July 8 - July 12, 2024

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In this week’s newsletter: $17.1 Billion across 26 deals in Transition Finance ($16.5 Billion), NbS ($395 Million), Hard to Abate sectors ($78 Million), Carbon Removal ($40 Million) and the Blue Economy ($100 million).

10 Essential Deals and Commitments:

Transition Finance

• The UK’s new Labour Government launches a $9.74 billion climate-focused national wealth fund
• BNDES plans $6 billion in investments through climate fund
• EBRD issues a $1.09 billion green bond
• Azerbaijan pledges a $500 million climate fund for COP29

Nature-based Solutions

• India launches a $90 million agriculture tech fund

Hard-to-Abate Emissions

• ADNOC signs a $3 billion decarbonization funding deal with the JBIC
• Australian federal government to provide $60 million for heavy industry decarbonization

Carbon Removal

• Microsoft signs 500,000 tonne DAC deal with 1PointFive
• Frontier buys 61,500 tons of CO2 removal from 280 Earth for $40 million

Blue Economy

• GFCR greenlights $25 million for coral resilience

News Highlights

Policy and Regulation

• FSC announces EUDR compliance solutions toolkit for companies
• Climate Bonds analyzes Hebei Province’s new steel industry transition guidelines
• California’s $10 billion climate bond makes the November ballot

Climate & NbS Finance

• The Philippines is chosen as host for the Loss and Damage Fund
• WEF releases a new assessment of potential for Indian natural climate solutions
• Temasek releases outline of current nature-related investments

Emerging Science

• Forest Ecosystems paper finds that mixed forests and ecological succession improve soil carbon sequestration
• Science Advances paper finds planted mangroves can store as much as 70% of the carbon stock of comparable natural stands within 20 years of planting
• New paper in Nature estimates tropical forest degradation may be more extensive than previously realized

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Nature-based Solutions ≥ $1M

Commitments and deals

Deals

USDA releases $50 million for wetlands [morning ag clips]

• The USDA will invest $50 million in fiscal 2024 to support the conservation of wetlands through the Wetland Reserve Enhancement Partnership. The WREP will restore and enhance high-priority wetlands in agricultural lands and prioritize the integration of intact wetlands in farmland areas. Applications are available through August 16, 2024.

The U.S. and Indonesia approve a $35 million debt for nature swap [environmental finance]

• The U.S. and Indonesia have agreed on a $35 million debt-for-nature swap, to be conducted over the next 9 years. Capital earmarked for debt repayment will be put into a locally managed conservation fund, with grants made available to local NGOs for projects benefiting coral reef ecosystems. The deal is the fourth between the 2 countries under the US Tropical Forest and Coral Reef Conservation Act.

InterEarth lands $8.25 million in funding [carbon herald]

• InterEarth, an Australian climate tech company, has secured $8.25 million in funding from Germany's Securing Energy for Europe (SEFE). The funding will support the scaling of the company's restoration efforts, which use native Australian trees to sequester carbon.

EU Commission invests $5.2 million in biodiversity investment scaling project [carbon pulse]

• The EU Commission has dedicated €4.7 million ($5.2 million) to fund the Bio-Capital initiative under the Horizon Europe scheme. The project is expected to run until December 2027, and will focus on driving investment in biodiversity conservation through the use of technology-based monitoring data. The initiative aims to help bridge the gap between biodiversity conservation needs within the EU and available funding and will trial multiple innovative financing methods.

UK rewilding project secures $109 a tonne carbon credit financing deal [environmental finance]

• An English rewilding project has sold carbon removal credits for over €100 per tonne ($109 per tonne), a first-of-a-kind deal for the project type. The credits were issued from the Boothby Wildland Project, managed by Nattergal, a natural restoration company, and conducted through the carbon removal company Treeconomy.

Fund Formation

India launches a $90 million nature and agriculture tech fund [assamtribune]

• The Indian federal Ministry of Agriculture and Farmers’ Welfare and the National Bank for Agriculture and Rural Development have announced a Rs 7.5 billion 'Agri Sure' fund for startups aiming at promoting investment in agriculture startups. The fund will support approximately 85 agricultural startups to empower rural producers through promoting innovative technology-driven initiatives, enhancing the farm produce value chain, and sustainably intensifying production.

UK Nature Impact Fund launches with $39 million [carbon pulse] [uknaturefund]

• The UK Nature Impact Fund has launched with £30 million ($39 million) from the UK government and is continuing to fundraise. The fund invests directly in nature restoration projects that generate income through the sale of ecosystem services and targets investment across woodland creation, peatland restoration, biodiversity net gain, and the nature market supply chain.

Transition Finance ≥ $100M

Commitments and deals

Commitments

ADB and Tajikistan launch $8 billion climate finance plan [asia plus tj]

• The Asian Development Bank and Tajikistan have announced a new plan for Tajikistan's next Paris Agreement Nationally Determined Contribution (NDC). The plan estimates $8 billion dollars will be required by 2030 to achieve the country's adaptation and mitigation targets, which include priority investments in renewable energy, expanding sustainable agriculture, and adapting to glacier melt and other climate-exacerbated natural disasters.

BNDES to release $6 billion through climate fund [bnamericas]

• Brazilian development bank BNDES plans to provide financing of 32.1 billion reais (US$5.94bn) through its fund for initiatives to mitigate climate change. The financing, expected to be available until the end of 2026, will focus on clean energy and transportation projects. The bank’s climate fund provides financing for companies and government decarbonization projects at an average annual interest rate of 6.15%. The fund was created in 2009 and operates in two components: a non-refundable part, administered by the Environment and Climate Change Ministry using resources from the government budget, and a segment administered by BNDES, with subsidized interest rates. In 2023, BNDES disbursed 814 million reais via the fund, up from 170 million reais in 2022.

Deals

ADNOC signs $3 billion deal with JBIC for green financing facility [egypt oil-gas]

• ADNOC and the Japan Bank for International Cooperation have signed a $3 billion agreement to create a green financing facility, which will support the company's decarbonization and energy transition initiatives. The credit facility is partially supported by Japanese commercial banks and will support the company's goal to reduce its carbon intensity by 25% by 2030 and invest $23 billion in operational decarbonization.

Department of Energy invests $1.7 billion in EV production [washington post]

• The U.S Department of Energy has announced an investment of $1.7 billion across 11 auto factories, which will fund their conversion into electric vehicle manufacturing hubs. The 11 factories span 8 states, and are all unionized, with a focus on sites that might potentially shutter without additional financing.

Biden-Harris Admin releases $120 million for tribal climate resilience [doi]

• The Biden Administration has announced it will make $120 million in funding available to support Tribal community’s responses to climate-related disasters. The funding will be used in efforts ranging from Tribal climate planning to renewable energy equipment purchasing, and community relocation.

NorSun invests $620 million to build solar wafer plant in Oklahoma [plant services]

• NorSun will invest $620 million in an Oklahoma-based solar wafer manufacturing plant. The plant is expected to begin construction in 2024, and production in 2026, with an expected capacity of 5GW of wafers.

Fund Formation

UK’s new Labour government launches $9.47 billion national wealth fund [the guardian]

• The UK Labour Party has announced the establishment of a £7.3 billion ($9.47 billion) national wealth fund focused on green infrastructure investment, a key campaign promise. The announcement comes soon after the party's landslide July 4th election victory and is designed to marshall private funds, with a goal of a 1:3 ratio of public to private investment. The fund will be managed by the UK Infrastructure Bank, headed by HSBC chief executive John Flint, with support from the British Business Bank. The breakdown of investments is estimated to be £1.8 billion for ports, £1.5 billion for gigafactories including electric vehicles, £2.5 billion for clean steel, £1 billion for carbon capture and £500 million for green hydrogen.

NextPower UK ESG raises $847 million [born2invest]

• NextEnergyCapital has raised £653 million ($847 million) for its NextPower UK ESG fund, exceeding its initial fundraising target by 30%. The capital includes a contribution of £250 million in matching funding from the UK Infrastructure Bank. The fund focuses on acquiring utility-scale, construction-ready solar and battery storage systems assets.

Azerbaijan pledges $500 million in oil revenue to climate fund [financial times]

• Azerbaijan has announced plans to raise at least $500 million for a "Climate Investment Fund for Nature" which will be launched with the support of Azerbaijan's state oil company Socar. The fund is substantially smaller than the $30 billion pledged by the previous COP host the UAE, and comes amid pressure for the COP29 host to take climate action.

UK LGPS expands climate allocation by $454 million & Invests $168 million in forestry funds [room 151]

• The South Yorkshire Pensions Authority has announced a £350 million ($454 million) commitment to the Border to Coast Climate Opportunities fund, alongside increased forestry investments. The fund includes portfolio investments in hydrogen technology, synchronous condensers, battery storage systems, and lithium-ion battery creation. The company also invested £130 million in 2 forestry funds, £80 million in Campbell Global, and £50 million in Gresham House.

North Sky raises $250 million for impact secondaries fund [businesswire]

• North Sky has raised $250 million for the first close of its impact secondaries fund, Clean Growth VI. The fund is expected to invest in the energy transition, climatech, the circular economy, and healthy living sectors, with potential investments across water remediation, smart grid, natural consumer products, heat pumps, EV charging, and smokestack abatement for heavy industry, among other sectors.

Green Bonds ≥ $100M

Commitments and deals

Completed Issuances

EBRD issues $1.09 billion green bond [eureporter]

• The European Bank for Reconstruction and Development has issued its largest-ever green bond transaction for €1 billion ($1.09 billion). The 7-year bond will mature in 2031, with proceeds earmarked across Energy Efficiency, Renewable Energy, Water Management, Waste Management, Pollution Prevention and Control & Sustainable Transport.

Iberdrola issues $817.65 million in green bonds [iberdrola]

• Iberdrola has issued a new €750 million ($817.65 million) green bond with a demand of over €4 billion, over 5 times oversubscribed. The 10-year bond has a coupon of 3.625%. The funds will be allocated to eligible assets within Iberdrola's Green Financing Framework.

Carbon Removal ≥ $1M

Commitments and deals

Commitments

Strathcona announces $1.5 billion oil sands carbon capture project [carbon herald]

• Strathcona Resources, a Canadian oil drilling company, has announced a Canadian Growth Fund-backed carbon capture project for its oil sands operations, with an expected budget of CAD 2 billion ($1.5 billion) The facilities will be owned and run by Strathcona, and are expected to be able to capture up to 2 million tons of carbon emissions annually once active. The carbon credits generated by the project will be used to pay back the initial investment by the CGF. The technology will help to reduce the extraction of carbon emissions from the company's oil sands, but will not reduce the emissions of the final product.

Deals

Frontier invests $40 million 280 Earth in exchange for carbon removals [carbon herald]

• Frontier, the carbon removal agreement facilitator, will invest $4 million in 280 Earth, a DAC developer. The investment will fund the removal of 61,500 tons of CO2 by 2030, with carbon captured at 280 Earth's Oregon pilot facility. The facility is powered by unconventional energy sources, including industrial waste heat.

Microsoft signs 500,000 metric ton DAC purchase agreement with Occidental’s 1PointFive esg today]

• Occidental's 1PointFive subsidiary has signed an agreement with Microsoft to deliver 500,000 metric tons of carbon dioxide removal credits over 6 years, the largest ever DAC-based CDR credit purchase agreement to date. The credits will be issued from the STRATOS facility in Texas, which will have a capacity of 500,000 tonnes of CO2 a year when fully operational. The transaction is the latest in Microsoft's series of large-scale CDR purchases, including the purchase of 8 million tons of nature-based credits from BTG TIG.

Hard to Abate Sectors ≥ $1M

Commitments and deals

Deals

Australia invests $61 million in heavy industry decarbonization [minister for industry and science]

• The Australian government will provide AUD 91 million ($61 million) through its Powering the Regions Fund to support industrial decarbonization and reduce carbon pollution by 1 million tonnes a year. The investment will support 6 new projects, including 5 investments in Queensland and 1 in Western Australia. The 6 investments include projects ranging from methane emission reduction to electrification and emissions capture technologies for ammonium nitrate facilities.

NLine Energy raises $11 million for decarbonization tech [esg today]

• NLine Energy has raised $11 million with proceeds dedicated to expanding its business and promoting the decarbonization of commercial and industrial facilities. The company develops Microsteam Turbine Systems that convert waste energy from steam distribution systems into renewable power. The capital is expected to enable the enhancement of the company's North American operation and expand internationally to Europe.

KC8 Capture Technologies raises $6.74 million for hard-to-abate decarbonization [industry update]

• KC8 Capture Technologies, a Melbourne-based carbon emissions management startup, has completed an AUD 10 million ($6.74 million) fundraising round to support the commercialization of its carbon capture technology. The company develops its technology for heavy industrial sources, utilizing non-toxic solvents to treat low-pressure, high-volume exhaust gasses.

Blue Economy ≥ $1M

Commitments and deals

Commitments

Australis Aquaculture plans $800 million in barramundi farming in Vietnam [undercurrent news]

• Australis Aquaculture has announced plans to invest $800 million in its Vietnam operations and extend beyond its current operations within the country. The company hopes to utilize techniques from the salmon industry to build the company's barramundi supply infrastructure.

Deals

AIIB signs $75 million blue and green bond deal in Vietnam with SeABank [aiib]

• The Asian Infrastructure Investment Bank has signed a $75 million financing contract to support green and blue bonds issued by Southeast Asia Commercial Joint Stock Bank (SeABank). The bonds will support Vietnam's efforts to realize its nationally determined contributions under the Paris Agreement and expand the financing of water and sea-related economic activities. It represents the first blue bond in Vietnam and the first green bond by a private bank in the country.

GCFR greenlights $25 million for coral resilience [marine technology]

• The Global Fund for Coral Reefs (GFCR) has announced $25 million in grant funding to support resilience efforts across coral nations. The funding includes blended finance programs for Egypt, the Philippines, Indonesia, the Mesoamerican Reef, Zanzibar, and Tanzania. The program aims to catalyze additional market-based solutions to support coral reefs, including organic waste recycling, aquaculture-supported ecosystem restoration, and MPA expansion.

Research and Knowledge Sharing

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Policy and Regulations

FSC announces EUDR compliance solution [businesswire]

• The Forest Stewardship Council has announced the launch of a new solutions toolkit designed to help companies align with the European Union Regulation on Deforestation-free Products (EUDR). The new FSC Aligned for EUDR solution is split into 2 components, FSC Aligned Certification for EUDR, available from July 1, 2024, and FSC Aligned Reporting for EUDR, launching August 30, 2024. The first builds on existing standards to incorporate EUDR expectations, while the second is an automated data compilation system that will help companies generate and report EUDR data.

California to vote on $10 billion climate bond in November [rto insider]

• Californians will vote in November of 2024 on Proposition 4, a $10 bond authorization that would finance various climate and nature projects throughout the state currently left in limbo by budgetary issues. Notable investments would include $3.8 billion for safe drinking water and groundwater, $1.5 billion for wildfire and forest programs & $1.2 billion to combat sea level rise.

Hebei province releases new transition guidelines for steel industry [climate bonds]

• China's Hebei province, which produces 11% of the world’s steel, released new transition finance guidelines for its steel industry in 2023. An analysis by Climate Bonds highlights the substance of this first set of guidelines for steel at the provincial level in China, including the mandates for 2025, 2030, and 2060 carbon emission targets; the guidelines also provide a catalog of transition finance to support 176 specific steel decarbonization technologies.

6 Amazon tribes win lawsuit over controversial carbon credit project in Colombia [barrons]

• The Colombian Constitutional Court has annulled a highly controversial carbon credit deal between the US-based Ruby Canyon Environmental and Colombian company Masbosques, over a suit brought by 6 local tribes in the Pira Parana area. The tribes contended that the deal was done without their consent and was signed by false representatives of their community.

Philippines to host loss and damage fund [mirage news]

• The Philippines has been chosen as the Loss and Damage Fund host country following the LD's second board meeting. The Philippines will host the board going forward, which will grant the board the ability to negotiate a hosting arrangement with the World Bank, the current temporary host of the fund. The agreement will be finalized in the coming months.

Finance Research and Updates

WEF publishes report on financing Indian NCS [WEF]

• The World Economic Forum has published a new report analyzing the business case for investing in natural climate solutions (NCS) in India, based on a survey of large firms in the country. The report provides an overview of the current policy and market environment for NCS in India, alongside insights from interviews with market participants. The report found that 86% of those surveyed agree there is a business case for NCS investments.

Transition minerals boom leading to investor-state conflicts [sustainable views]

• Sustainable Views finds that investors in critical minerals have filed 57 investor-state dispute cases against governments for over $200 billion in damages in the 7 years since the Paris Agreement came into force, compared to 35 cases in the prior seven years. The disputes often center on actions governments have taken to expropriate critical mineral supply, or otherwise limit the conduct of companies in the extraction of critical minerals.

Amazon hits 100% renewable energy target [esg today]

• Amazon announced on July 10th that it had achieved a goal of powering its global operations with 100% renewable energy in 2023. The achievement is 7 years ahead of a 2030 target, and an increase from 42% in 2019. The company continues to have a net-zero by 2040 target and expects that energy demands from generative AI could require additional energy acquisitions.

Urgewald estimates institutional investors hold $4.3 trillion in fossil fuel assets [urgewald]

• Urgewald and 17 other NGO partners have released their 2024 edition of Investing in Climate Chaos, a website-based report cataloging the fossil fuel holdings of over 7500 institutional investors worldwide, based on data current May 2024. The data shows that institutional investors currently hold $4.3 trillion in bonds and shares in fossil fuel companies. Vanguard, Blackrock, State Street, and Capital Group were the 5 largest holders of fossil fuel assets.

ClimeCo launches NatureLink matching tool [esg today]

• ClimeCo has launched NatureLink, a tool for matching organizations with nature-based solutions projects that fit their policies, goals, and budgets. The tool includes an online questionnaire for outlining the offtake and structure, geographic and project type, carbon credit usage, labeling and standardization, and financial metric preferences for participating companies, as well as their need for additional revenue streams. The tool then generates a list of optimal projects and partners from a list of global options.

Temasek provides outlines of nature investments [new private markets]

• Temasek has released its first sustainability report, providing an overview of the investor’s ESG approach across its $288 billion portfolio. The report outlines the company's internal carbon price increase to $65 tCO2e in 2024, the new nature considerations included, and catalogs the fund's commitments to nature, climate, and social impact funds.

Emerging Science

UNU EHS releases land and water management report [reliefweb]

• The United Nations University and United Nations Convention to Combat Desertification have published a new report entitled The contribution of land and water management approaches to Sustainable Land Management and achieving Land Degradation Neutrality. The report provides a coherence and alignment assessment of the expanding approaches for sustainable management of land and water resources. The report provides details on the alignment of different land management approaches with the UN's definitions of Land Degradation Neutrality (LDN) and Sustainable Land Management (SLM), and approaches for bridging identified gaps.

UNDRR publishes NbS for disaster toolkit [UN]

• The UN Office for Disaster Risk Reduction and the United Nations University have published a new toolkit on nature-based solutions for disaster and climate risk management. The report provides expanded NbS approaches to disaster and climate risk management and includes tools for compiling country-level data, selecting NbS interventions, identifying relevant actors, and understanding current NbS integrations, among other reports.

Research finds southern African forests store more carbon than previously thought [carbon herald]

• New research published in Communications Earth and Environment, has found that northern Mozambique's forests likely contain as much as 2x the sequestered carbon that had been previously estimated using traditional methods. The study utilized laser-scanning technology to estimate forest carbon in an area 8 times the size of Manhattan, and suggests that older methods may drastically underestimate the carbon stored in tropical forests, and the potential that could be lost from deforestation.

Climate change is driving inflation, study finds [financial times]

• Shifts in the climate in growing regions are leading to lower yields and increased prices for crops ranging from maize to olives, according to a survey of recent research by the Financial Times. In 2024, prices for wheat, palm oil, and sugar rose 17%, 23%, and 9%, with climate playing a major role in the increase. The Energy and Climate Intelligence Unit estimated that climate change was responsible for a third of UK food price inflation in 2023, and a report by the European Central Bank and the Potsdam Institute for Climate Impact Research finds that global food inflation could rise 3.2% a year due to climate change, implying an increase in annual overall inflation of 1.18% a year by 2035, with developing countries affected the most.

Study finds mixed forests score most soil carbon [earth]

• A new paper in Forest Ecosystems analyzes the effects of forest succession on the soil quality stock in subalpine forests. The research suggested that mixed forests had the highest soil organic carbon, indicating that allowing for ecological succession promotes effective carbon sequestration.

Global temperatures were 1.5c above pre-industrial levels for 12 months [inside climate news]

• Copernicus Climate Change Service has found that global temperatures were 1.64 degrees Celsius above the pre-industrial average for 12 months, the first year-long period breaking the Paris Agreement goal. While the target is not technically breached until the rise is observed over a 20-30 year period, the 12 months stretch marks a troubling milestone in the struggle to bring down carbon emissions.

Planted mangroves can store 70% of the carbon contained by intact stands after 20 years [sciencedaily]

• A new study in Science Advances analyzes 40 years of mangrove stand restoration data worldwide to estimate the carbon stock contained in restored stands. It finds that, after 20 years, the carbon stored in the planted mangroves reached 71-73% of that found in intact stands, though conservation of existing stands was still considered superior from an ecological perspective.

Destruction of tropical forests is worse than previously estimated, study says [earth]

• A new study in Nature suggests that degradation of tropical forests from human activity may be greater than previously estimated. The study utilized satellite remote sensing data and canopy height and biomass estimations using LIDAR to calculate the average effects of human activity on canopy height and biomass. The study found that road and agricultural expansion can reduce the height and biomass of a forest canopy by 20-30%, with potential cascading effects throughout the ecosystem that have been more difficult to estimate.

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