ASSET SUMMARY

Operator Blue Source LLC, Locus Agricultural Solutions
Location USA
Stage Development (2023E start)
Commodity Verra Verified Carbon Standard voluntary carbon offset credit
Terms Proceeds sharing agreement with Blue Source LLC.


Green Star Royalties and Bluesource announced an agreement to create premium, verified carbon offset credits that will reward the adoption of regenerative agriculture practices by North American farmers. This agreement initially started a program that would enable a Bluesource and Locus AG partnership to incentivize regenerative agriculture practices on 320,000 acres of farmland, maximizing soil health and the soil’s carbon sequestration capacity. However, following exceptional demand and strong grower enrollment, in April 2022 the CarbonNOW® carbon farming program was expanded more than fourfold, to cover 1.32 million acres of farmland. Green Star Royalties and Bluesource expect this expanded program to result in over 2 million carbon offset credits per annum, commencing to generate credits for the 2023 growing season. The credits will be available for sale in the voluntary carbon marketplace. This program has been financed by Green Star Royalties, with Bluesource executing the carbon offset development and sales.

PROGRAM HIGHLIGHTS

  • Sustainable farming: This initiative aims to finance and accelerate the transition of North American farmers to sustainable farming practices that will improve soil health and accelerate atmospheric CO2 removal and sequestration into soils.
  • Innovative, aligned benefit structure: Pioneered by Green Star Royalties and Bluesource, this novel approach, in partnership with grower-facing organizations such as Locus AG, enables farmers to participate in the carbon credit market, maximizing benefits and alignment to all program participants.
  • Premium credits in a low-risk jurisdiction: Providing carbon finance to growers across the United States to create premium regenerative agriculture carbon offset credits for the voluntary carbon markets.
  • Material increase in scope: Project expansion from 320,000 to 1.32 million acres reflects strong grower enrollment.
  • Originating carbon offset credits: Green Star Royalties anticipates generating annual cash flow equivalent to approximately 560,000 carbon offset credits from the expanded project (100,000 previously).
  • Preferred partnership drives growth: Green Star Royalties and Bluesource look to finance progressively larger regenerative agriculture projects with further potential of over one billion acres of additional prospective farmland in the United States and in Canada.
  • Highly reputable partner: Bluesource is North America’s leading carbon offset developer and marketer, with a proven track record spanning over 21 years in developing and monetizing nature-based carbon offset projects.

REGENERATIVE AGRICULTURE

Regenerative agriculture is a wholesome conservation and rehabilitation approach to food and farming systems. The purpose of regenerative agriculture is to promote soil health regeneration and to rebuild soil organic matter while improving water management, reducing or eliminating nitrogen-based fertilizers, and increasing biodiversity. This can be done by implementing traditional practices such as no or low tillage and cover cropping, and accelerated through the use of Locus AG’s soil health probiotics. In addition to benefiting farmers and enhancing long-term soil health and crop performance, regenerative agriculture practices reverse climate change by sequestering significant additional amounts of atmospheric CO2 into soils than would have been released to the atmosphere by utilizing conventional farming practices. By accurately quantifying the amount of sequestered carbon into these farmlands, Bluesource is able to develop premium and verified carbon offset credits that are then sold to a variety of companies looking to voluntarily offset their CO2 emissions.

ASSET DESCRIPTION

  • Green Star Royalties has agreed to finance a regenerative agriculture carbon offset program being developed and managed by Bluesource for an increased capital contribution of up to $20.6 million in cash.
  • Cash will be made available to growers in this program through Locus AG’s CarbonNOW program. Locus AG will be actively recruiting growers under this project until a total of 1.32 million acres of farmland across the United Sates have been adopted into the program.
  • Initial funding of the investment is expected to commence in Q2 2022, with further quarterly tranches drawn by Bluesource, as required, until the entire $20.6 million is invested. Green Star Royalties currently expects $5 million will be invested in 2022 and the remainder in 2023.
  • This project investment has a term of 11.5 years and the future financial benefits derived from the monetization of the project’s carbon offset credits will be split between the CarbonNOW growers, Bluesource, and Green Star Royalties.
  • The program expects to generate revenues from an average of over 2 million carbon offset credits per annum, starting in 2023. Green Star Royalties expects to generate cash flow equivalent to over 220,000 attributable carbon offset credits in 2024, and increasing to over 560,000 attributable carbon offset credits per annum starting in 2025.

Bluesource

Bluesource is a climate action partner for private and public companies, non-profit organizations and governments. Bluesource has pioneered creative solutions to the climate crisis since 2001, with deep expertise across environmental technologies and markets. With more than 200 active projects in the United States and Canada, Bluesource is a leader in voluntary, compliance and pre-compliance carbon, renewable energy attribute, renewable natural gas and energy efficiency markets. For six consecutive years, Bluesource has been voted Best Project Developer (North America) and Best Offset Originator (California) by peers and partners in Environmental Finance’s Annual Market Rankings.

As announced in 2022, Bluesource has merged with Element Markets to create the largest marketer and originator of carbon and environmental credits in North America and one of the largest in the world. The combination brings together Element Markets’ leading position in low carbon fuels and greenhouse gas markets with Bluesource’s expertise in nature-based solutions, project development, capital formation and advisory services to create a vertically integrated, climate-focused company that serves all sectors and geographies to accelerate the fight against climate change and environmental degradation. As it relates to regenerative agriculture, Bluesource partners with organizations in the ag supply chain to design, develop, and manage a carbon program to leverage the carbon opportunity for their network of growers. More information about the company is available at www.bluesource.com.

Locus AG

Locus Agricultural Solutions® (Locus AG) is an agtech, certified B Corp™ and innovator member of the World Business Council for Sustainable Development that is helping to solve the interrelated challenges of climate change and food security. Its innovative microbial soil health probiotic technologies and globally recognized CarbonNOW® carbon farming program give farmers a new way to boost yields, profit and accelerate carbon sequestration while reducing operating costs and environmental impact. Locus AG gets its core scientific capabilities from its parent company, Locus Fermentation Solutions (Locus FS), an Ohio-based green technology company. For more information, visit LocusAG.com.