March 18 - March 22, 2024

Your Newsletter at a Glance

Commentary by C4C

Dealflow Summary: $29.5 Billion across 19 deals in climate ($17.9 billion), nature-based solutions ($587 million), and hard to abate industries ($11 billion).

In this issue:

• Korea plans $313 billion investments for low carbon transition funding.
• Iberdrola pledges to invest $45 billion in Green Investments by 2030.
• Green Climate Fund reaches $12.8 billion in contributions.
• The Biden Administration awards $6.3 billion to decarbonize heavy industry.
• Morgan Stanley aims to raise $1 billion for energy transition bets.
• Constellation raises $900 million in first US nuclear green bond.
• Vietnam launches $375 million fund to support low carbon rice cultivation.
• IFC raises $187 million in bonds to support emerging market blue economy projects.
• UK government backs Gaia Sciences innovation fund to commercialize UK scientific research with $64 million.
• Cemvision raises $10 million in seed round for green cement technology, and more.

Policy & Regulatory Highlights:

• EU nature restoration law faces major setback as Hungarian ambassador reverses position
• Texas divests $8.5 billion from BlackRock as ESG backlash continues

Climate & NbS finance:

• VC investment in nature tech rose 18% in 2023
• USAID to fund WTW climate insurance pilot

Emerging Science:

• New study examines financial and scientific viability of nature-based climate solutions
• Study finds grassland rewilding is as successful at sequestering carbon as woodland replanting

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Climate Finance ≥ $100M

Commitments and deals

Commitments

Korea pledges $313 billion in green financing projects [Korea Times]

• The Korean government has pledged to allocate 420tTrillion won ($313 billion) through state run institutions from the state budget into green financing, with the goal of reducing greenhouse gas emissions by 40% from 2018 levels by 2030. The government is also coordinating with the banking industry to establish a 9 trillion won ($6.7 million) future energy fund. The Korean FSC forecasts that the reductions funded by these investments will lead to a reduction of 85.97 million tons of greenhouse gasses by 2030.

Iberdrola pledges to invest $45 billion in grid expansion and renewables by 2026 [ESG today]

• Iberdrola has pledged to allocate EU41 billion to its network and renewable energy program from 2024-2026, and to hire 10,000 people to support this program. The Investments were announced as part of an update to the company's strategic plan, which prioritizes network based growth, with 40% of investment anticipated to be allocated in the U.S. The company expects to invest more than €15 billion in renewable energy through this investment, half of it offshore wind.

MOL Group targets $4 billion in green investments by 2030 [Chemanalyst]

• Hungarian chemicals manufacturer MOL Group has released its updated SHAPE TOMORROW strategy with $4 billion in green investment commitments and a 2050 carbon neutrality target. The company is expected to prioritize investments in waste integration, recycling, and medium scale chemical projects, as well as a downstream segment focused on biomethane and green hydrogen production. The strategy also contains a consumer services section focused on mobility solutions including hydrogen fuel cell vehicles, and a 65% recycling rate target by 2035.

Morgan Stanley Aims to raise $1 billion for energy transition bets [Bloomberg]

• The Morgan Stanley Investment Management infrastructure team has made plans to raise $1 billion for a new fund dedicated to energy transition bets, with the goal of delivering private equity-like returns. This comes after recent moves by TPG and KKR and Co. to establish energy transition investment funds, and Brookfield Asset Management's $10 billion close of its second global transition fund.

Deals

Green Climate Fund reaches $12.8 billion in contributions [Island]

• The Green Climate Fund has reached $12.8 billion in its second replenishment with contributions from 31 countries. Eight donors also gave $174 million to the Least Developed Countries Fund and Special Climate Change Fund.

IMF approves $1.3 billion to support Cote d'Ivoire climate resilience [Ventures Africa]

• The IMF executive board has announced it will invest SDR 975.6 million ($1.3 billion) to support Cote d'Ivoire's climate resilience and adaptation progress. The funding will support structural reforms and capacity building to improve the country's macroeconomic stability and adaptation and mitigation investments in the agricultural and infrastructure sectors.

Statkraft issues $1.09 billion in green bonds [Renewables Now]

• Statkraft has issued a dual-tranche €1 billion senior unsecured green bond ($1.09 billion) to finance green finance framework eligible projects.

Constellation raises $900 million in first US nuclear green bond [Environmental Finance]

• Constellation has issued the U.S's first ever Nuclear Green Bond, raising $900 million from a 30 year bond with a 5.75% coupon. Exact details are not finalized but most of the proceeds are expected to go towards nuclear power infrastructure construction.

Biden Administration announces $475 million clean energy investment in mine land [U.S Department of Energy]

• The United States Department of Energy will provide $475 million in funding for 5 projects in Arizona, Kentucky, Nevada, Pennsylvania and West Virginia to scale clean energy deployment on current and former mine land. Projects include coal-to-pumped storage hydropower, gold mine decarbonization, copper recovery, and a coal-to-solar transition model project.

Vietnam launches $375 million fund to support low-carbon rice cultivation [Vietnamnews]

• The Vietnamese government has announced the launch of a $375 million fund to support low-carbon rice cultivation infrastructure development. The project will be executed over a 5 year period from 2026-2031, and will primarily be financed by a $360 million loan from the IBRD and $15 million from the World Bank. The project will focus on providing comprehensive investment packages to support small scale producers’ adoption of climate friendly strategies.

World Fund raises $328 million for first fund [Reuters]

• World Fund, a Berlin-based climate tech venture firm, has announced a €300 million raise for its first fund, with subscribers including the European Investment Fund, BPI France, PWC Germany and the UK Environment Agency Pension Fund. The fund closed 50 million under target due to issues in the wider market. The fund managers hope to deploy the fund to help address deficiencies in the climate hardware market in Europe, and hope to make 25-30 investments in decarbonization startups around Europe.

AEMETIS approved for $200 million Sustainable aviation fuel project [Ethanol Producer]

• Aemits has received approval to invest $200 million in its Riverbank sustainable aviation fuel production plant, as well as a renewable natural gas project, a carbon sequestration project, and energy efficiency upgrades to an ethanol plant.

IFC $187 million investment in developing country's blue economy [IFC]

• IFC has issued its first ocean-friendly, developing country-focused green bond, for 2 billion Norwegian krone ($187 million) at a five year fixed rate. The funds will be used to catalyze private sector investments along the parameters of the company's Guidelines for Blue Finance, including ocean and water conservation projects and support for sustainable marine livelihoods and water utilities in emerging markets.

Fullerton Management raises $100 million climate action fund [ESG today]

• Fullerton Fund Management, a Singapore based fund manager, has raised $100 million for the anchoring close of its Fullerton Carbon Action Fund, a private equity fund focused on investing in companies accelerating decarbonization in Asian Emerging markets. The new fund will invest  in manufacturing, industrials, energy, and electric mobility businesses, with a goal of closing at least 3 transactions by the 2nd quarter of 2024.

UK Infrastructure Bank (UKIB) backs Gaia Sciences Innovation fund with $64 million [Reuters]

• The UK government has provided Greensphere Capital with backing for a fund aiming to commercialize nature and climate research from Britain's bioscience and environmental science institutes. The UKIB will provide £50 million ($64 million) to the Gaia Sciences Innovation fund on the condition it matches those investments from other investors. Frank Mars has already pledged £15 million , with the Greensphere team providing £1.3 million. The fund will focus on commercializing the work of more than 4000 scientists across the Kew Botanical Gardens, ZSL, The University of York, and the UK Centre for Ecology and Hydrology.

Carbon accounting and management startup Greenly Raises $52 million [ESGtoday]

• Greenly, a carbon accounting company, has raised $52 million in its series B funding round, which will support the acceleration of the company's growth and deployment of its carbon management and accounting software. The company expects growth to be driven by regulatory compliance but hopes to also make sales based on mainstreaming of sustainability goals.

Nature-based Solutions ≥ $1M

Commitments and deals

Deals

ClonBio invests $500 million in Wisconsin bio-refinery [World Bio Market Insights]

• Clon Bio Group has committed €456.98 million ($500 million) to establish a biorefinery in Jefferson Wisconsin, which will produce biofuels from agricultural waste and other sources.

Mad Capital launches new fund with $50 million target aiming to de-risk regenerative organic farming [Ag Funder News]

• Mad Capital has launched Perennial II, a $50 million target fund which aims to provide loans to help producers transition to regenerative and organic agriculture. The Fund has already made two closes and received commitments from the Rockefeller Foundation and Builders Vision, among others. The Company aims to help organic farmers, who are often seen as risky bets for traditional lenders, access capital.

Novocarbo raises $27million for Carbon Removal Parks [Carbon Credits]

• Novocarbo, a German climate tech company, has raised €25 million ($27 million) in growth funding to build a European network of biochar-based carbon removal solutions with support from SWEN Capital Partners. The company's plants generate renewable energy through biomass pyrolysis and sequester the residual carbon as biochar. The Company hopes to scale to 200 parks by 2033.

Ducks Unlimited receives $10 million for biodiversity and reforestation [Ducks Unlimited]

• Ducks Unlimited has received $10 million to restore hardwood forests and wildlife habitat in the lower Mississippi River valley, as part of the U.s Department of Agriculture's $145 million program to provide forest landowners with access to private carbon and biodiversity markets. The foundation will work with Trust in Food, Farm Journal’s sustainability division, and Landoption, to help landowners enroll in programs and access private capital.

Hard to Abate Sectors ≥ $1M

Commitments and deals

Deals

Biden Administration awards $6 billion to decarbonize heavy industry [ESGtoday]

• The Biden Administration has announced $6 billion in grants across 33 projects to advance industrial decarbonization, the largest ever investment in the U.S. The projects are expected to reduce 14 million tons of CO2 annually if successful. The awards provide 50% of the cost of first-of-a-kind or early-stage decarbonization projects, with the hope of bringing them to scale this decade. Priority is given to projects that accelerate deep decarbonization, and larger awards include the Green Aluminum Smelter project, the Lebec Net Zero Cement Plant Project, and the Hydrogen-Ready Direct Reduced Iron Plant and Electric Melting Furnace installation.

BP and Total invest $5 billion for carbon capture implementation [This is Money UK]

• BP, Total  and other investors have agreed to provide GPB 4 billion ($5 billion) to construct the net zero Teeside power plant, which will capture carbon emissions and store them under the north sea in the UK. The plant represents a major component of both companies net-zero transition investment plans.

Cemvision raises €10 Million in seed round [Macau Business]

• Cemvision has announced its first official customer contract, and raised €10 million for its first seed round, with support from BackingMinds, Polar Structure, and Zacua. Cemvision claims that its products can reduce CO2 emission from cement production by more than 95%, by using recycled industrial waste and renewably powered kilns.

Research and Knowledge Sharing

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Policy and Regulations
Conservation programs threatened by farm bill delays [Ag-web]

• Congressional dysfunction and the lack of a 2024 farm bill has created a looming "conservation cliff" for climate-smart and environmentally-friendly farming programs throughout the United states. With funds from the IRA expected to expire in 2031, congress is currently debating on how to fund the conservation title, and if climate related conservation funding will be redirected to support traditional land conservation programs. If an agreement is not met, it is possible that funding will not be extended, which could pose a threat to recent advances in climate smart agriculture funded by the IRA.

EU nature law held up by ambassador approval [Euronews]

• A vote by ambassadors on the EU's landmark Nature Restoration Law has been put on hold due to the sudden reversals of position by Hungary, who have moved to oppose the bill after previously supporting it due to resistance from agribusiness. The future of the bill is in doubt, as major changes would have to be made before the EU parliament adjourns ahead of elections.This would mark a major setback for the EU's green deal and the wider biodiversity preservation agenda ahead of COP16.

Texas school fund terminates $8.5 billion black rock contact over ESG policy [Reuters]

• The Texas Permanent School Fund is terminating its contract with BlackRock to manage $8.5 billion of state money, despite efforts by Larry Fink to convince them not to. Despite BlackRock no longer using the term ESG, it still fell afoul of the large remit given to the state treasurer of Texas to divest from fund managers that are seen as boycotting fossil fuels.

Finance Research and Updates

USAID to fund WTW climate insurance tool [Life Insurance International]

• USAID has announced that it will support WTW's “Resilience Wrapper” climate-resilient insurance solution, which provides insurance coverage for climate related disasters to private direct loans. The initial pilot will be funded by the U.S's PREPARE program for climate resiliency.

CFC enters carbon insurance market [Reinsurance News]

• CFC, a specialist insurance provider, has announced the launch of a Carbon Delivery Insurance project which will cover both physical and political risks faced by businesses purchasing voluntary carbon credits. The product will cover 100% of the purchaser's investments for non-delivery of carbon credits.

VC investment in Nature Tech rose 18% in 2023 [Carbon Pulse]

• Carbon Pulse reports that Nature Tech Investments rose 18% in 2023, with major bets on biodiversity credits. The finding is based on analysis of 910 VC transactions over the past 6 years, that saw reported funding rise from $1.56 billion in 2022 to $1.85 billion in 2023. The market maintained momentum despite overall slowing of the venture capital market.

IGCC releases updated Net Zero Investment Framework (IIGCC)

• The IGCC has released its updated Net Zero Investment Framework 2.0 for consultation. The framework is open for comment until April 24th, 2024 and includes updated asset classes and guidance for private equity and infrastructure investments, among other changes.

Emerging Science
Arup releases report on carbon sequestration effects of rewilding on Knepp Wildland Project [Arup]

• Arup has published the findings of the Knepp Wildland Carbon Project , which aims to set a benchmark for nature restoration data. The analysis was conducted by ARUP and natural capital specialist Nattergal, with partnerships from Agricarbon, Treeconomy, and Queen Mary University London. The study found that carbon sequestration rates over the first 20 years in the scrub and grassland rewilding project were competitive with woodland planting projects, with the majority of the sequestration belowground.

Study finds improving clean water access can slash carbon emissions by 1.6 billion tonnes a year [Businessgreen]

• A study by WaterAid, UC Boulder and Castalia Advisors finds that enhanced access to clean water could save over 1.6 billion in CO2 emission a year, which could be funded through blue economy-linked carbon credits.

Nature publishes review of Nature-Based Climate Solutions Science [Nature]

• An expansive new study in Nature looks at the current state of viable nature-based climate solutions, analyzing 43 pathways that are currently the most used for both scientific and financial viability.

Higher temperatures linked to higher food prices [Phys]

• A new study in Communications Earth and Environment sponsored by the European Central Bank finds that food prices and overall inflation rise as temperatures increase. The study analyzed food, temperatures, and other climate factors across 121 nations since 1996, and found that weather and climate shocks were likely to cause food prices to rise 1.5-1.8% annually within a decade, with higher rates in hotter climes.

Nature Geo-science study explores soil carbon's role in global temperatures [Phys]

• A new paper by Lawrence Livermore National Laboratory (LLNL) looks at how particulate soil carbon reacts to global climate temperatures, and finds that warmer temperatures are associated with increased microbial decomposition of particulate soil carbon.

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