By Gabriel Araujo
SAO PAULO (Reuters) – Private equity-backed reforestation startup re.green has signed a partnership with Agro Penido to restore 600 hectares (1,482 acres) of land owned by the Brazilian agribusiness firm with native species from the Amazon (NASDAQ:AMZN) rainforest, it said on Monday.
Their partnership is the latest deal for the nascent reforestation business in Brazil, home to most of the world’s largest rainforest and host of the COP30 U.N. climate summit this year in the Amazonian city of Belem.
Local startups including re.green, AXA-backed Mombak and Biomas – a firm established by Suzano, Santander (BME:SAN), Vale, Marfrig, Rabobank and Itau – have been working to buy land or partner with local farmers to restore areas of the Amazon.
Turning degraded land into forests can generate carbon credits, which companies buy to offset their greenhouse gas emissions voluntarily or through regulated markets like the one Brazil has recently written into law.
Firms such as Alphabet (NASDAQ:GOOGL)’s unit Google, Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:META) owner Meta and McLaren Racing have recently purchased carbon credits from Brazilian projects.
The new re.green deal represents the first time it is partnering to restore farmer-owned land, Chief Executive Thiago Picolo told Reuters, noting the firm has already bought 13,000 hectares from ranchers.
“Buying land is an important model, but we always knew that for re.green to reach the size it wants we would have to partner with landowners and involve them in this business,” Picolo said.
Re.green is backed by Brazilian billionaire Joao Moreira Salles and asset managers including Lanx Capital, Principia, Dynamo and Gavea Investimentos, which was founded by former Brazilian central bank governor Arminio Fraga.
Salles and Fraga are both on the board of re.green, whose goal is to restore 1 million hectares of land in Brazil, an area twice the size of Delaware. It announced a deal with Microsoft in May to restore 15,000 hectares in the Amazon.
The deal with Agro Penido covers areas near the Xingu Indigenous Park in Mato Grosso, Brazil’s largest grain-producing state. Picolo said re.green plans to restore forests in less productive parts of Agro Penido’s farms, some of which may yield lumber in addition to carbon credits.
Picolo said the first phase of their partnership has the potential to produce some 300,000 carbon credits over the next few decades, each representing the removal of a metric ton of carbon dioxide equivalent from the atmosphere.
He said re.green can sell its reforestation-based credits at a premium, fetching some $50 to $100 in private deals.
Scientists consider the Amazon’s protection vital to curbing climate change because of the vast amount of climate-warming carbon dioxide its trees absorb. Some critics complain the offsets allow polluters to avoid reducing their emissions.
Agro Penido, which has a separate joint venture with grains powerhouse SLC Agricola, currently has nearly 40,000 hectares producing soybeans, corn and cotton, which it aims to expand to 65,000 hectares by 2027/28.
“This is a start,” said Caio Penido, one of the owners, about the re.green deal. He added they would now evaluate other areas owned by the firm, noting it was possible for the project to double its scope to 1,200 hectares.