SHANGHAI: Tencent Holdings Ltd will buy 300,000 carbon removal credits from an agroforestry project in Indonesia, marking the first deal of its kind for the Chinese technology firm outside its domestic market.
“Tencent has entered a 10-year agreement with Singapore-based carbon developer Thryve.Earth to purchase credits generated from a project on the island of Sulawesi,” it said on Wednesday.
Alphabet Inc’s Google struck a separate 10-year offtake deal for 260,000 credits from the same project, while consulting firm McKinsey & Co agreed to buy 75,000.
The average price for agroforestry credits in Asia is currently around US$21.40, according to carbon data company Sylvera.
Carbon removal will play a key role in Tencent’s commitment to achieve carbon neutrality in its own operations and supply chain by 2030, a company spokesperson said by email.
“While reducing emissions remains the top priority, high-quality carbon credits can help address residual emissions and deliver climate impacts,” the spokesperson said.
Agroforestry projects, which combine agriculture with removing carbon by planting or increasing forest cover, have the potential to deliver up to 310 million tonnes of carbon-dioxide removal annually and could play an important role in efforts to limit global warming.
The willingness of corporate buyers to keep doing such deals offers a counterpoint to news earlier this year that Microsoft Corp was pulling back.
The Thryve.Earth project will restore degraded land in Sulawesi, an island in the centre of the Indonesian archipelago on which tropical rainforests have been destroyed by agriculture, soil erosion and invasive species.
The idea is to develop a “mixed crop farming system” that sequesters carbon, replenishes soils, increases biodiversity and provides income for local farmers.
The project envisages an upper tree canopy of sugar palm plants and timber trees, a mid-layer of papayas, avocados, coffee, and bananas, and ground-level annual crops such as chilli and corn.
The layers are intended to optimise land productivity and provide income streams that are “significantly more valuable than the carbon revenues alone, aligning carbon sequestration benefits with economic incentives,” Thryve.Earth said.
Vinay Kulkarni, the company’s co-founder and chief executive officer, said “nature-related work, be it conservation or be it restoration, needs to happen at a whole different scale than what we are currently operating on now.” — Bloomberg
