Net Zero Investor 7/31 - 8/6

Highlight of the Week

IPCC released their sixth assessment of the state of the climate

• The report reconfirms that we only have a 500 gigatons emissions budget left, implying slashing emissions this decade to preserve a 50:50 chance of a 1.5C outcome. Poor odds, as we emit 50gt CO2e per year (50 X 10 = 500).
• Today we are at 1.07C with catastrophic fires raging in California, Greece and Turkey.  And this is just the first decade of the Anthropocene.  It’s going to get worse.
• All five IPCC scenarios forecast the world reaching 1.5C by 2040. And IPCC confirmed that the only way to cool the atmosphere now is to deploy carbon removal technologies at massive scale, sucking dilute CO2 out of the atmosphere -- technologies which we have yet to commercialize.
• In his eloquent article summarizing the destabilizing Jet Stream, the slowing Gulf Stream, the global fires, and the methane bubbling out of permafrost, Bloomberg’s Andreas Kurth describes our new world as a Greek tragedy.

Individual Deals and Market Watch

Carbon credits deal will bring in $2bn, Hartree, Wildlife Works estimate [Environmental Finance]

• Hartree Partners and Wildlife Works have signed a voluntary carbon deal they estimate will generate over $2 billion in private investment across 20 projects to enable communities to protect biodiversity and forests at risk from deforestation.

Moody’s to pay $2bn for climate risk modeller RMS [Responsible Investor]

• US financial services giant Moody’s has announced the acquisition of California-based climate and disaster risk modelling specialist RMS, in a deal worth around $2bn.
• RMS, which runs over 400 risk models covering 120 countries, provides climate and natural disaster risk modelling and analytics for the global property and casualty insurance and reinsurance sectors.

Terra-Gen secures USD 800m for massive solar-storage project in California [Renewables Now]

• US renewables developer Terra-Gen LLC today said it has closed the financing for the first phase of its massive Edwards Sanborn Solar Storage facility in Kern County, California.
• The construction of the solar plant featuring 346 MW of AC power and 1,501 MWh of battery storage is currently happening at the site.

Aydem to use part of USD 750 million green bond issue for hybrid power plant projects [Balkan Green Energy News]

• Turkish Aydem Renewables issued $750m of green bonds to pay off bank loans and build renewable plants that would double its capacity by 2025 to more than 2 GW. It will mostly focus on adding solar units to hydro and wind assets.

Redwood Materials raises $700M to expand its battery recycling operation [Tech Crunch]

• Redwood Materials is aiming to create a circular supply chain for li-ion. Redwood recycles scrap from battery cell production and consumer electronics like cell phone batteries, laptop computers, power tools, power banks, scooters and electric bicycles.
• The company’s post-funding valuation is $3.7 billion, according to a source familiar with the investment round.

Allied properties REIT launches $500M green bond series [CrowdFund Insider]

• Allied intends to allocate the net proceeds to fund the financing and/or refinancing of eligible green projects as described in the Allied Green Financing Framework. Prior to allocation of the net proceeds of the offering to eligible green projects, Allied intends to use the net proceeds of the offering to prepay approximately $494 million aggregate principal amount of first mortgages and for general trust purposes.

Bank of America invests $314 million in NY Green Bank [American Banker]

• The state-sponsored entity works with the private sector to catalyse clean energy growth. The money will support the goals of New York state under its Climate Act to reduce greenhouse gas emissions by 40% by 2030 and achieve a zero-emissions electricity sector by 2040. As of June 2021, the NY Green Bank had invested $1.6 billion in environmental initiatives since its launch in 2017 including projects in the residential, agricultural, and commercial industrial sectors. [Environmental Finance]
• This is the largest private fundraising deal by a green bank in the country so far, according to NYSERDA. [Environmental Finance]

Intesa Sanpaolo: circular economy loan for 250 million euros to Iberdrola, leaders in renewable energy in Europe [Market Screener]

• C4C Note: First of a kind deal as far as we know: Intesa Sanpaolo has finalised a €250 million circular loan to Iberdrola wind, linked to water use. That said, we were not aware that wind was a big user of water.
• The transaction, a 5-year term loan, includes an incentive mechanism linked to the achievement of a circular economy objective: Iberdrola has committed to progressively reducing the use of water, by not exceeding a threshold of 420 m3/GWh by 2025 (thousand cubic meters of water pre gigawatt hour), Intesa Sanpaolo will apply a rate discount to the loan. Conversely, an increase in the loan's price will be applied if these targets are not reached. The transaction is the first in the European electricity sector to be related to the reduction of water consumption.

Onto raises $175 million in Series B to expand EV subscription service in the UK [Tech Crunch]

• Onto has raised $175 million in a combined equity and debt Series B round, capital the U.K.-based electric vehicle subscription startup plans to use to expand within the country as well as move into new markets.

IFC invests $100 million  in Egypt’s first private sector green bond issuance [Zawya]

• The International Finance Corporation (IFC) will invest $100m in Egypt’s first private sector green bond, (issued by the Commercial International Bank – Egypt’s largest private bank), issuance to help unlock finance for climate-smart projects, reduce greenhouse gas emissions, and support the country’s transition to a greener economy.

Africa: $58m close for Acumen Resilience Agriculture Fund to help small farmers adapt to climate change [Pioneer Post]

• Launched by developing country impact investment veteren, The Acumen Resilient Agriculture Fund (ARAF), is dedicated to helping small farmers in Africa adapt to climate change, has closed at $58m – $8m above its initial target.
• The equity fund invests in African agribusinesses that help smallholder farmers become resilient to the effects of climate change such as soil degradation, severe storms and changing weather patterns.

Macro Commitments

British house builder, Berkeley Group, to Issue $553Mln in Green Bonds to Fund Portfolio [Market Watch]

• Berkeley Group has announced plans to raise £400m to build low-carbon homes by issuing a green bond to institutional investors. The £2.2bn London-focused housebuilder said it would allow the business to restructure its current banking facilities. [Housing Today]

Singapore’s sovereign wealth fund introduces $42 internal carbon price [Responsible Investor]

• Temasek Holdings’ newly-adopted carbon price is derived from a 1.65°C climate model issued by the International Energy Agency (IEA) in 2020, which requires the global economy to decarbonise by 2070.
• According to the fund, the new carbon price will be considered by its Investment Committee - together with company-level ESG data - to “guide decision-making in line with broader climate targets and model the likely future impact of carbon pricing on the investments we make”.

Biden sets U.S. goal for clean cars to be half of 2030 sales [Bloomberg Green]

• President Joe Biden plans to call for half of all vehicles sold in the U.S. to be capable of emissions-free driving by the end of the decade, an ambitious goal that automakers say can only be achieved with bigger government investment in charging stations and other infrastructure.

Pathways, Frameworks, Case Studies, Research, Climate Science

Renewables spending in H1 reaches new heights of USD 174bn - BNEF [Renewables Now]

• The world has spent a record USD 174 billion (EUR 146.5bn) on renewable energy projects and companies during the first six months of 2021, according to a new report by BloombergNEF (BNEF).

Why green bonds are beating all expectations in the post-pandemic recovery [World Economic Forum]

• Issuance of green, social, sustainable and sustainability-linked bonds doubled in the first half of 2021, and in some cases tripled compared to the same period a year earlier, according to the Financial Times.
• For green bonds, the acceleration is most pronounced in Europe, according to a report from International Finance Review based on Refinitiv data. This is without counting in the NextGenerationEU stimulus package, which will run from mid-2021 to 2027 and see around €250 billion of green bonds issued.
  China and the US are the most active markets. China accounted for 13.2% of the green bond market while the US made up 12.8%. Germany, which has recently adopted a new sustainable finance strategy, followed with a 12.2% market share and France with 10.9%.
• C4C Note: We will not be surprised if 2021 is a trillion dollar year for green and sustainable bonds.