BlackRock-Temasek’s Decarbonization Partners joins the carbon offset boom

Warburg Pincus, Partners Group, GIC and Swiss Re have also invested in carbon removal technology this year.

Decarbonization Partners, the joint venture announced last year by Singaporean state-backed investor Temasek and BlackRock, is backing a company that facilitates access to carbon offsets for its latest investment. The joint venture has co-led a $60 million Series A funding round in Carbon Direct alongside Quantum Energy Partners.

Temasek has previously signalled its appetite for carbon removal. In June, the investor announced a S$5 billion ($3.6 billion; €3.4 billion) allocation to carbon removal and reduction technologies via its wholly owned subsidiary investment company, GenZero. GenZero has a mandate to invest “long-term and flexible capital” into third-party funds and directly into companies. It focuses on three themes: technology-based carbon solutions for carbon reduction and removal, nature-based solutions and developing the carbon credit market.

Temasek is not the only private equity investor with an appetite for carbon removal. Warburg Pincus co-led a $50 million funding round for carbon abatement and management company ClimeCo in April. ClimeCo provides nature-based solutions and plans to expand into engineered carbon capture and sequestration.

Days after that deal, Partners Group, Singaporean sovereign wealth fund GIC, Swiss Re, Baillie Gifford and M&G announced an investment in Climeworks, a Swiss company specialising in direct air carbon capture. Partners Group “aims to capitalise on attractive thematic investing tailwinds into carbon management”, a spokesperson for the firm told New Private Markets at the time. “Carbon removal technologies [play] a critical role in achieving long-term global emission reduction targets.”

Carbon Direct, which counts BlackRock and Microsoft among its clients, has an existing relationship with many of these investors. The company has a fund management arm, Carbon Direct Capital Management, which last year participated alongside BlackRock, Temasek, GIC and Baillie Gifford in a $350 million funding round into low-carbon chemical producer Solugen.

Carbon Direct is Decarbonization Partners’ fourth investment. The joint venture platform has previously invested in alternative leather producer MycoWorks, lithium-silicon battery producer Group 14 Technologies and materials company Monolith.