Monday File: A New Emissions Speculation or Two

Adding a new asset class to the Real Money Portfolio in your Friday Monday File

By Travis Johnson, Stock Gumshoe, June 21, 2021

The piece I wrote about Marin Katusa’s teased “carbon streaming” company a couple weeks ago got me to thinking about the ongoing opportunity in carbon emissions and carbon offsets as governments continue to push for emissions reduction, so I decided to add a little exposure to this to my Real Money Portfolio. Not Katusa’s specific teased idea, that situation doesn’t yet strike me as proven enough to be interesting (though my opinion might change as it re-enters the public markets more seriously, and as we get a better idea the financials), but a couple of the ideas that started percolating in my mind at that time are now investments.

That Katusa teased company which is trying to build a royalty-like business on carbon offsets, Carbon Streaming (MXVDF), has started to invest in new deals with all that private placement money they’ve been raising (perhaps from Marin Katusa, as I speculated last week), though the latest deal falls in the category I’d call “least interesting” — they’re backing a nature preserve to preserve the carbon in its bamboo forests, but one assumes that as a nature preserve it would be largely spared of deforestation, anyway.

Those negative credits don’t intuitively impress me as much as positive ones, because they can be generated almost anywhere regardless of how much risk that forest faces. This one may be a particularly valuable one, I certainly don’t know the details, and it’s in the Democratic Republic of the Congo (DRC), so I’d be a little skeptical of the longevity of that deal… but maybe I’m just being a little too dismissive of the DRC. We’ll see. Carbon Streaming’s latest investor presentation is here if you’re interested in following up, they do have an impressive pipeline of projects if they can close those deals and get those returns they’re expecting, so maybe I’m being a little too skeptical of the valuation, and my original article on the topic is here.

But what caught my eye when I was researching this idea was both the likelihood of rising prices for carbon credits in the traded futures markets, which ought to continue to be good for the ETF that was created to buy those futures… and an industrial company in Norway that I think has an interesting potential to become part of the solution for the heavy emitter “smokestack” companies of Northern Europe over ...

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