Climate Investment Newsletter 12/12 - 12/18

Highlight of the Week

Can capital markets succeed where governments fail?

• Global investor networks are alive and humming with climate-focused commitments. Are capital markets the missing carbon regulators?  
• The deepening climate crisis requires an unprecedented alliance of private capital and government policy to mobilize around climate solutions. We’re not there yet, but we could catch up. And the time to do it is at November’s 26th United Nations Climate Change Conference (COP26) in Glasgow.

Individual Deals and Market Watch

I Squared Sells Grupo T-Solar to Cubico for $1.8 Billion

• Infrastructure investment manager I Squared Capital has agreed to sell Grupo T-Solar to Cubico Sustainable Investments Ltd. for 1.5 billion euros ($1.8 billion).
• T-Solar has 274 megawatts of installed and regulated solar power capacity in Spain and Italy, according to an emailed statement from I Squared. The internal rate of return for the deal was over 40%.

EV Company Electric Last Mile to List on Nasdaq Through Merger With Forum Merger III Corporation

• Electric Last Mile, Inc. (“ELMS”), an electric vehicle (EV) company focused on creating efficient and reliable last mile solutions, and Forum Merger III Corporation (Nasdaq: FIII) (“Forum” or “Forum III”), a special purpose acquisition company, today announced that they have entered into a definitive agreement for a business combination that would result in ELMS becoming a publicly listed company. Upon closing of the transaction, which is expected to occur in the first quarter of 2021, the combined company will be named Electric Last Mile Solutions, Inc. and will continue to be listed on the Nasdaq Capital Market under the new ticker symbol, “ELMS.” The transaction reflects a pro forma implied equity value for the combined company of approximately $1.4 billion.

EVBox Group to Become Public Company via Business Combination with TPG Pace Beneficial Finance

• The business combination values EVBox at an implied $969 million enterprise value. Upon transaction closing, and assuming no redemptions by TPG Pace stockholders, EVBox is expected to have approximately $425 million in cash, and a total pro-forma equity value of approximately $1.394 billion.

Residential renewable energy developer Swell is raising $450 million for distributed power projects in three states

• Swell Energy, an installer and manager of residential renewable energy, energy efficiency and storage technologies, is raising $450 million to finance the construction of four virtual power plants representing a massive amount of energy storage capacity paired with solar power generation.

Lightning EMotors to Go Public in Reverse Merger With SPAC

• Lightning eMotors, a company that electrifies commercial-vehicle fleets, has agreed to go public through a merger with GigCapital3 Inc., a blank-check company.

J.P. Morgan Asset Management Launches Carbon Transition U.S. Equity ETF: JCTR

• J.P. Morgan Asset Management today launched the JPMorgan Carbon Transition U.S. Equity ETF (JCTR). The sustainable ETF will offer core exposure to U.S. equities with a low tracking error, compared to the Russell 1000 Index, and aim to have a meaningful reduction in carbon intensity.

'Net Zero Underwriting Alliance': Axa boss proposes new climate alliance for insurance sector

• The chief executive of French insurance giant Axa has called for the creation of a 'net zero underwriting alliance' that would see member companies from across the insurance sector align their business activities with the 1.5C warming pathway required under the Paris Agreement.

Fed joins central bankers backing Paris climate goals

• The US Federal Reserve has joined a consortium of central bankers supporting the Paris climate goals as it becomes more outspoken on the risk climate change poses to the global economy.

BP Acquires Majority Stake in U.S. Forest Carbon-Offsets Company

• BP Plc acquired a majority stake in forest carbon-management company Finite Carbon, expanding on an initial investment made last year.
• The transaction gives BP -- one of the world’s biggest carbon-credit traders -- control of the largest developer of forest carbon-offset credits in the U.S. It comes at the end of a year that’s seen the oil major step up its commitment to reduce emissions and increase investments in cleaner energy.

Sweden's AP funds: Alternatives are go

• AP funds welcome the removal of the ceiling on their investment in alternatives
• A two-stage reform to the mandate for Sweden’s four main pension buffer funds finally came to completion just after March’s market shock. After years of lobbying, the funds now have more  scope to invest in illiquid and alternative assets.

Fifth Wall adds new partner as it seeks at least $200 million for a new climate impact fund

• “A year ago, real estate investors began asking questions around climate and sustainability,” said Fifth Wall co-founder Brendan Wallace . These questions were motivated by three main concerns from commercial and residential property developers.

Church of England investors ban nine, keep 12 after climate engagement

• The Church of England’s national investing bodies have banned investment in nine companies and stuck with 12 after asking them to meet certain climate change-related standards, according to an announcement today.
• They said they would divest the restricted companies in which they have holdings as soon as possible. As of 21 October, the total value of their holdings in the companies was £32m (€34.9m).

Macro Commitments

EU Raises 2030 Climate Target To 55%

• After an all-night negotiating session that went on for eight hours, the prime ministers and presidents of the European Union agreed early this morning to increase the EU’s emissions reduction target for 2030 from 40% compared to 1990 to 55%.

Canada pledges extra €9.7B for climate investment, innovation

• The Canadian government stepped up its climate commitments with an additional C$15 billion (€9.7 billion) plan that includes extra money for research and innovation to speed take-up of green hydrogen and other renewable energy sources in Canadian industry.

China to Ease Foreign Access to Domestic Green Finance Market

• The PBOC (People’s Bank of China) has pledged to harmonise its green finance standards with international norms, and to ease access to its domestic green finance market for foreign investors, as part of efforts to speed up its transition to a low-carbon economy.
• In September, China announced ambitions to reach its carbon emission peak by 2030, and achieve carbon neutrality by 2060. “This long-term vision reflects China’s commitment to green and low carbon development,” PBOC governor Yi Gang said at SFF x SWITCH on Wednesday (9 December).

BlackRock to Double Down on Climate Offenders in 2021

• BlackRock, the world’s largest asset manager, will step up its sustainability efforts next year by more than doubling the number of companies it will scrutinize for climate transgressions.

Lendlease to ban diesel on construction sites in zero carbon push

• Lendlease has announced plans to phase-out the use of diesel across all its European construction sites from 2025, with the property developer shifting instead towards renewable electricity to power on-site equipment and appliances as part of a new 2040 zero carbon roadmap unveiled yesterday.

Pension scheme Nest to ramp up green energy and buildings investments

• Workplace pension scheme Nest has unveiled plans to ramp up its investment in energy efficiency upgrades, renewables, and green buildings in a bid to slash the carbon footprint of its portfolio and take advantage of "exciting" growth areas in emerging markets, it announced yesterday.

U.K. Power Grid Moving Offshore to Support $27 Billion Wind Boom

• Britain’s electricity grid operator is pushing deeper into the turbulent waters of the North Sea, seeking to support the government’s $27 billion program to build up the offshore wind industry.

Frameworks and Case Studies

Experts Support UN Secretary-General’s Call For Major Effort In 2021 To Achieve The $100 Billion Climate Finance Goal

• Meeting the pledge by developed countries to mobilize at least US$100 billion a year to support developing countries in mitigating and adapting to climate change, lagging even before the COVID-19 pandemic, requires urgent action, according to a new report by independent experts released today by the United Nations.

UK white paper says BECCS, RNG will help meet net zero goal

• The U.K. government on Dec. 14 published a white paper that describes how the country will clean up its energy system and reach net zero emissions by 2050. Bioenergy carbon capture and storage (BECCS) and renewable natural gas (RNG) will play an integral role in reaching that goal.

Near-Zero Industrial Emissions By 2050 Would Boost U.S. GDP 3.3%, Create 5 Million Jobs

• New analysis shows seven common-sense policies that avoid wasted energy, transition to clean fuels, and reduce industrial sector emissions could dramatically boost the United States’ economic output – increasing GDP 3.3% and creating more than 5 million additional jobs by 2050.

Getting U.S to Zero Carbon Will Take a $2.5 Trillion Investment by 2030

• It’s going to take $2.5 trillion in spending over the next decade to get the U.S. on a path to a carbon-free economy, but the transition will help to pay for itself, Princeton University researchers say.

Emissions Gap Report 2020: 1.5°C Goal Requires Green Recovery, Rapid Action

• The UN Environment Program (UNEP) has released its annual flagship Emissions Gap Report, warning that the world is on track to warm more than 3°C this century. Although COVID-19 caused a brief emissions dip, the report predicts that the long-term impact on climate change will be negligible unless coupled with a green recovery.

Companies are committing to net-zero emissions and diversity, 2 reports find

• Nearly half of the companies engaging with investors through Climate Action 100 Plus have committed to reaching net-zero emissions no later than 2050 or sooner, the organization said in a progress report released Thursday. The Climate Action 100 Plus initiative has 545 investor signatories with a collective $52 trillion in assets under management.