climate

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.

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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.