Green Markets - July 2, 2024
News in environmental markets.
Green Markets is a daily series dedicated to highlighting events of interest that could impact investments within environmental markets.
Government/Regulatory
CalPERS, the California Public Employees’ Retirement System, has announced a $10 billion investment initiative focused on the energy transition, part of its broader plan to invest $100 billion in climate solutions by 2030. This initiative includes commitments to private market investments, with nine signed commitments totaling over $1.1 billion, and another $3.6 billion under review. These investments target sectors involved in energy production, distribution, and freight logistics.
Biofuels/Chemicals
Stonebriar Commercial Finance closed a C$130 million seven-year term loan for a leading provider of specialty industrial and environmental services. The loan was secured by all the company's fixed assets as part of a leveraged buyout. This marks Stonebriar's second transaction with the company's sponsor in the past year, totaling C$186 million.
Shell has announced a temporary pause in on-site construction at its biofuels facility in Rotterdam, citing the need to address project delivery and ensure competitiveness amid current market conditions. The facility, designed for sustainable aviation fuel (SAF) and renewable diesel production from waste, was initially planned to start SAF production by 2025 but has faced technical challenges causing delays.
Spanish oil and gas company Cepsa, owned by Mubadala and Carlyle Group, has partnered with PreZero Spain, part of Germany's Schwarz Group, to develop biomethane plants using organic waste. They plan to build facilities producing up to 100 GWh of biomethane to supply Cepsa's green hydrogen and biofuels projects in Huelva, Spain. Cepsa is investing up to 8 billion euros through 2030 to shift its business toward low-carbon fuels.
Carbon Capture
The European Commission has approved a €3 billion Swedish scheme aimed at supporting carbon capture and storage (CCS) to reduce biogenic CO2 emissions. This initiative will fund projects in Sweden capable of capturing at least 50,000 tonnes of biogenic CO2 annually through permanent CCS, utilizing a competitive bidding process starting in 2024.
Voluntary Carbon Markets (VCMs)
Luiz Amaral, CEO of the Science Based Targets initiative (SBTi), is stepping down at the end of July for personal reasons amid controversy over loosening guidelines on carbon offsets. His decision to allow companies to use offsets across supply chains sparked internal dissent and calls for a leadership change. Chief Legal Officer Susan Jenny Ehr will take over as interim CEO with board support. SBTi’s declared stance on carbon offsetting could have significant implications for the VCMs.
Energy Efficiency
LG Energy Solution has decided to temporarily halt construction on its energy storage systems (ESS) battery facility at its $5.5 billion battery manufacturing complex in Queen Creek, Arizona. The pause affects only the ESS battery plant, while construction of the cylindrical electric vehicle battery facility will proceed as scheduled. LG cited the need to adjust investment pace based on market conditions but remains committed to the project long-term.
Hydrogen
American Airlines has agreed to purchase 100 hydrogen-electric engines from aviation startup ZeroAvia to power aircraft on its regional routes. ZeroAvia is flight-testing a prototype for a 20-seat plane and is designing an engine for larger aircraft, such as the Bombardier CRJ700, used by American on some regional routes.
Liquified Natural Gas (LNG)
ADNOC Logistics and Services (ADNOC L&S) has awarded South Korean shipyards Samsung Heavy Industries and Hanwha Ocean contracts worth up to AED 9.2 billion ($2.5 billion) for the construction of eight new liquified natural gas (LNG) carriers. The contracts include an option for each shipyard to build an additional LNG carrier, with deliveries expected by 2028. This expansion will increase the company’s fleet of LNG carriers from 14 to at least 22 vessels, aligning with its revised growth strategy to invest over $5 billion in energy-related maritime logistics to meet global demand.
New Fortress Energy has agreed to sell its liquefaction and storage facility in Miami, Florida. The facility is authorized to export up to 60,000 tonnes of liquefied natural gas (LNG) annually for a 20-year term starting in 2016. The small-scale facility, to be sold to a US middle-market infrastructure fund, includes one production train with a capacity of 100,000 gallons per day, three LNG storage tanks totaling around 1,000 cubic meters, and two LNG transfer areas for truck and rail.
Nuclear Energy
Turkey is engaging in talks with the United States regarding the construction of large-scale nuclear power plants and small modular reactors (SMRs), as part of its strategy to enhance its nuclear energy capacity. Turkish Energy Ministry official Yusuf Ceylan highlighted the U.S.'s serious interest in Turkey's nuclear ambitions, with discussions focusing on both existing and new plant sites. The U.S. aims to help Turkey reduce its dependency on Russia by supporting these nuclear projects.
Recycling Technology
Hydrovolt, a battery recycling firm, announced plans to expand internationally by opening a facility in Hordain, France, within the emerging Battery Valley. This move aligns with the establishment of four major battery production facilities in the region. As a joint venture between Norsk Hydro and Northvolt, Hydrovolt is Europe's largest recycler of EV and industrial batteries.
Renewable Energy
China Three Gorges Renewables Group is set to build an 8 GW solar farm as part of an $11 billion integrated energy project in Ordos, Mongolia. The project will also include 4 GW of wind capacity, 5 GWh of energy storage, 200 MW of solar thermal, and 4 GW of coal-fired power. Construction is slated to begin in September 2024, and completion is expected by June 2027. China Three Gorges will hold a 56% stake, while Inner Mongolia Energy Group will hold 44%.
Rio Tinto has completed the installation of a 3.5 MW solar power plant at its Diavik diamond mine in Canada’s Northwest Territories. This facility, comprising 6,620 panels, is the largest off-grid solar power plant in Canada’s territories. It is expected to generate 4.2 million kWh of solar energy annually
Investment Funds
Seaya, a venture capital firm in Europe, has closed its Andromeda climate tech fund at €300 million (USD $321 million). This fund, which complies with SFDR Article 9 regulations, focuses on impact-driven growth companies in the energy transition, decarbonization, sustainable food, and circular economy sectors. Investors like Iberdrola, Santander, and BNP Paribas Group have contributed, raising Seaya's total assets under management to over €650 million.
BlackRock has announced new climate policies affecting 83 funds in Europe, with potential expansion to funds in the US and Asia-Pacific regions. These policies aim to ensure investments align with strict climate goals, including decarbonization objectives set by clients.
Start-Up Investments
Genica, a Brazilian ag biologicals company, has raised R$68 million ($12 million) in funding, led by Mitsubishi's Agrex group and Banco do Brasil's corporate venture fund, which is co-managed by Vox Capital. Genica, founded in 2015, specializes in bio-based products for agriculture, including bio-inoculants, bio-stimulants, and bio-pesticides targeted at soybean, corn, and sugarcane crops, key exports for Brazil.
Midsummer, a Swedish thin-film solar manufacturer, has secured approximately €8 million ($8.6 million) in funding from Italian investment agency Invitalia to support its copper indium gallium selenide (CIGS) thin-film cell manufacturing project in Puglia, Italy. This investment builds on Invitalia's previous €6.4 million injection in 2021, along with substantial grants and loans from Italian authorities totaling about $44 million.
eAgronom, a climate tech firm, has raised €10 million in Series A2 equity funding. The company supports farms in implementing modern agricultural practices through crop monitoring, automated reporting, and farm management tools, impacting hundreds of thousands of hectares in Europe and Africa.
Circulor, a startup specializing in blockchain-based supply chain mapping for sustainable production, has raised $25 million in a Series B funding round led by Westly Group. This brings their total funding over the last two years to $45 million. Investors include Volvo Cars, Jaguar Land Rover, and BHP Group. Circulor is a leader in tracing supply chains for companies like Volvo, JLR, BHP, and TotalEnergies to meet ESG goals and regulatory demands, such as tracking carbon emissions.
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