The term refers to the role fungi can play in helping move carbon captured by plants into soils and, critically, supporting the processes through which some of that carbon becomes stabilised below ground.

The language may be new. The underlying biological system is ancient.

For hundreds of millions of years, fungi have formed relationships with plants that have helped terrestrial ecosystems grow, cycle nutrients and store carbon. These organisms are among our oldest and most important environmental allies, yet most of us remain almost entirely unaware of what they do.

That is beginning to change.

Recent scientific work has revealed the extraordinary scale of the fungal networks beneath the world’s forests, grasslands and agricultural fields. At the same time, advances in soil science are allowing us to understand how those networks might be used more deliberately to increase the amount and durability of carbon stored in agricultural soils.

The carbon market has an important role to play in that process.

At Valitera, we believe our responsibility extends beyond originating and trading carbon credits. Carbon markets only function when ideas can move as effectively as capital. New methodologies and scientific discoveries must first be understood before they can be financed, and part of our role is to help translate those ideas into credible commercial propositions.

Mycosequestration may be one of the most consequential new ideas the market has yet to understand.

The natural carbon portfolio

When we think about the planet’s carbon sinks, two systems tend to dominate the conversation: forests and oceans.

That is understandable. Both operate at a scale that is almost impossible to replicate artificially.

The oceans have absorbed approximately 10.5 billion tonnes of carbon dioxide per year over the past decade, equivalent to around 26 per cent of total human-caused CO₂ emissions. Terrestrial ecosystems have absorbed approximately 11.7 billion tonnes annually, or around 29 per cent of emissions, although their performance fluctuates significantly with temperature, rainfall, fire and land-use change.[1]

Forests are one of the most visible and important components of that terrestrial sink. Through photosynthesis, trees remove carbon dioxide from the atmosphere and convert it into biomass. Carbon accumulates in trunks, branches, leaves and roots, while further carbon enters forest soils through litter, root turnover and interactions with microorganisms.

But forests do not function in isolation.

Beneath them lies an extraordinarily complex system of roots, microbes, minerals and fungi. The carbon stored in a forest is therefore not simply the product of trees. It is the product of an ecosystem.

This distinction matters when we begin talking about fungi as another major component of the global carbon cycle. Fungal carbon should not simply be added to ocean and forest sequestration as though these were three completely separate accounting categories. Much of the carbon moving through fungi is already part of the terrestrial carbon sink measured by scientists.

Forests, soils and fungi overlap.

That does not make fungi less important. It makes them foundational.

Fungi are part of the mechanism through which terrestrial carbon sequestration occurs. They help plants access nutrients and water, influence plant productivity, transport plant-derived carbon into soils and contribute to the formation of soil structures that can protect organic matter from rapid decomposition.

The ocean, forests and fungal networks are therefore not competing answers to the same problem. They are parts of the planet’s natural carbon portfolio, operating through different processes and over different timescales.

The oceans provide enormous scale and absorb heat as well as carbon, but rising CO₂ concentrations are driving acidification and warming is weakening some of their capacity. Forests remove carbon while providing habitat, water regulation and livelihoods, but they remain vulnerable to fire, drought, disease and deforestation. Soil systems can store substantial quantities of carbon while supporting agriculture and resilience, but their performance depends on biology, climate and land management.

There is no single natural system capable of carrying the entire burden.

The climate debate has a tendency to force solutions into false binaries: nature or technology, reductions or removals, forests or engineered carbon removal. Nature itself does not work that way. Its systems are interconnected, overlapping and mutually reinforcing.

This is not an either/or problem.

The scale of the climate challenge demands that we protect the oceans, preserve and restore forests, rebuild degraded soils and develop engineered carbon removal at the same time. We should not be searching for the one pathway that makes every other pathway unnecessary. We should be building the broadest credible portfolio available.

Mycosequestration adds another pathway to that portfolio, but it also helps us understand more clearly how the terrestrial pathways we already rely upon actually work.

The world beneath us

We spend remarkably little time thinking about soil.

We build on it, cultivate it, extract from it and pave over it. We even use the word “dirt” to describe something we consider worthless.

In reality, healthy soil is one of the most valuable forms of natural infrastructure on Earth.

It is not an inert layer of material holding plants upright. It is a living ecosystem containing minerals, organic matter, water, air, roots, bacteria, fungi and countless other organisms interacting at scales we are only beginning to understand.

The Food and Agriculture Organization of the United Nations estimates that approximately 95 per cent of the food we consume is directly or indirectly produced from soils.[2] Every loaf of bread, bowl of rice, piece of fruit and cup of coffee ultimately depends on the continued productivity of the thin layer covering the Earth’s land surface.

Our entire food system is predicated upon it.

Healthy soils cycle nutrients, filter and retain water, support biodiversity and help crops withstand drought, heat and disease. Their structure determines whether rain infiltrates the ground or runs across it, whether roots can access oxygen and nutrients, and whether agricultural land remains productive over generations.

They are also vast carbon reservoirs.

Carbon enters soil through several routes. Plants remove CO₂ from the atmosphere through photosynthesis and allocate part of that carbon below ground through their roots. Dead roots and plant residues decompose. Root exudates feed microbial communities. Fungi receive carbon directly from their plant partners and redistribute it through underground networks.

Some of this carbon returns quickly to the atmosphere through respiration and decomposition. Some remains in living organisms. Some becomes associated with minerals or incorporated into soil aggregates, where it can persist for much longer periods.

The distinction between carbon entering soil and carbon remaining there is critical. Carbon flow is not automatically carbon sequestration. To generate a credible removal, projects must demonstrate that atmospheric carbon has been transferred into a measurable pool, that the increase is additional to what would otherwise have occurred, and that it is sufficiently durable.

This is precisely why soil carbon has historically been both compelling and difficult.

Its potential scale is immense because agriculture occupies such a large share of the world’s habitable land. Soil carbon can also create benefits beyond climate mitigation, including improved water retention, soil structure, nutrient availability and resilience.

Yet soils are heterogeneous. Carbon levels vary across fields and depths. They are influenced by weather, crop rotations, management practices and local conditions. Measurement can be expensive, and carbon gains can be reversed if land management changes.

A credible soil carbon market therefore cannot rest on broad claims about regenerative agriculture alone. It requires robust sampling, conservative baselines, scientifically grounded models and long-term monitoring. It must distinguish practices that are generally beneficial from outcomes that have actually been measured and verified.

Carbon markets did not suddenly make soil important.

They simply gave us another reason to value something that civilisation has always depended upon.

For much of the past century, agricultural innovation focused primarily on what could be added above ground: machinery, fertiliser, crop protection and improved genetics. These advances dramatically increased yields and helped feed a growing global population.

But the emphasis on chemistry and mechanisation sometimes came at the expense of biology.

Intensive tillage can disrupt soil structure and fungal networks. The overuse of some inputs can alter microbial communities. Erosion removes fertile topsoil that may have taken centuries to form. Declining organic matter reduces water-holding capacity and makes agricultural systems more vulnerable to drought and extreme weather.

Regenerative agriculture has emerged partly in response to these pressures. It encompasses a range of practices intended to rebuild soil function, including reduced disturbance, cover cropping, diverse rotations, residue retention and improved grazing management.

These practices can be valuable, but regenerative agriculture is not a single intervention or universally consistent outcome. What works depends on crop, climate, soil type and farming system.

The deeper opportunity is not simply to label agriculture “regenerative.” It is to understand the biological mechanisms that allow soils to become healthier and store more carbon, then develop tools that can activate those mechanisms reliably and at scale.

That is where fungi become so important.

Our unknown friends

Most people encounter fungi as mushrooms appearing after rainfall or mould growing on forgotten food.

But mushrooms are merely the visible reproductive structures of certain fungi. The organism itself can exist largely out of sight, spreading through soil as microscopic filaments known as hyphae.

Together, these filaments form a mycelial network.

Among the most important are mycorrhizal fungi, which form symbiotic relationships with plant roots. Arbuscular mycorrhizal fungi are associated with most major crop species and with a substantial share of terrestrial plants. These relationships extend back more than 400 million years and are thought to have helped plants colonise land.[3]

The exchange is elegantly simple.

Plants use photosynthesis to convert atmospheric carbon dioxide into energy-rich compounds. Fungi cannot photosynthesise, so they receive part of that plant-derived carbon. In return, their hyphae extend far beyond the reach of the plant’s roots, helping the plant access water and nutrients such as phosphorus and nitrogen.

The partnership benefits both organisms.

It is also one of the oldest functioning exchange systems on Earth.

Long before humans developed markets, plants and fungi had established a form of biological trade based on comparative advantage. The plant specialises in capturing solar energy and atmospheric carbon. The fungus specialises in exploring the soil and acquiring scarce resources.

Neither performs the same role, and neither achieves the same outcome alone.

Scientists are now beginning to quantify the scale of this partnership. A 2023 review estimated that plants allocate approximately 13.12 billion tonnes of CO₂-equivalent to mycorrhizal fungi each year. Of that total, around 3.93 billion tonnes was allocated to arbuscular mycorrhizal fungi.[4]

That estimate requires careful interpretation. It represents carbon moving from plants into fungal mycelium, not necessarily 13.12 billion tonnes of permanent atmospheric removal. Some of that carbon will cycle rapidly and return to the atmosphere. Some will remain temporarily in fungal biomass. Some may contribute to more persistent soil carbon pools.

Nevertheless, the magnitude reveals how central fungi are to the terrestrial carbon cycle.

More recent research highlighted by National Geographic has gone further by mapping the global distribution of arbuscular mycorrhizal fungal networks. Researchers estimate that the upper layers of the world’s soils contain approximately 110 quadrillion kilometres of these fungal filaments. The networks form relationships with roughly 70 per cent of terrestrial plants and transport around four billion tonnes of CO₂-equivalent below ground each year.[5]

It is difficult to comprehend a network of that scale, partly because it is almost completely invisible.

We notice trees because they tower above us. We notice oceans because they cover most of the planet. Fungi conduct their work underground, without spectacle or recognition.

They are our unknown friends.

They help plants obtain nutrients, support soil structure and move carbon beneath the surface. They have been performing these functions since long before humans cultivated the first field, yet they remain largely absent from climate policy and corporate climate strategies.

The emerging field of mycosequestration seeks to change that.

What is mycosequestration?

At its simplest, mycosequestration is the deliberate use or enhancement of fungi-driven processes to help convert plant-captured carbon into more stable forms of soil carbon.

The concept starts with photosynthesis. Crops capture atmospheric CO₂ and allocate some of the resulting carbon to their roots. Fungi associated with those roots use this carbon as they grow through the surrounding soil.

The significance lies not only in moving carbon below ground, but in what happens to it once it arrives.

Fungal hyphae increase contact between plant-derived carbon, soil particles and minerals. Fungi also produce compounds and residues that contribute to soil aggregation. Within aggregates, organic matter can become physically protected from microbes that would otherwise decompose it rapidly. Carbon can also bind to mineral surfaces, creating more persistent forms of storage.

Mycosequestration therefore describes more than fungal biomass. Its commercial promise rests on increasing the conversion of atmospheric carbon into soil pools capable of enduring beyond a single growing season.

This distinguishes the concept from a generic claim that healthy soil contains fungi or that regenerative agriculture stores carbon. A carbon removal pathway must demonstrate a causal intervention, quantify the resulting change and account for uncertainty and reversal risk.

As with DAC, ERW, biochar and other emerging pathways, the terminology is valuable because it gives the market a way to describe a distinct process.

Direct Air Capture refers to removing CO₂ directly from ambient air using engineered systems. Enhanced Rock Weathering accelerates the natural reaction between crushed minerals and atmospheric or soil CO₂. Biochar converts biomass into a carbon-rich material designed to resist decomposition.

Mycosequestration uses living fungal systems to help transfer and stabilise plant-derived carbon in soils.

Each pathway has different characteristics, benefits, constraints and durability profiles. Each requires its own scientific evidence and methodology. And each can contribute something different to a diversified carbon removal portfolio.

The role of the market is not to declare one universal winner. It is to understand the integrity of each pathway and direct capital toward the approaches capable of delivering credible outcomes at meaningful scale.

Why Loam Bio stood out

Over the past several years, we have met project developers working across almost every major carbon removal pathway.

Many begin with engineering. Others begin with chemistry.

Loam Bio began with biology.

Founded in Australia, Loam has built a scientific and commercial platform around fungi and their ability to contribute to stable soil carbon formation. Its work focuses on microbial seed treatments that can be applied during normal sowing operations and integrated into existing broadacre agricultural systems.

That proposition immediately stood out to us.

Agriculture offers extraordinary potential scale, but successful solutions must work within the operational and economic realities of farming. A technology can be scientifically impressive and still fail if it requires growers to abandon productive land, purchase entirely new equipment or assume risks that outweigh the benefits.

Loam’s approach is compelling because it seeks to embed carbon removal into the farming system rather than build a separate system alongside it.

Its CarbonBuilder technology is applied as a microbial seed treatment. Once planted, the fungi interact with the crop’s roots and extend hyphal networks through the surrounding soil. Loam’s stated objective is to increase the conversion of plant-derived carbon into stable soil carbon, including within soil micro-aggregates.[6]

The crop above ground remains a crop.

The carbon opportunity develops below it.

This creates an important alignment between food production and carbon removal. Rather than choosing between agricultural productivity and climate mitigation, the model seeks to generate both from the same land.

That does not remove the need for scrutiny. Soil carbon projects must still prove additionality, quantify changes conservatively, address uncertainty and manage permanence. Commercial scale cannot substitute for scientific integrity.

What makes Loam particularly important is that it has invested in the scientific work required to test the mechanism.

Research conducted with Western Sydney University used carbon-isotope tracing to examine how plant-derived carbon moved through soils inoculated with different fungal isolates. Loam reports that the work demonstrated the potential of selected fungi to increase soil carbon and improve its stability, contributing to the peer-reviewed evidence supporting its approach.[7]

Loam has also translated its technology into a project structure designed to generate independently verified carbon removals. Its Gold Standard programme represents an effort to take mycosequestration from an intriguing biological process to a measurable and financeable climate asset.

This is where the investment thesis becomes particularly compelling.

First, the addressable agricultural land area is enormous. The pathway does not depend on finding a small number of highly specialised industrial sites. It can potentially be deployed across existing cropping systems.

Second, implementation is designed to fit within an activity farmers already perform: planting seed. This matters because adoption tends to increase when a climate intervention complements established operations rather than disrupts them.

Third, the project creates a potential second source of value from productive land. Farmers can continue growing food while also generating verified carbon outcomes beneath the surface.

Fourth, soil carbon carries a broader resilience story. Improvements in soil structure and organic carbon can support water retention, nutrient cycling and the long-term productivity of agricultural systems. Carbon is not the only reason to care, but it may help finance outcomes that matter to farmers and food systems more broadly.

Finally, mycosequestration expands the universe of carbon removal. Corporate buyers increasingly want portfolios that combine engineered durability, nature-based benefits, geographic diversity and scalable supply. A scientifically credible agricultural removal pathway can occupy a distinct and valuable place within that portfolio.

Loam is not trying to invent fungi.

It is developing a way to work with one of nature’s oldest systems, measure the outcome and bring it to commercial scale.

A symbiotic partnership

Our decision to partner with Loam followed from that combination of scientific novelty, agricultural scale and commercial potential.

The partnership itself mirrors the biology underpinning the project.

Plants and fungi perform different roles within the same system. The plant captures atmospheric carbon. The fungus extends the biological network beneath the soil, gaining access to carbon while helping the plant obtain resources it cannot reach as efficiently alone.

Their value comes from specialisation and exchange.

Loam brings deep scientific capability, microbial technology, agricultural relationships and project-development expertise. It understands the organisms, the soils, the farms and the technical processes required to generate and verify the carbon outcome.

Valitera brings carbon-market access, trading experience, commercial structuring and relationships with buyers across voluntary and compliance markets. We understand how corporate demand is formed, how long-term offtakes are negotiated and how emerging assets must be positioned to become financeable and liquid.

Loam has the project and technical expertise.

We have the market and trading expertise.

The science creates the removal. The market creates the conditions for scale.

Neither party needs to replicate the other’s role. Like the relationship between fungi and plants, the partnership is strongest because each contributes something different to a shared outcome.

Under our agreement, Valitera is working with Loam to commercialise its Gold Standard soil carbon removals across Europe and Asia. Our immediate focus is helping corporate buyers understand mycosequestration, evaluate its role within their removal portfolios and structure forward offtake agreements that can provide long-term demand.

This work requires more than selling credits.

An emerging pathway needs education before it achieves adoption. Buyers must understand what is being measured, how the carbon reaches the soil, what makes it stable, how uncertainty is managed and how the project fits alongside other removal technologies.

That is part of the reason we are publishing this essay.

Carbon markets do not scale through transactions alone. They scale when scientific ideas become legible to buyers, credible to investors and valuable to the people implementing them.

Our role is to help make that translation possible.

The pathway beneath our feet

Every generation of carbon markets has been shaped by ideas that initially seemed unfamiliar.

Forestry projects introduced many companies to the concept of paying for avoided emissions and removals beyond their own operations. Clean cooking, methane destruction and renewable energy expanded the range of measurable interventions. Article 6 is creating new links between sovereign climate policy and international carbon finance.

The current generation is learning the language of engineered carbon removal.

DAC. BECCS. ERW. Biochar. Bio-oil. Ocean alkalinity enhancement.

Mycosequestration belongs in that emerging vocabulary.

It does not replace forests, oceans, soil restoration or engineered technologies. It helps complete the picture by drawing attention to a biological mechanism that supports the terrestrial carbon cycle and may now be deliberately enhanced within agricultural systems.

The climate challenge is too large for technological tribalism.

We will need rapid emissions reductions and carbon removal. We will need engineered pathways and natural systems. We will need forests, oceans, healthy soils and new technologies capable of storing carbon for centuries or millennia.

We will also need markets capable of recognising innovation before it becomes obvious.

That is what makes this moment important.

Beneath the fields that feed the world, fungi are already moving carbon through networks of extraordinary scale. Science is beginning to reveal how those systems function. Companies such as Loam Bio are developing ways to enhance and measure them. Carbon markets can provide the demand and finance needed to turn that scientific insight into climate impact.

The future of carbon removal will not be defined solely by the machines we build.

It will also be shaped by the living systems we learn to understand.

Some of the most important climate solutions may have been quietly growing beneath our feet all along.

Valitera is working with Loam Bio to introduce its Gold Standard mycosequestration programme to corporate buyers across Europe and Asia. Organisations interested in learning more or exploring structured forward offtake agreements are invited to contact our team.

References

[1] Global Carbon Project, Global Carbon Budget 2024. The ocean sink absorbed an average of approximately 10.5 GtCO₂ annually during 2014–2023, while the terrestrial land sink absorbed approximately 11.7 GtCO₂ annually. These figures represent net global sinks and fluctuate from year to year.

[2] Food and Agriculture Organization of the United Nations, Healthy soils are the basis for healthy food production. FAO states that approximately 95 per cent of food is directly or indirectly produced on soils.

[3] Parniske, M. (2008), “Arbuscular mycorrhiza: the mother of plant root endosymbioses,” Nature Reviews Microbiology. The review describes the ancient symbiosis between plants and arbuscular mycorrhizal fungi and their role in supplying plants with water and nutrients in return for plant-fixed carbon.

[4] Hawkins, H.J. et al. (2023), “Mycorrhizal mycelium as a global carbon pool,” Current Biology. The authors estimate that plants allocate approximately 13.12 GtCO₂e annually to mycorrhizal fungi, including approximately 3.93 GtCO₂e to arbuscular mycorrhizal fungi. The figure represents annual carbon allocation and should not be interpreted as an equivalent quantity of permanent sequestration.

[5] National Geographic, “Fungi take up more mass than people—see how they stretch across the Earth,” reporting on the first global mapping of arbuscular mycorrhizal fungal networks. The study estimates approximately 110 quadrillion kilometres of fungal network in global topsoils and annual transfer of roughly four billion tonnes of CO₂-equivalent into soils.

[6] Loam Bio, information on CarbonBuilder and its proposed mechanism. Loam describes its microbial seed treatment as creating fungal networks around plant roots, with hyphae helping deposit plant-derived carbon within soil micro-aggregates.

[7] Loam Bio and Western Sydney University research communications concerning fungal inoculation and soil carbon stability. A related peer-reviewed study examines the effects of arbuscular mycorrhizal fungal inoculation on carbon partitioning across plant and soil pools.