflects our ongoing strategy of supporting quality projects in the early stages of development to elevate their impact.”
Climate Trust Capital’s Fund I is focused on supporting innovative U.S.-based carbon offset projects in the forestry, grassland conservation, and livestock digester sectors. The Lightning Creek Ranch project was identified as a match for conservation finance, with the offer of upfront investment supporting the purchase of an agricultural conservation easement and the development of a carbon offset project. The Lightning Creek Ranch project will be developed in accordance to the Climate Action Reserve’s protocol for Avoided Conversion of Grassland.
“We are fortunate to enter into one of our very first investments with partners known for their integrity, and in a sector and geography that affords such a great potential for impact,” said Sean Penrith, executive director for The Climate Trust. “The Lightning Creek project beautifully bridges the tension between conservation and grazing, and is a true reflection of our investment philosophy.”
“In the course of building our portfolio for Fund I, our team has expressed a lot of optimism around the potential for impact in the grasslands conservation sector,” said Kristen Kleiman, director of investments for The Climate Trust. “Climate Trust Capital leverages our technical expertise and robust buyer network, to ensure optimal long-term performance and the best possible premiums for the sale of generated credits.”
“We are proud of the progress we’ve made in building and deploying our Fund in the past six months, and look forward to future investments in carbon that align with our conviction that carbon prices are undervalued and will provide investors with long-term, risk-adjusted returns,” continued Penrith. “Our patient approach rewards project owners as carbon prices increase over time, while meeting our personal commitment to preventing a disastrous rise in global temperatures brought about by climate change.”
Zumwalt Prairie. Image Credit: J. Johansen, NRCS.