February 5 - February 9, 2024

Your Newsletter at a Glance

Commentary by C4C

Dealflow Summary:

• Brookfield announces $25 billion in planned clean energy investments. International automakers plan $4 billion in Brazilian Electric Vehicle investment. HSBC and Google partner on a $1 billion climate tech investment plan. The GEF approves $916 million in nature investments for 2024. Switzerland’s Klik foundation commits to purchase $850 million dollars worth of Carbon Credits produced under the new Ghana emissions scheme. Hong Kong raises $765 million on the world's first ever multi currency green digital bond. The Green Guarantee Company raises $100 million to help derisk developing country climate investment, and more.

Climate and NbS finance:

• Bank of America reneges on pledge to stop funding coal power plants
• Barclays announces it will stop funding oil and gas projects
• ESG bond sales reach a new record for January

Policy and regulatory highlights:

• China releases new pollution regulations to pair with updated carbon market system
• EU proposes a 90% greenhouse gas reduction from 1990 levels by 2040

New Research:

• New UNDP study highlights importance of biodiversity credits as well as making changes in subsidy systems

C4C News and Events

Learn more about what we're doing

Capital for Climate’s 3rd virtual roadshow, held on February 8th, showcased 7 leading Brazilian funds and investment vehicles focused on Nature-based Solutions. The funds spanned venture capital to real assets, with business models spanning ecosystem restoration, the regeneration of degraded pasture land, finance for deforestation-free and conservation-linked soy production, Non-timber forest product commercialization in the Amazon, and eucalyptus plantations paired with forest restoration.

As the Brazil NbS Investment Collaborative continues to expand, Capital for Climate will be hosting an in-person summit in São Paulo, Brazil, from May 21st to 23rd, in partnership with Converge Capital. The summit will showcase 25+ investment opportunities with ample time for one-on-one's, networking and meeting local stakeholders. Day 1 will focus on the wider lens of climate science and climate finance in Brazil. Day 2 will focus on the NbS investment opportunity, with presentations that provide the investment context from government, risk management, multilateral and NGO experts supporting the emerging NbS sector.

More details will be posted in the coming weeks. Please reach out to Matt Portman, at Mportman@capitalforclimate.com if you have questions about the Summit or would like to learn more about the event.

Climate Finance ≥ $100M

Commitments and deals

Commitments

Brookfield plans to raise 25 billion for clean energy [Oilprice]

• Brookfield announced a $25 billion target for 2 new energy transition funds focused on investing in wind and solar power infrastructure, and aims to close the fund in the third quarter of 2024. The second fund is focused on emerging markets, and comes as the company surpasses $100 billion dollars in investment in transition projects.

Multinational Automakers coordinate $4 billion investment in Brazilian Electric Vehicles [Bnamericas]

• Volkswagen, BYD, General Motors and others have announced intentions to invest around $4 billion over the next few years in hybrid and electric vehicle manufacturing in Brazil, with support from the Brazilian National Development Bank BNDES.

Biden Administration announces $1.5 billion in clean busses [The hill]

• The Federal transit administration has announced $1.5 billion to be invested in low and zero emission bus transport, with $1.1 billion going to grants to purchase zero emission buses, and $390 to grants for buses and bus facilities.

Rio De Janeiro to invest $1.4 billion in natural disaster prevention [Bnamericas]

• The state of Rio De Janeiro has announced a 6.9 billion reais ($1.4 billion) investment plan for natural disaster prevention, including NbS and river restoration.

HSBC and Google aim to fund $1 billion in climate tech investment [Nasdaq]

• HSBC and Google have announced a partnership to invest in sustainability and climate solutions. HSBC plans to provide $1 billion to underwrite scaling climate tech from now until 20230, with Google's cloud computing arm serving as a partner in identifying target companies.

Temasek and Norinchukin collaborate on $173 million green fund [Bloomberg]

• Singapore's state investor Temasek and Japan's Norinchukin will serve as the anchors for the $173 million Seviora T3F strategy, a fund focused on decarbonizing agriculture and food technology investment throughout the Asia Pacific region. The fund has already begun investing, including a $17 million allocation to India's Country Delight.

Deals

Brookfield raises $10 billion to close 2nd climate fund [Esgtoday]

• The Brookfield Global Transition Fund 2 has raised $10 billion, and is thought to be on track to exceed the BGTF 1 fund. The Fund is expected to focus on expanding clean energy and funding the intensification of large-scale corporate decarbonization.

Ardian raises $5 billion of $10 billion goal for H2 Fund [Infrastructure Investor]

• Ardian has raised EU5 billion for its Infrastructure Fund VI, halfway to its target of EU10 billion. The fund will primarily target renewable energy, transportation and digital infrastructure projects in Europe, with 20% or less investment in the U.S and Canada.

Dow launches $1.25 billion green bond [Bloomberg]

• Dow has closed a green bond offering of $1.25 billion, split between a $600 million 2023 tranche and a $650 million 2054 tranche. The company has stated it plans to use the funding to decarbonize its plastic production plants and develop petrochemical alternative based plastics.

Hong Kong raises $765 million in first ever multi currency digital green bond [Esgtoday]

• The Government of Hong Kong concluded a HK$6billion ($765 million) digital bond issuance, denominated in HK dollars, Renminbi, USD, and Euros, marking the first ever multi-currency digital bond. The digital green bonds proceeds will be used for projects in Hong Kong ranging from renewable energy, energy conservation, and pollution mitigation to wastewater management and biodiversity and nature conservation.

Mirova Gigaton Fund raises $282 million [Webwire]

• The Mirova Gigaton Fund has raised $282 million, more than half of a planned $500 million target size. EIB provided a $75 million senior commitment to help the fund cross the halfway point. The fund supports decarbonization by providing debt financing to energy transition businesses across Africa, Latin America, the Middle East and Asia.

IFC launches $150 million Green Bond for African Solar Developer [IFC]

• The IFC and Social Investment Managers and Advisors have closed a $150 million solar green bond focused on rooftop solar investment in Africa. The project will provide short term corporate and project financing for 1 year to support small and medium local developers on sub 5 megawatt projects.

Vortex energy invests $123 million in Polish green energy infrastructure [Solar quarter]

• Vortex Energy has begun construction on a project portfolio of 53 MW of onshore wind and 57 MW of PV solar, totaling an approximate $123 million investment. The investment is seen to be a major part of Poland's efforts to meet its decarbonization goals.

Green Guarantee Company raises $100 million to derisk clean energy investment in emerging markets [Bloomberg]

• The Green Guarantee Company, with backing from Nigeria, the US, the UK, Norway and the US Green Climate Fund, launched on February 8th with more than $100 million in initial investments. The Company represents one of the largest efforts so far to help de-risk investment in decarbonization technology and green energy production in developing countries, which are often restricted due to poor sovereign credit ratings, currency risks, and high due diligence costs. The GGC plans to act as an intermediary and guarantee payments on bonds for investors in order to help extend loan periods and lower interest rates. This strategy could act as a proof of concept for potential future actions by multilateral development banks.

Voyager Ventures closes second $100 million fund [Prnewswire]

• Early stage climate technology fund Voyager Ventures has announced it closed its Voyager Partners Select 1 Fund for $100 million. The fund will primarily be deployed in Series A, with some consideration for Series B, and will focus on decarbonization in software, hardware, and biotech.

Spearmint secures $47.5 million for Texas battery storage [Spearmint]

• Spearmint, a battery development company, has announced a $47.5 million project finance loan from Manulife which will support the company's 150MW, 300 MWH storage system project in the Texas ERCOT market.

DOTZ raises $7.83 million for carbon capture technology [Utility dive]

• DOTZ Nano Limited has secured a A$12 million ($7.83 million) investment from Mercer to scale its DOTZearth carbon capture technology. The company's technology creates a porous carbon capture material from plastic waste, and aims to help contribute to both carbon sequestration and plastic waste reduction.

Nature-based Solutions ≥ $1M

Commitments and deals

Commitments

Total Energies to spend $48 million on carbon credits in 2024 [Carbon Pulse]

• Total Energies expects to increase its carbon credit purchases to $48 million in 2024 as part of its updated 2050 Net Zero policy, coming on the heels of a 300% rise in carbon credit purchases in the final quarter of 2023.

Deals

GEF approves $916 million in nature and climate investment [GEF]

• The Global Environmental Facility has approved $916 million in investments across 45 projects, with another $203 million expected to be confirmed soon through the Least Developed Countries Fund and Special Climate Change Fund.

Klik foundation invests $850 million in Ghana carbon reduction projects under Article 6.2 [GNA]

• The Klik foundation, which purchases carbon emission credits on behalf of Switzerland's transport sector, has announced it will be purchasing $850 million in ITMOS from projects in Ghana aiming to reduce 6 million metric tons of carbon. The projects range from sustainable agriculture to renewables, electric transportation, clean cooking and green cooling solutions, and is seen as a major test for Ghana's regulatory framework for carbon credits.

U.S Department of Interior announces $157 million in ecological restoration and climate resilience projects [U.S Department of the Interior]

• The Department of the Interior has announced the disbursement of $157 million in Bipartisan Infrastructure Law funding to support 206 ecosystem restoration projects in 48 states, with a focus on improving climate resilience.

National Science Foundation invests $35 million in agri-tech [Miragenews]

• The National Science Foundation has announced 7 $5 million investments in food systems transformation research projects throughout the US, focused on scaling new sustainable agriculture, forestry and food production projects. The grantees include digital twin technologies for crop management, seaweed based water scarcity reduction products and pathogen sensor systems.

Department of Interior invests $18 million in native seed cultivation and preservation [U.S Department of Interior]

• The Department of Interior has announced the investment of $18 million in Inflation Reduction Act funding in native seed cultivation and propagation to help support the preservation of native plant communities and the ecological and climate solutions they provide. The funding will help to restore native plant communities and store seeds for future restoration projects.

UK invests GPB 10.7 million in first net zero national park [The National]

• The UK has announced the investment of GPG 10.7 million ($13.51 million) to turn Cairngorms into the country's first net zero national park. The funding will help decarbonize the park's facilities and protect carbon rich wood and peatlands.

U.S Interior department invests $7 million in biodiversity protection and climate adaptation in American Samoa, Puerto Rico and other territories [U.S Department of Interior]

• The Interior department has announced $7 million in ecosystem restoration and climate adaptation investments across Puerto Rico, the Virgin Islands, Guam and American Samoa. The investments are authorized under the bipartisan infrastructure law and are intended to help build local expertise.

Caribbean Biodiversity Fund Announces 2 million for NbS for climate resilience in Haiti [Reliefweb]

• The CBF has awarded CORE (community organized relief effort $ 2 million to help utilize green infrastructure for flooding and natural disaster resilience and ecological restoration.

Research and Knowledge Sharing

Grow your climate finance expertise

Finance Research and Updates

Bank of America walks back commitments to halt coal financing [NewYorkTimes]

• Bank of America's updated social risk policy has replaced a commitment to no longer fund coal projects with a policy of "enhanced due diligence." The new policy is thought to have been driven in part by the ongoing backlash to ESG and anti-ESG regulation in states throughout the U.S.

Barclays announces it will stop funding oil and gas projects [Barrons]

• Barcalys has announced that it will no longer finance new oil and gas projects on behalf of its energy clients, and that it expects all existing energy clients to produce decarbonization strategies by 2025.

Man Numeric and other fund managers further develop climate risk pricing models[Iinfrastructure Investor]

• Escalating climate change and climate disasters have prompted fund managers to further refine models for predicting and pricing climate risk. Man Numeric in particular has built a physical risk model that attempts to predict risk to US food production and other sectors based on climate effects and severe weather risk. Other funds, such as Van Lanschot Kempen NV, and Picted Wealth Management are also building risk models based on climate data using varying approaches.

ESG bond sales reach $150 billion globally in January 2024 [Bloomberg]

• Sales of green, social, sustainability and sustainability linked bonds reached $149.5 billion in January of 2024, the highest total for the month since the inception of the market. Green and ESG bonds represented 18% of the total issuance of all bonds in January 2024.

Demand for catastrophe bonds rises on hedge fund projects [Bloomberg]

• Catastrophe bonds were among the best performing securities in 2023, rising 20% compared with 13% for high yield US corporate bonds. Investor appetite is expected to increase in 2024 due to performance and increasingly stringent language on the bond issuance.

Voxeurope finds millions of climate funding goes to fossil fuel giants [Euronews]

• An investigation by Voxeurop has concluded that millions of dollars of green classified funds have ended up going to fossil fuel related companies. The major loopholes used to achieve funding were less tightly defined as "light green" funds, which are classified as "promoting environmental features" rather than being "sustainable products" under EU law.

Policy and Regulatory Developments

CFTC draft guidance on carbon offsets could have major effects if implemented [Resources.org]

• Resources.orgs interview with Alex Rau of Environmental Commodity Partners provides an overview of the development and potential implications of draft rules from December on voluntary carbon credit training by the CFTC.

China releases more stringent pollution regulations ahead of Carbon Market relaunch [Bloomberg]

• China is pairing its revamped Carbon Market with more stringent emission and pollution regulations, with emission prices expected to raise and enforcement for misreporting to be enforced with fines as high as $278,000.

China finalizes emissions trading regulation [Chinadaily]

• The Chinese government has finalized its emissions trading regulation revision for 2024, with the legislation intending to streamline the trading system and better define responsibilities of parties covered by the system.

EU proposes 90% Greenhouse Gas reduction from 1990 levels by 2040, but scales back agricultural emissions targets [Climatechangenews]

• The European Commission has recommended a 90% emissions reduction from 1990 levels by 2040, the most ambitious of the 3 targets the committee had been considering. The target drew both praise and criticism, with the lack of agricultural emission reduction targets being singled out for particular criticism.

COP 29 President calls for 6 trillion in climate finance for developing nations by 2030 [Economictimes]

• Mukhtar Babeyev, the Azerbaijani minister of the environment and president of COP29, has called for the provision of 6 trillion to developing countries for mitigation and adaptation financing by 2030, with an immediate goal of doubling adaptation finance by 2025. Climate finance is expected to be the main focus of COP29, ahead of major discussions of nature in COP30.

Academic Research and Emerging Science

MIT researchers release county by county analysis of transition job effects in U.S [Techxplore]

• MIT researchers have built a comprehensive map of U.S areas that are particularly dependent on fossil fuel production, with the goal of helping policy makers better understand the shifts needed to drive the energy transition.

UNDP study promotes biodiversity credits [Carbon-Pulse]

• A recent study conducted by the UNDP Biodiversity Finance Initiative and Colorado State university has identified 4 important steps to driving private investment to preserving biodiversity. They include reducing subsidies harmful to nature, connecting biodiversity outcomes to financial investments, identifying finance mechanisms, and implementing biodiversity credit systems. The paper also recommended companies adopt frameworks such as the Taskforce on Nature Related Financial Disclosures to better understand impact on biodiversity.

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