Paris-based France Valley has announced the establishment of a €200 million ($214 million) fund dedicated to investments in afforestation, reforestation, and revegetation (ARR) projects across Europe. This initiative aims to leverage Europe's secure land rights and rising interest in biodiversity, as well as the region's favorable long-term carbon prices.
Growing Investment in ARR Projects
Since 2022, there has been a significant influx of investment in ARR projects, particularly in tropical countries in Asia, Africa, and Latin America. However, France Valley CEO Arnaud Filhol highlights the potential for ARR investments in Europe despite slower biomass growth rates. The secure land rights and increasing interest in biodiversity make Europe an attractive region for these projects.
EU Legislation and Carbon Market Integration
The European Union is finalizing its Carbon Removals and Carbon Farming legislation, which may eventually include ARR projects in the EU Emissions Trading Scheme. This development could further incentivize afforestation efforts across the continent.
"When we look at operations carried out by forest carbon funds in the southern hemisphere, they often have issues in terms of relocating populations or finding other types of activities local inhabitants can do, such as agroforestry," Filhol explained. "Generally, we do not have this problem in Europe because we will be on land which is hardly used as it is generally not optimal in terms of soil capacity for agriculture."
Targeting Established ARR Projects
France Valley is targeting established ARR projects registered under major carbon standards, including Verra's Verified Carbon Standard, Gold Standard, and France's Label Bas Carbone. The company has active partnerships with foresters in Estonia, France, Ireland, Latvia, Lithuania, and Spain, among other countries. Their strategy involves purchasing degraded lands, planting trees, and integrating these areas into existing carbon projects.
"One can buy 100,000 hectares in Ivory Coast, but that's not possible in Europe. So you have to be able to buy small areas everywhere to aggregate a global carbon impact," said Filhol. France Valley's expertise lies in selecting optimal land plots for long-term tree growth.
Optimizing ARR Projects for Carbon Removals
The fund follows local regulations on tree planting and optimizes projects to maximize carbon removals over 15 years while preserving a mix of species resilient to climate change. "Over the long term, monocultures are simply not the most profitable investment... planting beech at low altitudes in France is a lost cause," noted Filhol.
Targeting Professional Investors
Unlike the bulk of its investments, which are largely aimed at retail investors, this new fund targets professional investors. Investors can purchase shares of the fund, with the value of stakes assessed annually by a mix of forestry and finance auditors. The fund is expected to attract corporate clients looking to offset emissions and intermediaries betting on rising carbon removal prices.
France Valley's Expanding Portfolio
France Valley is one of the largest forestry funds in Europe, with investments focused on timber and the housing sector. The company made its first investment outside France just over two years ago and is now present in nine countries. European ARR prices currently trade between €30 and €45 per tonne of carbon dioxide equivalent, depending on project location and carbon scheme registration.
Conclusion
France Valley’s €200 million fund for ARR projects in Europe signifies a strategic investment in sustainable development and carbon removal. By leveraging Europe's secure land rights and biodiversity focus, this initiative aims to provide long-term benefits for investors and contribute to global reforestation and climate resilience efforts.
CarbonUnits.com
