NextGen to buy carbon removal credits from Indian enhanced rock weathering project

Carbon removal specialist NextGen CDR signed a deal Oct. 16 to purchase carbon removal credits from Alt Carbon’s enhanced rock weathering project in Darjeeling, India.

Under the deal, NextGen will purchase a long-term supply of carbon dioxide removal credits from the Indian removal project, certified by the Isometric registry, at an average price of $200/mtCO2e for 2025-30 delivery, the companies said in a statement.

NextGen, which is a joint venture between project developer South Pole and Japanese industrial conglomerate Mitsubishi Corp. said the credits from this project will be bought by a suite of global buyers including Boston Consulting Group, LGT Group, Mitsui O.S.K. Lines, SwissRe and UBS.

CO2 removal, or CDR, refers to climate mitigation strategies that remove CO2 emissions from the atmosphere, in contrast to strategies to avoid such emissions.

Carbon removal projects encompass a wide array of approaches, including technology-based methods like direct air capture, enhanced rock weathering, biochar, biomass carbon removal and storage, as well as nature-based projects such as afforestation and reforestation.

Enhanced rock weathering is a chemical process that fast-tracks the natural process of carbon removal. Alt Carbon will spread basalt on tea plantations in the Himalayan foothills, where the humid weather conditions speed up the rock’s ability to remove CO2 from the atmosphere and store it in the soil for thousands of years.

From tea to carbon

Alt Carbon’s Darjeeling Revival project is aiming to remove 5 million mt of carbon dioxide from the atmosphere by 2030, and hopes to build more projects in northeastern India, which is home to several tea estates.

"Every research paper in the world spoke about how India and Brazil are the best areas to do rock weathering primarily because of the high temperatures, high rainfall, high acidity, and [easy] access to feedstocks," Alt Carbon Co-Founder and CEO Shrey Agarwal told S&P Global Commodity Insights.

Agarwal comes from a family of tea estate owners so access to land has been easy, and the company has spent a lot of time building a science team and trying to make the project “cost effective.”

The company says that spreading basalt with traditional farming will help support rural farmers and improve soil health in Darjeeling’s tea estates in the Himalayan foothills.

Alt Carbon recently secured a $500,000 pre-purchase agreement with Frontier, a carbon removal buyers coalition, founded by Stripe, Alphabet, Meta, Shopify, and McKinsey Sustainability.

Deal spree

This deal comes amid a flurry of carbon removal offtake agreements in recent months. Tech giants like Microsoft, Meta and Google have been very active in this sector.

Megan Kemp, head of Tech CDR at NextGen, said the company was designed to be a large-scale purchaser of carbon removal credits in a bid to grow this nascent yet popular market. This is a growing trend in carbon removals, where many companies are coming together to form a buyer’s coalition to help monetize and scale this market.

"You can't just switch on the carbon dioxide removal market. These are long-term, highly complex infrastructure projects that need 20 years of financing,” said Kemp in an interview with Commodity Insights.

This is the fifth type of carbon removal technology that NextGen has invested in. It has previously agreed an advance purchase of credits in four removal technologies: direct air capture, bioenergy carbon capture and storage, product mineralization and biochar, added Kemp.

This trend of big corporate buyers pivoting toward premium-priced removal credits rather than continuing to invest in the avoidance sector is expected to persist in the coming months.

CDR technologies are seen as a necessary tool in the fight against climate change. The IPCC has said CDR technologies will need to account for around 10 gigatons/year of CO2 globally by 2050 for net-zero goals to be achieved.

Platts, part of S&P Global Commodity Insights, assesses the price of carbon credits generated from technology-based carbon credits like biochar projects, direct air capture projects and carbon removal, capture and storage operations.

Platts assessed tech-based carbon capture credits at $140/mtCO2e Oct. 15. That compares with $12.55/mtCO2e for standard carbon removal credits Oct. 15, according to Platts.

The price of credits from technology-based carbon removal projects has consistently traded at a significant premium to other types of removal credits.

This premium on tech-based credits reflects a much higher cost of implementing projects, but also a perception of lower risks linked to issues such as environmental integrity, additionality and permanence.