By Fabiana Negrin Ochoa


A joint venture from Japanese conglomerate Mitsubishi Corp., backed by the likes of Switzerland's UBS and Swiss Re AG, has taken a step toward establishing what it said will be the world's largest diversified portfolio of carbon-dioxide removal credits in a bid to scale the nascent but growing corner of the offset market.

The NextGen CDR Facility, a venture formed by Mitsubishi and climate project and solutions company South Pole, said Wednesday that it has made advance purchases of carbon-removal contracts that will take close to 200,000 tons of the greenhouse gas out of the environment.

These include CDRs from two U.S. facilities: one being developed by carbon-removal company 1PointFive in Texas that is set to become the world's largest for direct air capture and storage--a method that sucks CO2 from the atmosphere and stores it underground--and another from agriculture-focused Summit Carbon Solutions that will take carbon emitted by biorefineries like ethanol plants in the Midwest, compress it and sequester it underground in North Dakota.

NextGen will also buy carbon-removal credits from climate-tech company Carbo Culture's project in Finland, which will capture CO2 using biochar, a substance made from renewable organic materials like agricultural waste.

The purchases mark a key milestone in the development of the carbon-removal market, NextGen said, comprising a quarter of all purchases to date, according to industry data. Once delivered, the portfolio offers access to more than 1,000 years of carbon storage, it said.

NextGen, which aside from UBS and Swiss Re also counts Boston Consulting Group and Japanese shipping group Mitsui O.S.K. Lines Ltd. among its founding buyers, aims to buy 1 million certified carbon removal credits by 2025.

The news comes as more companies look to enter the CDR market as buyers, according to experts at McKinsey. In a recent report, they said they expect demand for carbon removal to grow as more corporations make climate pledges. But they flagged some uncertainties ahead, including scarce supply, varying degrees in the quality and credibility of CDR credits, and costs, with tech-based carbon removal being significantly more expensive than nature-based solutions.

NextGen said all of the projects it works with will be certified and verified under standards endorsed by the International Carbon Reduction and Offset Alliance.


Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com


(END) Dow Jones Newswires

04-26-23 0216ET