Seattle-based Mast Reforestation had a novel idea to help save the planet: sell voluntary carbon credits and use that money to replant forests destroyed by wildfire.
To pull off its reforestation projects, the company bought key parts of the supply chain, including Cal Forest Nurseries in Etna, California 鈥� the largest independent nursery in the Pacific Northwest. It also purchased Silvaseed in Washington, the largest privately held seed bank in the West.
In 2023, it replanted 2,500 acres of land in Montana. A year later, it launched the Feather River Dome project near Chico, California. Mast positioned itself as a rising star in the carbon credit market, claiming to be the only 鈥渧ertically-integrated reforestation carbon credit developer in the industry.鈥� It got backing from Silicon Valley venture-capital firm Social Capital.
Now, the company is facing allegations that it deceived potential partners to secure its reforestation projects.
Risky projections
The way Mast structures its credits is central to the controversy.Like other companies, Mast sells carbon credits to businesses that want to voluntarily offset emissions. Those financial instruments are often used to fund the protection of areas 鈥� like forests or marine habitats 鈥� that remove greenhouse gases.
But Mast鈥檚 model hinges on a specific type of carbon offset known as an 鈥渆x-ante鈥� credit 鈥� essentially, a bet on future climate benefits. Instead of waiting for trees to grow and capture carbon, Mast sells its credits based on projections of reductions.
The money raised would be used to plant trees on private land scarred by wildfire. Landowners are required to set aside some of their property for conservation. In exchange, they get a new forest, and the world benefits from a reduction in greenhouse gases.
The money comes up front, but the reward comes in the following years and decades, as weather, fire and other factors affect forest growth, and ultimately carbon absorption.
That makes these credits riskier, according to Danny Cullenward, senior fellow at the Kleinman Center at the University of Pennsylvania.
鈥淚nstead of observing what actually happens at the project, we project what we think is going to happen,鈥� Cullenward said. 鈥淎nd that's even more speculative than the conventional carbon-crediting approach.鈥�
Forest growth predictions can be especially tricky in areas susceptible to drought or wildfire, which is where Mast鈥檚 reforestation projects are located.
Whistleblowers raise alarms
In a wrongful termination lawsuit filed in Siskiyou County, Mast鈥檚 former senior director of business development Arnould De Villegas, claims the company misled potential partners. He alleges Mast鈥檚 CEO, Grant Canary, made inflated claims about future deals and oversold the value of its ex-ante credits. According to the lawsuit, Canary 鈥漟requently lied about Mast鈥檚 business to outside clients and investors.鈥�.
The alleged lies include Canary implying a well-known corporation would purchase a large percentage of the carbon credits from Sheep Creek Ranch in Montana and putting a value on offsets with little relation to actual demand. The lawsuit claims employees, even Canary himself, knew this wasn鈥檛 true.
Several former employees of Mast, speaking on condition of anonymity due to fears of legal retaliation, confirmed the potentially false marketing by Canary.
De Villegas and other employees became so concerned over Canary鈥檚 sales tactics that they sent a letter to the board in January 2024 asking for an assessment of the CEO鈥檚 performance, according to court documents. But the complaint notes the board announced a few months later that an independent investigation found no wrongdoing. Canary continued to push projects, which De Villegas claims he delayed due to his ethical concerns.
De Villegas alleges he became so overwhelmed with the company鈥檚 false statements that he took medical leave. Last May, his access to the company鈥檚 email was suspended. He argues in the wrongful termination suit that he was effectively fired.
Mast said it does not comment on pending litigation.
鈥楶eriod of reckoning鈥�
The lawsuit comes at a time of reckoning for the voluntary carbon credit model, as investors and environmentalists search for anchors of integrity in an increasingly scrutinized market.
Cullenward said past enthusiasm for the voluntary carbon credit market has generally waned.
鈥淥ver the last three or four years, there's been a steady drumbeat of academic and investigative reports documenting major problems with the market,鈥� Cullenward said.
A study in Nature Communications found less than 16% of the carbon credits issued to projects led to emission reductions. 鈥淐arbon crediting mechanisms need to be reformed fundamentally to meaningfully contribute to climate change mitigation,鈥� according to the paper.
There鈥檚 been a general downturn in market prices for credits at least in part because of these concerns, according to Cullenward.
Carbon Streaming Corp, which invested $15 million into Mast in exchange for carbon credits, the fair value of the Sheep Creek reforestation project to zero after many of the seedlings died, according to that company鈥檚 2024 fiscal report. It similarly reduced the fair value of Mast鈥檚 Feather River Dome project in Northern California.
鈥淚n 2024, carbon credit market demand has generally shifted towards lower-risk carbon credits,鈥� according to Carbon Streaming. 鈥淔orecasted mitigation units or ex ante carbon credits, which are designed to facilitate forward financing, inherently carry higher risk, leading to supply that has exceeded demand.鈥�
Despite the weak demand for ex ante credits, the company said it still planted about 47,000 native seedlings across 165 acres on its Feather River Dome project in Butte County, California, last year. The owner of Sheep Creek Ranch in Montana confirmed the company had replanted his property.
In a statement to 老夫子传媒, Mast admits that the voluntary carbon market went through a 鈥減eriod of reckoning鈥� in recent years 鈥� but said things are looking up.
鈥淔rom our vantage point, the market is evolving鈥攁nd buyers are raising the bar,鈥� said Mast. 鈥淭hat鈥檚 a good thing for projects like ours that are built around high-integrity carbon removal and long-term ecosystem restoration.鈥�
Most recently, it launched a biomass burial project to meet demand for immediately realized carbon credits. The method involves burying dead trees, so as they decompose and release carbon dioxide, the carbon remains trapped underground for the next century. The company that it received $25 million in Series B funding for its biomass burial project.
This isn鈥檛 Mast鈥檚 first pivot. Formerly known as DroneSeed, the company previously used drones for mass aerial seeding, with mixed results.
鈥淭he problem isn't the value of these projects,鈥� the company said. 鈥淚t's that the market structure hasn鈥檛 always aligned with their timelines.鈥�
One former employee, who wished to remain anonymous, wanted to be clear: they believed the voluntary carbon credit market could still help combat climate change. They just hoped bad actions by some companies wouldn鈥檛 ruin the model for everyone.
