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IFC backs $10M carbon credit fund

Illustration of a pattern made up of pieces of coal connected by glowing blockchain lines, with one piece of coal glowing.

Illustration: Aïda Amer/Axios

The International Finance Corporation is teaming up with a handful of startups on a $10 million fund for investing in carbon credits and selling them back on a blockchain.

Why it matters: Treating carbon credits akin to traditional financial assets could bolster the nascent carbon market.

Of note: Aspiration, a fintech startup, and Cultivo, a project-financing startup, will primarily run the $10 million Carbon Opportunities Fund with backing and support from IFC and blockchain startup Chia Network.

How it works: The fund will invest in so-called nature-based carbon capture projects, where carbon is removed from the air through natural means such as reforestation or algae farming.

  • The projects generate verified carbon credits that the Carbon Opportunities Fund can then sell to corporations and financial institutions, and use the profits to reinvest back into the fund to back bigger projects down the road.
  • Steve Glickman, president of international at Aspiration, tells Axios that the fund will invest in up to 700,000 metric tons worth of carbon credits in the first year.
  • "The more they are seen as assets, the more people will solicit investment in the projects to get access to the credits," Glickman says of the Fund's long-term goal.

State of play: The carbon market has remained a tough nut to crack for large financial institutions and corporations looking to meet ESG commitments or offset emissions.

  • Carbon credits are difficult to verify and can have variable value due to lack of standardization across the market.
  • Some investors have argued that credits allow bigger corporations to buy their way into net-zero goals instead of taking meaningful steps to change dirtier aspects of their businesses.
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