Net Zero Investor 6/5 - 6/11

We’re Hiring: Join the C4C Team!

Head of Climate Funds Research and Evaluation

• Build and maintain the definitive digital resource on funds, vehicles, large projects, prizes and incubators that are investing (or driving investment) in climate solutions aligned to science-based roadmaps to net zero.
• With a $2tn annual capital gap, and financial institutions with over $70Tr AUM making commitments to climate, this is the moment to assure capital flows with strategic focus and speed to the climate solutions that will drive net zero outcomes. C4C’s Head of Climate Funds position is an exceptional leadership opportunity to help guide and mobilize billions toward actionable and impactful climate solutions.

Highlight of the Week

Over 450 investors managing $41 trillion in assets tell governments to get climate policy right and massive investment will flow [Investor Agenda]

• 457 investors managing more than US$41 trillion in assets have released a new joint statement to all world governments urging a global race-to-the-top on climate policy and warning that laggards will miss out on trillions of dollars in investment if they aim too low and move too slow. This represents the largest collective assets under management to sign on to a global investor statement to governments on climate change since the first statement in 2009.

BNEF’s latest projection shows EVs as $46T market opportunity between now and 2050 [Green Car Congress]

• EV sales are set to rise faster than ever, but governments aiming for net-zero carbon emissions by 2050 must do more to spur their adoption, according to BloombergNEF’s (BNEF) latest annual Electric Vehicle Outlook (EVO). Achieving that goal will require decisive policy action on all fronts, from supporting electric car adoption, to expanding charging networks, pushing for battery recycling and new regulations on heavy trucks, as well as encouraging active modes of transport, such as cycling and walking, according to the EVO.
• BNEF’s Economic Transition Scenario (ETS)—which assumes no additional policy measures—would see global sales of zero-emission cars rising from 4% of the market in 2020 to 70% by 2040.

Individual Deals and Market Watch

UK green bond sales this year to total at least 15 bln pounds [Yahoo Finance]

• Issuance of green bonds by the United Kingdom will total at least 15 billion pounds ($21 billion) this year, as the country aims to build up a liquid market for the new debt, the head of Britain's debt management agency said on Tuesday, June 8th.

Carbon Capture and Sequestration Market worth $6.13 billion at 19.2% CAGR [Globe News Wire]

• The global carbon capture and sequestration (CCS) market is set to gain traction from the increasing partnerships between industry giants to commercialize the CCS technology by completing large scale production facilities. This according to Fortune Business Insights™ in a new report.  The report states that the CCS market size was USD 1.75 billion in 2019 and is projected to reach USD 6.13 billion by 2027, exhibiting a CAGR of 19.2% during the forecast period.

A2A, Ardian ink non-binding terms for EUR 4.5bn energy deal in Italy [Renewables Now]

• Italian utility A2A SpA (BIT:A2A) and Paris-based investment house Ardian have signed a non-binding agreement to establish “one of the largest electricity producers and suppliers in Italy” and accelerate the energy transition, the partners announced this week.

VW battery supplier Northvolt raises $2.75 billion in financing [Bloomberg]

• The company, founded by former Tesla executives, currently leads European efforts to build a domestic supply chain for lithium-ion batteries in the region that has emerged as a key market for electric vehicles alongside China. As other projects in the region gather pace, Northvolt targets a 25% share of the European market by 2030.

Singapore places $1.8 bln for green investments [Reuters]

• Singapore's central bank has allocated $1.8 billion with five asset managers as part of moves to protect its portfolio from climate change risks and aid the city-state's efforts to promote environmentally sustainable projects.

Denham Capital keen on selling USD-774m of energy assets [Renewables Now]

• US private equity fund Denham Capital is looking to shed AUD 1 billion (USD 773.5m/EUR 636.2m) worth of Aussie and Asian assets, including renewable energy assets held by its Singapore-based platform Nexif Energy, The Australian reports.

Consolidated Edison Company of New York’s $1.5 billion green bonds offering [Global Legal Chronicle]

• Consolidated Edison Company of New York, Inc. (“CECONY”) announced the offering of $750 million aggregate principal amount of debentures due 2031 (the “Debentures”) and $750 million aggregate principal amount of debentures due 2061 (the “Green Bonds”). CECONY intends to use an amount equal to the net proceeds received by it from the sale of the Green Bonds to pay or reimburse the payment of, in whole or in part, existing and new qualifying “Eligible Green Expenditures.”

Orion Energy Partners’ $1.1 billion fund taps investor appetite for energy transition [Impact Alpha]

• Orion will focus on tailored debt financing for middle market companies in renewable fuels, energy efficiency, water, waste, transportation infrastructure and other areas. It expects to invest between $40 million and $200 million in up to 17 companies.

JSW Hydro Energy raises $707M from green bond sale [EnergyWorld]

• Unusually large ‘emerging market’ deal…
• New Delhi: JSW Hydro Energy, an arm of JSW Energy, has raised USD 707 million (about Rs 5,200 crore) from an international green bond issue that was oversubscribed by over four times, merchant bankers said on Monday June 7th.

Global Fund for Coral Reefs 'could grow beyond' $500m target [Environmental Finance]

• Natural Capital:  A large first of a kind fund for coral reefs is coming together sponsored by philanthropists, the Green Climate Fund, BNP and Pegasus.
• A blended finance fund aiming to invest $500 million to conserve coral reefs could surpass its initial target because rising interest in climate-themed investments has not yet been matched by large-scale investment opportunities in the 'blue economy', attendees at an Environmental Finance event heard.

Hydrostor, Energy Estate to invest over USD 430m in NSW storage project [Renewables Now]

• Canada’s Hydrostor is one of a small group of technology platforms focused on long duration storage.  The company and Australian advisory Energy Estate will need to invest up to AUD 560 million (USD 434m/EUR 356m) to realise the 200-MW/1,600-MWh energy storage project in Broken Hill, New South Wales.

Credit Suisse raises US$318 million Climate Fund to fuel sustainable tech [Green Queen]

• Credit Suisse announced in late May the closing of its Climate Innovation Fund with an impressive US$318 million, which will be allocated to ten venture funds globally that are active in supporting carbon-reduction solutions. These climate tech solutions span across food and agriculture, production and consumption and the mobility and urbanisation sectors, said the Swiss investment bank.

Toyota venture capital firm to rebrand; make new $300M investment [Auto Remarketing]

• Toyota venture capital firm Toyota AI Ventures is rebranding and investing another $300 million in emerging technologies and carbon neutrality efforts.
• The firm will be now known as Toyota Ventures, and the additional investment boost grows its total AUM to more than $500 million. Two early-stage funds — the Toyota Ventures Frontier Fund and the Toyota Ventures Climate Fund — adds $150 million each to the pot.

Gresham House opens 300m GBP UK forestry and carbon credits fund [Investment Week]

• The fund aims to deliver sustainable capital growth through new productive woodland creation and where returns will be generated through the sale of timber, distribution of carbon credits, and appreciation.

Varma invests €230m in new SSGA climate corporate bond trackers [IPE]

• Varma is investing €230m in two of a set of three new climate-tilted corporate bond index funds produced by State Street Global Advisors (SSGA), acting as a seed investor in the product launch.
• The Finnish mutual pension insurance company said it was investing €125m in the euro fund and $125m (€102m) in a US fund – which totaled around €230m.

Ex-Reddit CEO raises $30M to offer ‘reforestation in a box’ [GreenBiz]

• A lot of focus in the US applying tech business models to natural capital challenges.
• Terraformation, a climate-tech startup fronted by a former CEO of Reddit, engineer Yishan Wong, is definitely high tech and borrows from the Martian play book.
• Turn desertified landscapes and degraded land into new forests, native seeds that improve biodiversity, water from desalination,  powered by solar panels.

Nuclear fusion has attracted more than $2 billion in VC and private funding [Canary]

• Powering like the sun is back in the black.  More than $2 billion of private capital has flowed into fusion startups in the last few years.  
• Canary has a convenient roundup of recent private investments.

BNP Paribas Asset Management launches Ecosystem Restoration Fund [Mondovisione]

• The goal, investing in 40-60 public companies focused on ecosystem restoration. It will be interesting to see what they surface in an area with few companies.
• BNP Paribas Asset Management (‘BNPP AM’) announces the launch of BNP Paribas Ecosystem Restoration, a thematic fund offering exposure to companies engaged in the restoration and preservation of global ecosystems and natural capital. BNP is also co-manager on the private $500M coral reefs fund we will highlight next week.

Macro Commitments

Texas renewables defy GOP backlash with $20 billion in projects [Bloomberg Green]

• Texas is on pace to have as much green-power development in coming years as the next three states combined, according to the American Clean Power Association, a trade group. Projects totaling 15 gigawatts — equal to the total electrical capacity of Finland in 2019 — are under construction or in advanced development, more than double the capacity under development three years ago. That’s according to data from ERCOT the state’s grid operator.
• Texas, the center of the US oil and gas industry, is also blessed with massive wind and solar resources.

Climate neutrality: Council adopts the 17.5bn euro Just Transition Fund [European Council]

• The European Council on June 7th adopted a regulation establishing a €17.5 billion fund which will contribute towards making the green transition fair and inclusive.
• The Just Transition Fund (JTF) will finance projects that will alleviate the socio-economic costs for communities across the EU that are heavily dependent on fossil fuels or greenhouse gas-intensive industries and need to diversify the local economy.

Queensland unveils USD-1.5bn renewables and hydrogen jobs fund [Renewables Now]

• The Queensland government on Thursday June 10th announced a AUD-2-billion (USD 1.5bn/EUR 1.3bn) renewable energy and hydrogen jobs fund as part of its COVID-19 economic recovery plan.

PGE to spend EUR 1.1bn for clean power at Polish lignite mining area [Renewables Now]

• Polish utility PGE Polska Grupa Energetyczna SA (WSE:PGE) has committed to infusing close to PLN 5 billion (USD 1.37bn/EUR 1.12bn) into the initial transformation of the Belchatow lignite mining region into a clean power area where it has plans for solar, wind and energy storage projects.

Lightsource BP in $1B+ Portugal solar investment [RigZone]

• The project is to be deployed over six years and the company has entered into a co-development partnership with INSUN for five utility scale solar projects. The projects - which aim to add over 1.35 gigawatts (GW)  are said to be in the early development. More than 3,000 green jobs could be created in the regions, according to Lightsource BP, which highlighted that the projects will be in place for around 30 years once operational.

Green Growth Accelerator launched to unlock £200m of low carbon investment [Scottish Housing News]

• The Green Growth Accelerator will speed up delivery of low carbon infrastructure projects across Scotland and provide extra resources and technical support to local authorities to get projects off the ground more quickly. Once fully opened the programme will unlock £200 million of public sector investment to drive Scotland’s transition to net zero – with further investment from the private sector anticipated.

Octopus Renewables eyes GBP 100m from share issue [Renewables Now]

• Octopus Renewables plans to use the proceeds from the issue when pursuing additional investment opportunities. Its investment manager has identified GBP 1.3 billion worth of renewable energy assets in the UK, Germany, Ireland, Poland, Sweden and Finland that would potentially be suitable for acquisition by the trust. It has undertaken preliminary due diligence in relation to this pipeline and has also made non-binding offers in relation to some of the assets. The company has exclusivity with respect to GBP 256 million worth of assets.

U.S. seeks less costly clean hydrogen in climate fight [Reuters]

• Europe is far ahead of the US on supporting green H2 with Germany and the EU having decided on the transition fuel a while back and earmarking billions for scale up.
• Ex: Germany unveiled plans on Wednesday June 2nd to earmark 9 billion euros ($10 billion) for the expansion of hydrogen capacity at home and abroad in a bid to meet emission targets. Germany is eyeing hydrogen capacity of up to 5 gigawatts (GW) by 2030, with a further 5 GW to be installed by 2040 at the latest. [Reuters]
• Playing catch up, The US Department of Energy (DOE) set a goal for hydrogen made with clean power, such as renewables and nuclear energy plants, by 80% to $1 per kilogram in a decade.
• Today it’s north of 6/kg, most research studies are shooting for $2/kg.

Pathways, Frameworks, Case Studies, Research, Climate Science

Developing nations need boost to clean energy funds 7x, says IEA [FT]

• 7X.  Annual clean energy investment in developing economies must increase seven-fold by the end of the decade if the world intends to reach net zero emissions by 2050, the International Energy Agency said on Wednesday June 9th.
• 5X.  To put this in perspective, McKinsey estimates that the rate of investment/deployment in renewables in the major developed economies needs to increase 5X to get on track to 1.5C.

Maine passes ‘groundbreaking’ fossil fuel divestment act in US first [Responsible Investor]

• Maine has become the first US state to adopt legislation which will divest public assets from fossil fuels.
• The “groundbreaking” law places the 200 largest listed oil and gas companies, and the 30 largest listed coal-fired power plant operators on a state investment blacklist, in addition to all companies deriving more than 50% of revenue from fossil fuel related businesses.

Ten-fold increase needed in voluntary carbon offsets price needed [Climate Action]

• The cost of offsetting corporate carbon emissions needs to increase ten-fold to drive meaningful climate action, says a landmark report by UCL and Trove Research.

G7 agree on ‘historic steps’ to make climate reporting mandatory [Euractiv]

• G7 finance ministers made a commitment at the meeting to make it mandatory for corporates to report climate impacts and investment decisions, alongside new measures to strengthen central company beneficial ownership registries to crackdown on environmental crime.
• The G7 will end the funding of new coal generation in developing countries and offer up to £2bn ($2.8bn) to stop using the fuel (BBC).

Bank of England unveils sweeping new Climate Test of Banks and Insurers [Bloomberg Green]

• The test will be based on three scenarios that assume early, late and no policy action on the climate over 30 years, as designed for central banks globally by the Network for Greening the Financial System. It’s meant as an “exploratory exercise” and won’t be used to set capital requirements, the BOE said.

EU’s heavy industry made €50 bln in windfall profits from bloc’s carbon market between 2008-19 [Carbon Pulse]

• Perhaps mispriced?

Study: Financing is a Key Barrier to Sustainable Ocean Economy, but Solutions Exist [EDF]

• A paper published in the journal Nature Communications today on World Oceans Day finds that public and private investment lags far behind what’s needed to ensure a thriving, resilient and sustainable ocean economy — but that solutions exist.
• $200B/year Cost estimated to protect coastal areas from climate change
• $322B/year Cost of damage estimated without investing in resilience
• $7.5B, Estimate of cost to establishing most critical global Marine Protected Areas
• The paper, “Financing a sustainable ocean economy,” is authored by an international group of economists and ocean policy experts. It identifies key barriers to financing and ways to mitigate them in order to support jobs, livelihoods, food security, nutrition and ocean health. EDF’s EVP Amanda Leland and Senior Director for Oceans Climate Strategies Tim Fitzgerald are among the paper’s co-authors.

Funds with $8.8 trillion urge Asian utilities to cut emissions [Bloomberg Green]

• Flexing engagement muscle.  In an initiative coordinated by the Asia Investor Group on Climate Change, 13 institutional investors that manage $8.8 trillion among them will engage with the utilities that collectively emitted about the same amount of carbon dioxide as Spain in 2019, the group said in a statement.
• The companies that will be the focus of the program in its first year are China Resources Power Holdings Co., CLP Holdings Ltd., Japan’s Chubu Electric Power Co. and Electric Power Development Co., as well as Malaysia’s Tenaga Nasional Bhd.

China to limit carbon dioxide emissions of public institutions to 400 mln tonnes by 2025 [Xinhua Net]

China carbon market to face early test from expected power shortages [Carbon Pulse]