Climate Investment Newsletter 5/8 - 5/14

We’re Hiring: Join the C4C Team!

Head of Climate Funds Research and Evaluation

• Build and maintain the definitive digital resource on funds, vehicles, large projects, prizes and incubators that are investing (or driving investment) in climate solutions aligned to science-based roadmaps

Highlight of the week

IEA makes bombshell call for end to fossil fuel investments with launch of Paris-aligned decarbonisation roadmap [Responsible Investor]

• Investments in new fossil fuel projects will need to stop immediately if the world is to limit global warming to 1.5 °C, the International Energy Agency (IEA) has said in what commentators have described as a “stunning challenge” by the historically pro-fossil fuel body.

Individual Deals and Market Watch

German 30-yr green bond bucks market selloff with record demand (39bn euros) [Reuters]

• Germany received a record 39 billion euros of demand on Tuesday, May 11th, for a 30-year green bond, extending its yield curve for environmentally focused debt and drawing strong investor interest despite a selloff across euro debt markets.

China tech giants bet $19 billion on global electric car frenzy [Bloomberg]

• As the world’s biggest market for new-energy cars, China is a key battlefield.   Established automakers like Volkswagen AG and General Motors Co. are already slogging it out with local upstarts such as market darling Nio Inc. and Xpeng Inc. Over the past three months, Huawei, smartphone giant Xiaomi Corp., Baidu -- which runs China’s top search engine and a mapping app -- and even Apple’s Taiwanese manufacturing partner Foxconn have joined the fray, forging tie-ups and unveiling their own carmaking plans.

Oatly Commences Hotly Anticipated IPO With $10Bn Target Valuation [Vegconomist]

• Oatly Group AB announced on Tuesday, May 11th, that it has commenced its IPO of 84,376,000 American Depositary Shares, each representing one ordinary share offered by Oatly and certain selling shareholders. Around 20 million of those shares were from existing investors, who include Oprah Winfrey, Natalie Portman and Jay-Z. Oatly will list its shares under “OTLY” on Nasdaq. The company plans to raise a figure which is reported at between $1.43 and $1.65 billion, and is aiming for a valuation of $10 billion.

Avangrid to raise USD 4bn in private placement [Renewables Now]

• US sustainable energy company Avangrid Inc (NYSE:AGR) will privately place USD 4 billion (EUR 3.31bn) of common stock with its majority owner, Spanish utility group Iberdrola SA (BME:IBE), and the Qatar Investment Authority (QIA), it said in a regulatory filing on Wednesday (May 12th).

NXP sells $2 billion of debt to fund power-saving semiconductors [Bloomberg]

• The chipmaker issued bonds in two parts, according to a person with knowledge of the matter, who asked not to be identified as the details are private. The longer portion of the deal, a 20-year security, yields 1.15 percentage points above Treasuries, down from the initially targeted 1.5% premium, the person said. That equates to about 3.30%.

Orion Energy Partners closes $1.08bn Infrastructure Credit Fund III [Business Wire]

• Orion Energy Partners (“Orion”), a provider of credit and equity capital solutions supporting infrastructure investments in energy transition and environmental innovation, announced the final close of Orion Energy Credit Opportunities Fund III (“Fund III”). Through an oversubscribed offering exceeding the initial target of $900 million, Orion received $1.079 billion in capital commitments from investors across six continents. Orion’s Fund III will continue to address growing capital dislocation for middle market infrastructure credit with an emphasis on flexible direct lending into private and public companies seeking to scale both traditional and new infrastructure solutions.

Enlight, Prime reach fin close on 372-MW (USD-363m) Swedish wind project [Renewables Now]

• The milestone was announced on Thursday, May 13th, by the project’s owners -- Enlight Renewable Energy Ltd (TLV:ENLT) from Israel and the Prime Green Energy Infrastructure Fund (PGEIF) of German asset manager Prime Capital AG.

Couche-Tard prices USD-350m tranche of inaugural green bonds [Renewables Now]

• Canadian convenience stores operator Alimentation Couche-Tard Inc on Monday, May 10th, successfully priced a private debt offering that includes an inaugural $350 million 30-year green bond at 3.625%.  (EUR 288m).  
• Use of funds: clean transportation; energy efficiency; renewable energy; pollution prevention and control; sustainable water and wastewater management; and green buildings.

Aquila Energy Efficiency Trust eyes GBP 150m (USD 211m) IPO in London [Renewables Now]

• Aquila Energy Efficiency Trust said it intends to invest in solar photovoltaic (PV) plants, batteries and other energy storage solutions and electric vehicle (EV) charging infrastructure, in addition to energy-efficient lighting, smart building and metering services, cogeneration plants and heating, ventilation and air conditioning (HVAC) systems. Its investments will target assets with a maximum individual value of EUR 10 million in the European Economic Area (EEA), Switzerland and the UK.

Acciona increases Q1 net profit by 24% (USD 118 million) after adding 319 MW of new renewable energy capacity to its portfolio [Renewables Now]

• Acciona said last week that the increase is attributed to the contribution of the newly switched on international renewables and a 9.4% decrease in net financial expenses compared to the figure in the same period of 2020.

Autonomous trucking startup Einride raises $110M ahead of expansion into US [Tech Crunch]

• Einride, the Swedish startup known for its unusual-looking electric and autonomous pods that are designed to carry freight, has raised $110 million to help fund its expansion in Europe and into the United States.

Bank, power company issue joint US$100M ‘green bond’ [Dominican Today]

• The Haina Electricity Generating Company (EGE Haina) is the first Dominican company to establish a trust for the issuance of fixed income securities with environmental impact, “green bonds,” for US$100 million, based on one of its renewable power plants.

Unilever's net-zero transition plan backed by more than 99% of shareholders [edie]

• The vote took place at a virtual meeting on Wednesday (5 May), covering votes on Unilever’s ‘Climate Transition Action Plan’ among other proposed changes to business strategy and processes.

ESS Inc., a long-duration energy storage solutions company, to become a publicly listed company through merger with ACON S2 Acquisition Corp. [ESS Inc]

• ESS Tech, Inc. has entered into a definitive business combination agreement with ACON S2 Acquisition Corp. (NASDAQ: STWO); upon closing, the combined company expects to be listed on the New York Stock Exchange under the ticker symbol “GWH.”
• ESS claims an environmentally friendly, low-cost, long-duration storage battery engineered to support renewables and stabilize the electrical grid.

Macro Commitments

PG&E’s $7.5B securitization: A bellwether for utility efforts to cover the costs of climate change? [Canary Media]

• Northern California utility Pacific Gas & Electric has won approval for the largest and longest tenor (30-year) ratepayer-backed bond in U.S. history.  Use of proceeds is to refi short term debt from PGE’s restructuring and accelerate payments to victims of the 2018 Camp fires which triggered PGE’s bankruptcy a fire exacerbated by climate change.  
• Ratepayer advocates are challenging the issuance which has PGE customers backstopping principal and interest.
• Securitizations like this could play an increasing role in managing the costs of climate change, whether to pay for weather disasters or to accelerate closure of high-emitting power plants.

Hyundai Motor to make EVs in U.S., invest $7.4 Billion [Bloomberg]

• Hyundai Motor Group, which owns the Hyundai and Kia car brands, said it will build electric vehicles in the U.S. as part of a $7.4 billion investment that also covers hydrogen refueling stations and unmanned flying taxis.  
• That’s right, unmanned flying taxis are coming to a corner near you.

Biden administration approves $2B Offshore wind project [Canary Media]

• Tuesday’s (May 11th) decision from the Bureau of Ocean Energy Management clears the path for developers to begin installing Vineyard Wind, the 84 turbine CIP-Avangrid project that will deliver 800 megawatts of energy to Massachusetts when connected by the end of 2023.  

Amazon raises $1 billion sustainable bond for climate, social causes [Reuters]

• The world's biggest company joins a growing list of debt issuers tapping the market for green and sustainable bonds.  
• C4C: Use of proceeds is what you might expect, electric delivery fleets, e-bikes, alternative delivery vehicles, a green building project, and less expected --  potentially PE investments in clean transportation and zero carbon buildings.

Australia commits $219m to buy offsets from large industrial facilities [Carbon Pulse]

Ascendas Reit clinches US$150 million green interest rate swap [The Asset]

• Ascendas Real Estate Investment Trust (Ascendas Reit) has entered into a green interest rate swap (IRS) agreement with Scotiabank, which will be used to hedge an existing US$150 million green loan with the lender. The solution aims to support the reit’s commitment to meet its key green targets by the swap maturity date.

SBI, EIB tie-up for €100 million green fund [Mint]

• The State Bank of India (SBI) and the European Investment Bank (EIB) on Friday, May 7th, said they have agreed to back an initiative, Neev Fund II, of €100 million for new high-impact climate action and sustainability business financing.

CDC Group commits $100 million to ETG, supporting the lives of farmers across Africa and Asia [CDC Group]

• Investment aims to support over 550,000 farmers in Africa, improving crop yields and farmers’ livelihoods
• ETG connects smallholder farmers to global markets – a key tool for delivering significant development impact, enabling the financial independence of local farmers and increasing the availability of food staples
• This commitment marks one of CDC’s largest corporate debt investments

Pathways, Frameworks, Case Studies, Research

Moody’s: Sustainable bond volumes soar to record $231 billion in Q1 [Climate Action]

• Global issuance of green, social and sustainability bonds – or sustainable bonds, collectively – totalled a record $231 billion in the first quarter of 2021, a 19% increase over the previous quarter and more than three times higher than the same quarter last year, Moody's Investors Service says in a new report.

Renewable hydrogen could save Europe over €2 trillion by 2050, study finds [H2-View]

• Hydrogen technologies will play an essential role in reaching the Green Deal’s 2050 net zero targets by decarbonising hard-to-abate sectors, according to a study released by Hydrogen4EU.
• The sectoral breakdown of hydrogen demand confirms the versatility of hydrogen in decarbonizing the energy system. Hydrogen can provide an answer to the challenges of deep electrification and the limits of energy efficiency improvements. It proves to be a cost-efficient solution for certain hard-to-abate energy uses in transport and industry. [Hydrogen4EU]

Garbage may be $6 billion opportunity for Australia green push [Bloomberg Green]

• Large scale energy-from-waste facilities were seen holding the biggest potential, cutting the amount of trash going to landfill while also recovering energy. Other significant opportunities were in refuse-derived fuel facilities, and processing municipal solid waste generated by households.

Clean Energy Ventures launches open access tool to identify the climate technologies worth investor attention [Cision]

• Boston-based Clean Energy Ventures announced May 11th the launch of an open-access calculator to estimate a climate tech innovation's potential impact on climate change. The Simple Emissions Reduction Calculator (SERC), which Clean Energy Ventures developed to help evaluate climate tech startups seeking funding, will be used by partners including Cleantech Open, Cleantech Scandinavia, and by any climate tech startups that are looking to validate their carbon emissions reduction potential. The open accessibility of SERC represents a step forward for clean energy and climate tech venture capital investors.

‘Exceptional new normal’: IEA raises growth forecast for wind and solar by another 25% [Carbon Brief]

• Furthermore, the IEA’s “renewable energy market update” forecasts nearly 40% higher growth in 2021 than it expected a year ago, putting wind and solar on track to match global gas capacity by 2022.

CPI launches framework for sustainable finance integrity [Responsible Investor]

• The ‘minimum’ benchmarks include eliminating finance for new coal projects, committing to Paris-alignment and disclosing Scope 1 and 2 of portfolio emissions, as well as climate and social risks.

Investment consultants team up to promote sustainability in US market [Responsible Investor]

• Mercer, Wilshire, Aon Hewitt, Cambridge Associates and Willis Towers Watson are among 14 investment consultants behind a new group seeking to “promote and improve sustainable investment practices” in the US.

Energy transition likely to skyrocket demand for critical minerals, says IEA [NGI]

• The global energy watchdog in a new report, “The Role of Critical Minerals in Clean Energy Transitions,” detailed the discrepancy between the world’s climate goals and the availability of critical minerals. Copper, nickel and cobalt, among other minerals are necessary to produce alternative energy technologies.

Low carbon world needs $1.7 trillion in mining investment [Reuters]

• Mining companies need to invest nearly $1.7 trillion in the next 15 years to help supply enough copper, cobalt, nickel and other metals needed for the shift to a low carbon world, according to consultancy Wood Mackenzie.

Urgent action on methane emissions could shave 0.3C off global temperatures by 2045, UN report says [The Independent]

• A report led by the UN Environment Programme warns that atmospheric concentrations of methane are at their highest level since records began about 40 years ago. It also finds that through a combination of measures methane emissions could be slashed by 45 per cent by the end of the decade.

Sovereign Wealth Funds invest in climate technology, renewables [Bloomberg Green]

• The custodians of national wealth invested $2.3 billion in 2020 in sectors important to combating climate change, including forestry, renewable energy and so-called agritech, according to a report published Tuesday, May 11th, by the International Forum of Sovereign Wealth Funds, a network of sovereign funds from Abu Dhabi to Singapore. That’s more than double the $1.1 billion invested in 2019, IFSWF data show.

Total area of forests equivalent to the size of France have regrown over the last 20 years [Climate Action]

• According to new analysis from Trillion Trees, nearly 59 million hectares of forests have regrown since 2000 – with the potential to store the equivalent of 5.9 Gt of CO2

Lab-grown meat firms attract sixfold increase in investment [The Guardian]

• The Good Food Institute (GFI), an NGO (charity) focused on sustainable proteins, found in its annual industry report that cultivated meat companies received more than €300m in investment in 2020, and the number of companies grew by 43% to 76.
• C4C Note: According to other research from GFI, more capital was raised during 2020 than in any single year in the industry’s history. $2.15 billion was invested in the plant-based space - more than 3x the $667 million raised in 2019. In 2020 alone, the industry raised almost half of all capital invested in the industry since 1980.

Pension scheme and investor project group formed to create tool to rank government climate performance [Professional Pensions]