Carbon Credits. A billionaire's secret for wealth preservation... Or is it just for show?

Is investing in carbon credits a real estate deal? Is it for show? Or for wealth preservation through a real estate play? Deep dive into some of the most famous billionaire's strategies.

Carbon credit trading turnover was around $2 billion in 2021, but consultants McKinsey suggest it could be worth more than $50 billion a year by 2030.

It seems that there has never been a better time to generate carbon credits. But how? Buying a bunch of trees? Well here is how some of the most reputable billionaires have been putting their bets…

Behind the scene 📺

Carbon credits are basically certificates issued by government-verified entities that represent a number of Co2 emissions kept out of or removed from the atmosphere.

Recently, purchasing carbon credits have been a solution for companies to reduce their taxes by offsetting some of their Co2 emissions that they can hardly eliminate without losing on important margins.

While carbon credits have been around for a while, the voluntary carbon credit — a market not handled solely by government entities but also enabling private organizations to trade— market has grown significantly in recent years.

Overall, these carbon credits would come from four major sources: avoided nature loss (including deforestation); nature-based sequestration, such as reforestation; avoidance or reduction of landfill emissions, such as methane; and technology-based removal of CO2 from the atmosphere. 

It is estimated that the global surface of natural forests combines a total net carbon absorption of 7.6 billion tonnes of CO2e per year. As forests are also home to 80% of the world’s terrestrial biodiversity, they are an essential landscape in our efforts to preserve habitats and protect natural heritage.

This has caught billionaires’ and wealthy families' attention to investing in carbon credit carbon as an attempt to pledge — with high mediatic impact— to contribute to climate change mitigation by reducing their own greenhouse-gas emissions as much as possible. This everyone knows it.

Now, did you know that statistically, about 70% of the wealth of billionaires will be lost by the second generation and 90% will lose it by the third? On average, less than 10% of family wealth survives the transition to the third generation.

It seems that for these wealthy families, buying forestry assets, and locking value into lands and green fields could have been not only a great real estate idea but now also a real investment opportunity to make high returns by selling carbon credits…

The list 😎

Today we are going to look at some of the well-known billionaires and see how much they have been investing in lands with high returns potentialities with carbon credits… Or is it just some good PR BS? Let's get into it…

1. Jeff Bezos

Amazon founder Jeff Bezos, the world’s second richest person, announced a $2 billion pledge from his Bezos Earth Fund towards restoring nature and transforming food systems during a speech at the UN climate conference COP26 in Glasgow, Scotland. Bezos mentioned the Climate Pledge, an initiative spearheaded by Amazon and the Global Optimism group, which aims to drive corporate commitments to achieve net zero emissions by 2040, a decade ahead of the schedule outlined in the Paris Agreement. Amazon is also part of the LEAF coalition, which in April announced $1 billion in finance for tropical and subtropical forest conservation projects and now counts 19 corporate backers. Five projects in Costa Rica, Ecuador, Ghana, Nepal, and Vietnam are currently under consideration.

2. Elon Musk  

Elon Musk's investment in new carbon capture technologies dwarfs the $1 million he spent on trees in 2019 when he gave YouTuber Jimmy “MrBeast” Donaldson a donation to help him reach a $20 million tree planting target. According to the International Energy Authority.   Elon Musk’s foundation stumped up $100m to fund the largest incentive prize in history, a competition to find solutions that could collectively remove 10 gigatonnes of CO2 from the atmosphere per year by 2050. For context, in 2021 global energy-related carbon emissions were at 36.3 gigatonnes a year  

3. Bill Gates

Bill Gates has been listed as one of the 100 biggest US landowners, revealing that Bill and Melinda Gates have one of the largest portfolios of private farmland in the US, with assets totaling more than $690 million. He purchased 14,500 acres of prime Washington State farmland and found that the buyer was a small company in Louisiana, acting on behalf of Cascade Investments. 

4. Jack Ma

China’s richest man and a noted conservationist plan to turn the Brandon Reserve in New York’s Adirondack Mountains into a wildlife sanctuary and protect its timber and water from logging and mining operations in the region. The Chinese billionaire behind online shopping giant Alibaba has placed an order for 28,000 acres of the pristine, American wilderness. It is a $28 million dollar bid to preserve the wildlife, fish, and forests in these rugged mountains of the Northeastern United States. 

5. Tim Sweeney 

Fortnite creator Tim Sweeney has been buying up forest land in North Carolina to preserve and protect it for future generations. Sweeney is best known for founding the video and 3-D software company Epic Games in the 1990’s. Epic Games has given the world popular video game titles such as Unreal Tournament, Gears of War, and, most recently, the massively popular game Fortnite. In addition to these popular gaming titles, the billionaire philanthropist has made good on his promise to protect undeveloped and bio-diverse land in the picturesque western Carolina mountains for future generations. 

So, what is your verdict? Is this just for the show? Is this a new gambling poker table? Or is this a proper use of capital to solve hard environmental problems while securing investment returns through carbon credits? Tell us your view in the comments!

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