$30 Million Boost: Varaha Unlocks India's Soil Carbon Future with French Giant Mirova!

Reviewed By

Simar Singh | Whalesbook News Team

Detailed Coverage:

Varaha, a company focused on soil-carbon projects, has successfully raised $30 million from Mirova, a French sustainable asset manager. This significant investment is earmarked for expanding Varaha's Kheti soil-carbon project across the Indian states of Haryana and Punjab. The project aims to implement regenerative agriculture practices for more than 337,000 smallholder farmers, covering an extensive area of 675,000 hectares. This transaction marks Mirova's inaugural carbon investment in India and stands as their largest single carbon deal to date. The financial structure involves a project-level investment where Mirova will receive future carbon credits, rather than equity. Varaha's strategy centers on 'removal-based credits,' which are more costly but backed by higher scientific and data rigor, contrasting with 'reduction credits.' The company employs four removal pathways: regenerative agriculture, biochar, agroforestry on degraded lands, and enhanced rock weathering. Varaha collaborates with institutions like IARI Pusa and IIT Kharagpur for research to quantify carbon changes from interventions, utilizing multi-year datasets for their carbon models. Their operational model emphasizes deep field experience and understanding of smallholder farmer livelihoods, with a substantial portion of their team possessing direct agricultural exposure. Prior to this deal, Varaha had raised $13 million in equity and $23 million in combined equity and credit-linked structures. Their global buyers include entities from technology, aviation, telecom, consulting, and commodities sectors, with a notable multi-year biochar offtake agreement with Google. Varaha currently manages 13 carbon projects across India, Nepal, Bangladesh, and Bhutan, and intends to use the Mirova financing to enhance its regenerative agriculture operations and develop crop-specific carbon models.

Impact This investment is highly significant for India's burgeoning climate finance and sustainability sector. It validates the market potential for removal-based carbon credits and regenerative agriculture in India, potentially attracting more foreign capital. For the farmers involved, it provides a pathway to adopt sustainable practices and potentially gain income from carbon sequestration. It will bolster Varaha's capacity to scale its operations and contribute to India's climate goals. Rating: 6/10

Difficult terms used: Sustainable asset manager: A financial institution that invests in companies and projects with a focus on environmental sustainability and positive social impact. Soil-carbon project: An initiative designed to increase the amount of carbon stored within agricultural soils, typically through specific farming techniques. Regenerative agriculture: A set of farming practices that aim to improve soil health, biodiversity, water retention, and overall ecosystem function, often by working with natural processes. Smallholder farmers: Farmers who cultivate relatively small plots of land, often relying on their farm for their livelihood. Hectares: A metric unit of area used to measure land, equivalent to 10,000 square meters. Carbon credits: Tradable permits or certificates that represent the right to emit one tonne of carbon dioxide or an equivalent greenhouse gas. They are used to incentivize emissions reductions and removals. Equity: Ownership in a company, usually represented by shares, entitling the holder to a portion of the company's profits and assets. Removal-based credits: Carbon credits generated from activities that actively remove greenhouse gases from the atmosphere, such as reforestation or soil carbon sequestration. Reduction credits: Carbon credits generated from activities that reduce greenhouse gas emissions compared to a business-as-usual scenario, like switching to renewable energy sources. Biochar: A charcoal-like material produced by heating organic matter in a low-oxygen environment. It can be added to soil to improve fertility and sequester carbon for long periods. Agroforestry: A land-use system that integrates trees and shrubs into crop and animal farming systems. Degraded lands: Land that has lost its biological productivity or ecological functions due to factors like erosion, deforestation, salinization, or pollution. Enhanced rock weathering: A process that accelerates the natural geological process of rock breakdown, which can absorb atmospheric carbon dioxide and release beneficial minerals into soil. IARI Pusa: Indian Agricultural Research Institute, a renowned agricultural research and education institute in India. IIT Kharagpur: Indian Institute of Technology, Kharagpur, one of India's premier engineering and technology education institutions. Carbon models: Mathematical or computational tools used to simulate and predict the amount of carbon sequestered or emitted by various activities or systems. Offtake agreement: A contractual commitment by a buyer to purchase a specified quantity of goods or services from a seller over a defined period.