Last month, Baker McKenzie represented Bad Carbon LLC (BadCarbon) on an equity investment with Nexus Renewable Power, LLC (Nexus) valued at USD 100 million in the form of carbon credits generated under BadCarbon’s Geologic Environmental Mineral Sequestration (GEMS™) methodology. In exchange for its contribution of the credits, BadCarbon received an equity position in a Nexus entity, which will now proceed to market and sell the credits and use the proceeds to fund development costs for renewable energy projects in Texas, specifically, the development of solar and battery energy storage systems on the ERCOT grid.
This cutting-edge equity transaction leverages carbon market financing to help fund renewable energy projects and supports a significant net gain in energy production in Texas.
- Carbon Market Financing. Located in the Texas Permian Basin, the GEMS™ project has created carbon credits through a methodology that employs preservation agreements to prevent the development of commercially viable hydrocarbons. The third-party verified emission reductions from the project are based on the avoided release of millions of tons of greenhouse gases across the entire development and extraction-to-combustion lifecycle. GEMS™ credits are marketed globally through The Northern Trust Carbon Ecosystem™, a new digital platform for management of voluntary carbon credits.
- Net Energy Gain. The proceeds from GEMS™ credit sales will be strategically reinvested into new solar projects, including battery energy storage systems, which will provide decades of renewable energy. According to BadCarbon, the lifetime energy output from the renewable assets developed by Nexus is projected to generate approximately 8.5 times more energy than the one-time burn of oil preserved by GEMS™.
BadCarbon’s equity investment complements a USD 300 million portfolio-level debt facility for the Nexus projects. The combined investments are projected to result in a lifetime output exceeding 45,000 GWh and the sequestration of more than 3 million barrels of oil equivalent, significantly reducing greenhouse gas emissions. These initiatives aim to strengthen energy independence and economic growth while supporting long-term sustainability, as well as to enhance grid reliability, drive innovation, and contribute to a strong energy future.
Led by Senior Counsel David Hackett, Baker McKenzie has represented Bad Carbon throughout the development of its methodology and efforts to bring these unique credits to the market. The Baker McKenzie deal team for this transaction was led by Partner Daniel De Deo, with support from James O’Brien, Maher Haddad, Lewis Malkin and Allie Callahan.
Commenting on this transaction, David Hackett stated: "We are proud to have assisted BadCarbon on this meaningful investment in renewable energy initiatives in Texas. The deal demonstrates our commitment to providing strategic legal counsel to clients who are navigating the rapidly changing energy economy.”
With more than 2,700 deal practitioners in 45 jurisdictions, Baker McKenzie is a transactional powerhouse. The Firm is at the forefront of market-leading deals in the renewable energy and clean technology sector. Our multidisciplinary global team helps energy producers, investors and users forge their energy transition journey in an increasingly complex regulatory environment, enabling them to transform, powerfully.