BAKU, Azerbaijan, October 22. Citi has
completed a $72 million bond transaction linked to verified carbon
removal at an agricultural biochar project in Texas, introducing a
financing model that ties investor returns to the delivery of
carbon credits rather than conventional interest payments.


According to the bank's press service, the 3.5-year Carbon
Removal-Linked Note is designed to fund Applied Carbon's project
while protecting investors' principal. Under the structure,
investors forgo traditional coupon payments, and an upfront
allocation of funds supports the project's development. Payments to
investors are linked to the issuance and delivery of carbon credits
produced by the project.


The transaction brings together capital markets financing,
carbon removal technology and demand for emissions reductions. It
also marks Citi's first outcome bond linked to verified carbon
removals, according to the bank.


"The voluntary carbon market requires new financial structures
to bridge the gap between investor capital and the long-term
funding needs of carbon removal projects," said Sonia Battikh,
Citi's Global Head of Carbon Offsets Trading.


She said the transaction builds on the bank's efforts to link
bond performance to environmental outcomes and create additional
channels for financing projects with measurable climate
benefits.


The project is based on technology developed by Applied Carbon,
which converts agricultural crop residue into biochar through
mobile pyrolysis equipment. Biochar is a stable, carbon-rich
material that stores carbon and can improve soil health.


Unlike systems that require crop residue to be transported
elsewhere for processing, Applied Carbon's mobile units can operate
directly in agricultural fields, combining the conversion process
with biochar application. The equipment can also be deployed at
field edges, giving the company flexibility in handling feedstock
during different stages of the agricultural cycle.







For Applied Carbon, the financing provides support for expanding
deployment of its technology and demonstrates how engineered carbon
removal projects can attract capital through structured financial
products.


"This financing shows that biochar and engineered carbon removal
projects can be structured and financed like any other asset," said
Jason Aramburu, the company's founder and CEO.


He said the partnership with Citi and Nuveen would help expand
deployments in Texas, benefiting both climate efforts and
farmers.


The project also has an established source of demand for its
environmental output. Microsoft signed an offtake agreement with
Applied Carbon in 2022 covering a portion of the carbon credits
generated by the project. Such agreements can provide buyers for
future credits and support the long-term commercial case for carbon
removal investments.


Nuveen participated in the bond, citing the project's potential
environmental impact and financial characteristics. Stephen
Liberatore, CFA, Head of ESG/Impact for Global Fixed Income at
Nuveen, said the transaction combined an attractive relative
valuation with a distinctive underlying project and a commitment to
impact reporting.


He also highlighted the use of agricultural waste as feedstock
and the potential for carbon credits to generate revenue, noting
that the project aligned with Nuveen's investment approach.