Citi closes first $72M carbon-removal note for Texas biochar startup Applied Carbon
What's the deal? Applied Carbon has secured $72 million in debt financing led by Citi, with investment manager NuveenDealroom has a profile for this one. Try Dealroom → participating, to scale biochar carbon-removal operations in Texas. The funding is structured as a 3.5-year principal-protected note whose payouts are tied to verified carbon removals rather than conventional bond coupons.
What's the endgame? Applied Carbon produces biochar from agricultural crop residue using mobile pyrolysis systems that process waste biomass directly in fields, enabling on-site production and application. The capital will fund deployment of that technology across Texas.
Why now? Biochar is one of the faster-growing durable carbon-removal pathways, with buyers contracting nearly 3 million tonnes in the first half of 2026 — much of the vetted near-term supply already committed by July.
Microsoft signed an offtake agreement with Applied Carbon in 2022, providing long-term demand that helps underpin the deal. The company has also previously drawn backing from TO VC, Congruent VenturesDealroom has a profile for this one. Try Dealroom →, and the Grantham Foundation.
By the numbers: At $72 million, the note ranks around the 95th percentile among US debt rounds in its sector, based on a sample of 209 deals.
"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 called it Citi's "first outcome bond tied to verified carbon removals."
Founder and chief executive officer Jason Aramburu framed the structure as proof that engineered carbon-removal projects can be financed like other assets. "This is the kind of structure that will unlock capital for carbon removal at scale," he said.
What could go wrong? Because investor payments depend on verified credit delivery, execution is the risk. The deal's terms do not disclose expected credit volume or deployment schedule, so delivery and verification remain open questions.
The signal: Financing for carbon removal is increasingly tied to purchase commitments — in June, JPMorgan paired a $20 million debt facility for Charm Industrial with a 61,500-tonne purchase agreement. Citi's note extends that outcome-linked model, signalling a shift toward treating verified removals as the basis for larger, structured capital.
Read more: carbonherald.com
Image credit: Idaho National Laboratory
