Green Star Royalties, the pioneering carbon credit royalty and streaming company, has secured funding for top-tier North American nature-based climate solutions. This venture, a collaboration between Star Royalties Ltd., Agnico Eagle Mines Limited, and Cenovus Energy Inc., recently announced a significant milestone. Through its partner Green Star, they have finalized a “definitive royalty agreement” with NativState LLC. This agreement entails the acquisition of several gross revenue royalties on a portfolio of Improved Forest Management (IFM) projects in the southeastern United States.
NativState, a forest carbon project developer based in Arkansas, provides small to medium landowners with the opportunity to maximize the carbon potential of their forests. By aggregating these lands into IFM projects registered under the American Carbon Registry (ACR), NativState aims to contribute to the fight against climate change. Green Star’s Royalty Portfolio is set to unlock a strategic investment plan that is expected to yield high-quality voluntary carbon offsets over a span of 20 years. The total payment of $5.6 million will be disbursed in multiple installments in U.S. dollars, unless otherwise specified.
The investment plan outlined by Green Star includes key strategies such as expanding their North American nature-based portfolio by acquiring royalties on NativState’s IFM projects. This move enhances and diversifies Green Star’s existing portfolio of carbon offset solutions. Additionally, this marks Green Star’s first investment in carbon offset-issuing royalties, with Project ACR 783 in Arkansas projected to generate around 180,000 carbon offsets in 2024. The partnership between Green Star and NativState is underpinned by a defensive royalty structure, ensuring a stable and aligned approach over the 20-year term.
The Royalties acquired by Green Star encompass a 20% stake in Project ACR 783 and a 10% share in an additional 60,000 acres across Arkansas, Louisiana, Mississippi, and Missouri. These lands are earmarked for development by NativState and subsequent registration as future ACR projects. With a rising demand for premium North American carbon offsets, Green Star’s investment is poised to deliver significant value accretion and an attractive payback period. The partnership with NativState, a rapidly growing carbon developer managing over 300,000 acres, further strengthens Green Star’s position in the voluntary carbon markets.
The transaction terms between Green Star and NativState are crucial for the financial outcomes of both parties. Green Star’s investment of $5.6 million will secure them a 20% Royalty on Project ACR 783 and a 10% Royalty on an additional 60,000 acres. These royalties will span a 20-year term starting from the first carbon offset issuance date. Carbon offsets will serve as the primary method of payment for the royalties, with agreed-upon defensive mechanisms to ensure minimum offset delivery requirements are met over the term.
Improved Forest Management (IFM) plays a vital role in enhancing carbon sequestration by either reducing emissions from forests or increasing carbon removal and storage. Techniques such as adjusting harvest volumes, extending forest rotations, and implementing sustainable practices contribute to curbing emissions and boosting carbon sequestration. IFM projects like those undertaken by NativState have the potential to significantly increase total stored carbon annually, without compromising the benefits derived from managed forestlands.
In the United States, timber harvesting is a prevalent activity across forested areas, particularly on private lands. Decisions regarding forest and land management can have a profound impact on the ability of forests to sequester carbon effectively. Premium North American carbon offsets are in high demand, with prices ranging from $13 to $15 per metric ton of carbon dioxide equivalent for avoidance offsets and over $20 per ton for removal offsets.
Project ACR 783, also known as the S&J Taylor Forest Carbon Project, spans 18,000 acres of sustainably managed forestland in Southcentral Arkansas. Green Star’s 20% Royalty stake in this project is expected to yield approximately 1.5 million carbon offsets over the next two decades. The project focuses on maintaining forest carbon stocks through certified and sustainable management practices, aiming to achieve significant carbon sequestration in the designated areas.
In collaboration with NativState, Project ACR 783 seeks to generate sustainable revenue streams through forest management and participation in voluntary carbon markets. The project’s mission includes conserving valuable hardwood forests within the Gulf Coastal Plain eco-region, promoting landscape stability, enhancing biodiversity, and protecting critical species. Alex Pernin, CEO of Star Royalties, emphasized the importance of this partnership in advancing climate solutions and sustainable land management practices.
