South Pole, Mitsubishi’s NextGen buy major tranche of CO2 removal credits

LONDON, April 26 (Reuters) - NextGen, a joint venture owned by Swiss carbon project developer South Pole and Mitsubishi Corporation, will buy almost 200,000 tonnes of carbon removal credits from three projects to help drive down the cost of the technology, it said on Wednesday.

Many scientists believe extracting carbon dioxide from the atmosphere by using nature or technology is the only way to meet goals set under the U.N. Paris climate agreement to curb climate change because so many emissions are still being generated by the use of fossil fuels.

The projects include the 1PointFive direct air capture plant in Texas, which is being developed by oil company Occidental’s Oxy Low Carbon Ventures subsidiary.

In all, NextGen has said its carbon removal portfolio will buy 1 million carbon removal credits from a range of projects by 2025 to try to provide them with revenue streams and lower costs that can rise to several hundreds of dollars per tonne of carbon removed.

This first round of advance purchases of almost 200,000 credits will help to fund Carbo Culture’s biochar project in Finland and Summit Carbon Solution’s biomass carbon removal and storage project in the United States, as well as the Occidental project.

NextGen said the volume is equivalent to around a quarter of all carbon removal purchases made globally to-date.

It did not break down how many credits would come from each project or the individual cost of the credits but said it sought a target price of $200 per tonne on average across the 1 million tonne portfolio.

Asked about the Occidental project, NextGen Chairman Philip Moss said the purchased credits were not promoting extractive industries, but instead helping carbon removal to achieve scale and help the energy transition.

"This project provides an opportunity for the oil and gas sector to transition into cleaner activities," he said.

He added the target of $200 per tonne would make carbon removal credits affordable.

Founding buyers for NextGen already announced include insurer Swiss Re (SRENH.S), banker UBS (UBSG.S) and shipping company Mitsui O.S.K. Lines (MOL) (9104.T).

Reporting by Susanna Twidale; editing by Barbara Lewis

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