(Bloomberg) -- Microsoft Corp. is teaming up with a former Brazilian central banker and a billionaire family to reforest large sections of Latin America’s largest country. 

The US technology giant has agreed to buy 3 million tons of removal credits over 15 years from re.green, a two-year-old reforestation company. It’s Microsoft’s second agreement in the past six months to purchase nature-based carbon credits in Brazil, underscoring the country’s potential to supply voluntary carbon markets. 

A tropical climate and vast swaths of degraded farmland give Brazil the ability to plant fast-growing forests at scale. The country could offset a cumulative 30.5 billion metric tons of carbon dioxide equivalent by 2050, making it the world’s biggest potential carbon sink through avoided deforestation, reforestation and sustainable agriculture, according to BloombergNEF. 

“Brazil has a tremendous competitive advantage given the amount of land we have and the climate,” re.green Chief Executive Officer Thiago Picolo said in an interview, adding that he plans to have an area the size of Puerto Rico under management within 15 years. “The leading company of restoration isn’t going to come out of New York of London. It’s going to come out of Brazil.”  

Arminio Fraga, a former president of Brazil’s central bank, is on re.green’s board, and the asset management firm he founded, Gavea Investimentos, is one of re.green’s investors. The billionaire Moreira Salles family has also invested in the reforestation company.

The fast-growing carbon offset industry also faces some headwinds. In recent years cases of greenwashing have undermined confidence in Brazil and abroad. Brazilian federal prosecutors, for example, have opened investigations into carbon credit projects for allegedly harassing indigenous groups and failing to deliver on promises made to local communities.

Rio de Janeiro-based re.green already has 13,000 hectares of land available, and will need to acquire about another 3,000 hectares to meet the supply agreement with Microsoft. Its credits are generated by planting native species in lands that were once part of the Brazil’s Amazon and Atlantic forests, and it’s looking for other buyers beyond Microsoft. 

About 8% of re.green’s forests will be harvested in about 25 years and then replanted with permanent forests, under a different methodology for calculating carbon credits. This harvesting makes it economically feasible to restore areas where the value of the credits themselves wouldn’t be enough to cover costs, Picolo said. 

The company is in the process of registering it projects with Verra, a carbon offset verifier. The deal with Microsoft should serve as a vote of confidence that helps re.green find more investors and even access debt markets to expand, Picolo said.

“We think that this is going to be instrumental for us to raise additional capital,” he said. 

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