Climate Investment Newsletter 1/23 - 1/29

Highlights of the Week

China pours money into green Belt and Road projects [Financial Times]

• Renewable power has for the first time made up the bulk of China’s Belt and Road Initiative energy investments as the coronavirus pandemic accelerated a shift away from fossil fuels, new analysis showed.

Three NYC Pension Funds to Divest $4 Billion From Fossil Fuels [Bloomberg Green]

• Three of New York City’s five public employee pension funds are divesting $4 billion from securities related to fossil-fuel companies.
• Pensions for teachers, school administrators and civil servants voted to divest their holdings, according to a statement Monday from Mayor Bill de Blasio, Comptroller Scott Stringer and retirement board trustees. Police and fire department pension funds haven’t voted to divest.

Individual Deals and Market Watch

Oil Giant Total Acquires A $2.5bn Stake In World’s Biggest Solar Developer [Intelligent Living]

• France’s Total has acquired a 20% minority stake in Adani Green Energy Limited (AGEL), marking a strategic alliance between them. The $2.5 billion (£1.84bn) investment includes gas utility business, liquefied natural gas (LNG) terminals, and renewable assets across India. But most importantly, the deal with Adani gives Total exposure to a leading renewable energy business in one of the world’s fastest-growing energy demand markets – India.

Chamath Palihapitiya leads $250 million investment in residential solar company Sunlight Financial [Markets Insider]

• The billionaire investor tweeted he's partnering with Apollo-affiliated Spartan Acquisition Corp (NYSE: SPRQ) and Coatue founder Philippe Laffont to lead a $250 million PIPE in Sunlight Financial, a "leader in the residential solar boom."

Renewable investment wave continues as solar lending company Loanpal raises $800 million [Tech Crunch]

• Days after the billionaire investor Chamath Palihapitiya announced his involvement in the $1.3 billion acquisition of the solar and home improvement lending business Sunlight Financial, a collection of investors announced a nearly $1 billion cash infusion into Loanpal, another renewable energy and home improvement lender.

Hydrogen is going to take 25% of all oil demand by 2050, Bank of America analyst says [CNBC]

• Hydrogen is set to play a major role in the global energy markets over the coming decades, supplanting a large chunk of oil demand, according to Bank of America’s head of global thematic research.

Charging company EVgo is going public via SPAC merger [The Verge]

• Another company in the electric vehicle industry is going public by merging with a so-called SPAC, or special purpose acquisition company. This time, it’s EVgo, one of the leading providers of electric vehicle charging stations in the US.
• The deal is expected to bring in $575 million for EVgo. When it closes, EVgo will become a publicly-traded company on the New York Stock Exchange.

Shell agrees deal to buy electric car-charging company ubitricity [The Guardian]

• Shell has agreed to buy one of Europe’s largest on-street electric car-charging companies to accelerate its move into low-carbon transport.
• The oil company, which faces growing pressure to cut its carbon emissions, expects the deal to buy the German car-charger ubitricity to be finalised by the end of the year.

Sunlight Financial LLC, a Premier Residential Solar Financing Platform, to List on NYSE Through Merger With Apollo-Affiliated Spartan Acquisition Corp. II [business wire]

• Sunlight Financial LLC (“Sunlight”), a leading U.S. residential solar financing platform, and Spartan Acquisition Corp. II (NYSE: SPRQ) (“Spartan”), a SPAC managed by an affiliate of Apollo will combine. (NYSE: APO) Sunlight has funded over $3.5 billion of loans through its proprietary platform. Positioning its portfolio as a strong performer with good ESG alignment, Sunlight has arranged financing for more than an estimated 100,000 residential solar systems.

Sustainable fund assets hit record $1.7 trln in 2020: Morningstar [Reuters]

• Demand to invest in funds which focus on environmental, social and governance (ESG) issues jumped in 2020, driving assets under management up 29% in the fourth quarter to nearly $1.7 trillion, industry tracker Morningstar said on Thursday.

Victory Hill raises £242.6m for global infrastructure investment trust on London Stock Exchange [Investment Week]

• The company will invest in a diversified portfolio of global sustainable energy infrastructure assets, largely in developed market countries. It will target total returns of 10% per annum once fully invested including a yield of 5%, which Victory Hill CEO Anthony Catachanas told Investment Week was "very comfortable for us [to achieve]".

Macro Commitments

BlackRock sets out 2021 net-zero support commitments [IPE]

• BlackRock has put its brand behind temperature estimates of portfolios, and will be publishing a temperature alignment metric for public equity and bond funds, where market data is sufficiently reliable, as part of a series of actions aimed to help investors with their climate change-related goals

Ontario Teachers commits to net zero emissions by 2050 [Pensions & Investments]

• Adding another pension to the list of net zero, Jo Taylor, president and CEO of The Ontario Teachers' Pension Plan, ($160.2 billion AUM), is committing to achieving net-zero greenhouse gas emissions by 2050, officials announced. Mr Taylor said "This is a long-term journey and the actions we take now will be a defining feature of the resiliency of our business and the value we create over time for our members, partners and communities where we operate and invest".

UK Prioritizes Climate Crisis By Supporting Sustainability in Developing Countries With $4 Billion Plan [Good News Network]

• The UK government has announced it will commit at least £3 billion (US $4 billion) to climate change solutions in developing countries, helping to protect and restore nature and biodiversity over five years.

IFAD plans $500m fund for small farmers [Dawn]

• IFAD (Inter­national Fund for Agri­cul­tural Development) plans to launch a new $500m fund dubbed ASAP+ “to reduce climate change threats to food security, lower greenhouse gases and help more than 10 million people adapt to weather changes”. Austria, Germany, Ire­land and Qatar have already said they will contribute.

European Central Bank sets up climate change centre [FinExtra]

• The European Central Bank is to set up a climate change centre, uniting the disparate work streams operating across the bank.
• The new unit, which will consist of about ten staff working with existing teams across the bank, will report to president, Christine Lagarde, who oversees the ECB’s work on climate change and sustainable finance.

BIS launches second green bond fund for central banks [BIS]

• The Bank for International Settlements (BIS) has launched a euro-denominated, open-ended fund for green bond investments by central banks and official institutions. The launch follows the successful introduction of a first BIS green bond fund denominated in US dollars in September 2019. Together, the two BIS green bond funds will manage some $2 billion in green bonds for central banks with the expectation that the funds will continue to grow considerably.

EY aims to be carbon negative in 2021 [Smart Energy Decisions]

• EY, the global organization of Ernst & Young, announced on Jan. 25 that it has set an ambition to be carbon negative in 2021 by setting targets to significantly reduce its absolute emissions and removing and offsetting more carbon than it emits. This new ambition builds on the global organization's achievement of carbon neutrality in December 2020 and underscores the EY commitment to the environment and to driving long-term, sustainable growth.

Boeing commercial airplanes to fly on 100% sustainable fuels [Smart Energy Decisions]

• Boeing announced on Jan. 22 that it is committing to making its commercial airplanes capable and certified to fly on 100% sustainable aviation fuels by 2030. Boeing has previously conducted successful test flights replacing petroleum jet fuel with 100% sustainable fuels to address the urgent challenge of climate change.

Scottish Government to end overseas support for fossil fuel companies this year [insider.co.uk]

• The Scottish Government will end its overseas business support for fossil fuel companies before the Cop26 summit in Glasgow this year, a minister has said.
• Trade Minister Ivan McKee MSP said promotional activities solely focused on fossil fuel goods and services would cease in order to meet climate change commitments.

Climate change: Hong Kong’s government raises US$2.5 billion as it prices Asia’s first ever 30-year sovereign green bond [South China Morning Post]

• Hong Kong’s government priced what it said was the first 30-year green bond by an Asian government ever and the longest tenor bond in its history on Tuesday, raising US$2.5 billion, according to the Hong Kong Monetary Authority (HKMA), the city’s de facto central bank.

Aggreko Sets Net Zero Targets for 2030 and 2050 [Rental Equipment Register]

• Aggreko, the world leader in the temporary energy market, announces its ambition to be net zero by 2050 or sooner, aligning with the Paris Agreement to limit global warming to 1.5° Celsius.

GM Plans to Sell Only Zero-Emission Models by 2035 [Bloomberg Green]

• General Motors Co. is promising to go green by making all of its global operations and vehicles carbon neutral by 2040, including selling only zero-emission models by 2035.

China's CEIC, China Reform set up $1.55 billion new energy fund [Reuters]

• State-run China Energy Investment Corp (CEIC) and China Reform Holdings Corp have set up a 10.02 billion yuan ($1.55 billion) fund to invest in clean and renewable energy projects, the state assets regulator said on Friday.

World Bank Issues SEK 2 Billion 8-Year Green Bond [Mirage]

• The World Bank (International Bank for Reconstruction and Development, IBRD, Aaa/AAA) today issued a SEK green bond due January 2029, raising SEK 2 billion.
• Swedish investors made up the majority of investors in the transaction with pension funds, insurance funds and asset managers accounting for 84% of participation. Banks picked up the remaining share. The bond offers an annual coupon of 0.250% and a yield of 0.313%.

Frameworks and Case Studies

Natural climate solutions can provide 7 bln tonnes of CO2 abatement by 2030 [Carbon Pulse]

• Investing in conservation and land management programmes can sequester nearly one-third of the carbon necessary to keep temperatures in line with the Paris Agreement’s 1.5C target, with carbon markets seen as an important component in realising this goal, according to a report published Monday.

‘Urgent action’ needed to hit net-zero truck emissions by 2050, report says [Truck News]

• Shell and Deloitte see a path for the world’s trucks and buses to produce net-zero emissions by 2050, but identify “urgent action” that needs to be taken to reach the goal.

Energy Community releases carbon pricing roadmap for EU’s eastern neighbours [Carbon Pulse]

• The Energy Community (EnC) has released a roadmap for how the EU’s Western Balkans and Eastern neighbours can implement carbon pricing schemes, with the intergovernmental organisation flagging the potential for market integration and an eventual link with the EU ETS.

Data voted the biggest hurdle for investors trying to address biodiversity [Responsible Investor]

• Data is the biggest barrier to making investments that support biodiversity, with 70% of 222 surveyed investors putting it above being unable to value natural capital and lacking internal expertise, a new study by RI and Credit Suisse has found.

Rich nations 'hugely exaggerate' climate finance [Physiorg]

• Developed countries promised to provide $50 billion in annual finance for adaptation by 2020. But official OECD figures show that in 2018 donors committed just $16.8 billion.
• The figure, according to green group CARE International, is $9.7 billion.

Global green hydrogen production set to reach 5.7 million tons by 2030 [Smart Energy Decisions]

• Frost & Sullivan announced on Jan. 19 that its recent analysis forecasts that global green hydrogen production will skyrocket at a compound annual growth rate of 57% between 2019 and 2030, rising from 40,000 tons to 5.7 million tons. Increasing concerns about carbon emissions and the need to decarbonize the industrial, commercial, transport and power sectors have forced countries to reduce their dependence on fossil fuel-based systems and increase investments across alternate low-carbon technologies, including green hydrogen.