Climate Investment Newsletter 1/9 - 1/15

Individual Deals and Market Watch

Union Square Ventures File Paperwork Indicating New Funds [Tech Crunch]

• New York-based USV closed $151 million for USV Climate 2021.

CYCLE CAPITAL ANNOUNCES $145 MILLION CLEANTECH FUND FINAL CLOSE, ADDS EDC AS LP [BetaKit]

• Montreal-based cleantech venture capital firm Cycle Capital has closed $145 million CAD for its cleantech fund, Cycle Capital IV. The startup also announced that Export Development Canada (EDC) is a new limited partner.

BloombergNEF reports strong sustainability and green bond growth in 2020 [Smart Energy Decisions]

• BloombergNEF announced Jan. 11 that sustainable debt (sustainability bonds) grew 81% in 2020 to $68.7 billion, while the longest-established theme, green bonds, saw volumes rise 13% to a new record of $305.3 billion. While bond growth was robust, both sustainability-linked loans and green loans saw 15% reductions in issuance, to $119.5 billion and $80.3 billion respectively.

Proterra, Commercial Electric Vehicle Technology Leader, To Become Publicly Listed Through Transaction with ArcLight Clean Transition Corp. [Yahoo Finance]

• Proterra, the leading US electric bus maker will become publicly listed through an ArcLight SPAC. Upon closing, Proterra's common stock is expected to trade on the Nasdaq under the ticker symbol PTRA. The transaction represents an enterprise value of $1.6 billion for Proterra and likely a nice exit for long term backers.

Swedish Oatly Could IPO in US As Oat Milk Sees Triple-Digit Sales Growth [Green Queen]

• Oatly could be going public this year, according to a report by CNBC last week estimating a debut value of ~$5B and signaling the arrival of another plant based titan.  
• Born in 2017, with sales doubling in 2020 to $400M, the startup has seen its popularity skyrocket during the coronavirus, which has accelerated the trend away from dairy further. Oatly is expected to be profitable in 2021.

Total funding in solar equipment increased 24% in 2020 to $14.5bn [Smart Energy Decisions]

• Mercom Capital Group announced on Jan. 11 that total corporate funding into the solar sector globally, including venture capital, private equity (VC), debt financing, and public market financing, came to $14.5 billion in 2020, a 24% increase compared to the $11.7 billion raised in 2019.

Macro Commitments

California Gov. Proposing to Spend $4.1 Billion on the Climate and Environment [KQED]

• The $227 billion budget proposed on Friday by Gov. Gavin Newsom includes $4.1 billion in spending on a suite of environmental initiatives meant to fight climate change, gird California against devastating wildfires, reduce smog, and bolster the adoption of clean vehicles on the state’s roads.
• Given the pandemic-induced recession, the fact that California has so much to spend on the environment is remarkable, but the state is looking at a $15 billion surplus thanks to a progressive tax structure that helped capture huge capital gains generated by a soaring stock market.

China announces long-awaited national carbon market launch [Environmental Finance]

• China has announced it will launch its long-awaited national emissions trading scheme (ETS) in February, although the rules are not expected to be too onerous initially for the power companies covered by the market.

Prime Minister commits £3bn UK climate finance to supporting nature [Gov.UK]

• The Prime Minister Boris Johnson announced on January 11th that the UK will commit at least £3 billion to climate change solutions that protect and restore nature and biodiversity over five years.
• The funding will be allocated from the UK’s existing commitment of £11.6bn for international climate finance and will deliver transformational change in protecting biodiversity-rich land and ocean, shifting to sustainable food production and supply, and supporting the livelihoods of the world’s poorest.

World Bank Plans to Invest over $5 Billion in Drylands in Africa [reliefweb]

• World Bank Group President David Malpass announced the investment at the One Planet Summit, a high-level meeting co-hosted with France and the United Nations that is focused on addressing climate change and biodiversity loss.
• “This investment, which comes at a crucial time, will help improve livelihoods as countries recover from COVID-19 while also dealing with the impact of both biodiversity loss and climate change on their people and economies,” said Malpass.

BHP Invests in Boston Metal to Make Emissions-Free Steel [Bloomberg Green]

• BHP Group, the world’s biggest mining company, has participated in Boston Metal’s $60M round along with new investors Devonshire, Piva Capital and prior backers The Engine, Breakthrough Energy Ventures, and Prelude. Boston Metal has engineered and is testing the first near-zero emissions path to steel making

Investor alliance targets $10bn natural capital investment [Environmental Finance]

• An ‘alliance’ of institutional investors HSBC Pollination Climate Asset Management, Lombard Odier and Mirova aims to invest $10 billion in natural capital by next year.
• The Natural Capital Investment Alliance aims to ‘accelerate the development of natural capital as an investment theme’ and improve ‘investor-centric descriptions’ of natural capital investment opportunities.

Hydrogen project aims to drive UK transition to a low-carbon economy [FT]

• Indian energy company Essar is planning to build the UK’s biggest low carbon hydrogen production hub to help the country’s transition to a more environmentally sustainable economy.

Aviva Investors Pledges Zero Carbon by 2040 for its £47.3B Property Portfolio and Private Debt [News Break]

• Aviva Investors has pledged that its entire £47.3B property portfolio will record net zero carbon emissions by 2040. It also plans to extend the commitment to the complex world of private debt. The move, the latest in a series of commitments.

PepsiCo says it will reach net-zero emissions by 2040 [Fast Company]

• As one of the largest food and beverage companies in the world, PepsiCo has a correspondingly massive carbon footprint—it generated 57 million metric tons in 2019. But by 2040, 10 years ahead of what’s necessary to meet the goals of the Paris climate agreement, it plans to reach net-zero emissions.

Aegon AE pension default funds to be net zero by 2050 [PensionsAge]

• Aegon UK has committed to achieving net zero carbon emissions across its auto-enrolment (AE) default pension funds by 2050, as customer research reveals that 45 per cent of savers support calls for investing in a net zero carbon future to be made mandatory.

Frameworks and Case Studies

IEA Plans to Launch an Energy Roadmap to [Smart Energy International]

• Lagging for more than a decade in their zero carbon energy forecast, IEA looks to leapfrog to the moment and will publish a World’s Roadmap to Net-Zero by 2050 The initiative  unveiled in Paris on January 13th will set out in detail what is needed to fully decarbonise the energy sector and put emissions on a path to 1.5C by 2050.

Africa's green energy transition 'unlikely' this decade [BBC News]

• A report published in Nature Energy, “A machine-learning approach to predicting Africa’s electricity mix based on planned power plants and their chances of success”, found that around 2,500 power plants are planned, enough to double electricity production by 2030. But the authors say that less than 10% of the new power generated will come from wind or solar.

U.S. Disaster Costs Doubled in 2020 to $95bn, Reflecting New Costs of Climate Change [NYT]

• Hurricanes, wildfires and other disasters across the United States caused $95 billion in damage last year, according to new data from Munich Re, almost double the amount in 2019 and the third-highest losses since 2010.

Restoring oceans could create 100,000 jobs and give £50bn boost to economy in UK [Climate Action]

• Restoring the UK’s seas could put billions of pounds into the economy by 2050 and bring thousands of new jobs, according to a new report by Sky Ocean Rescue and WWF.