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Deploying catalytic capital to bridge financing gaps for climate action

October 20, 2021

The Brief - Daily Insights into Impact Investing

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Featured: Catalytic Climate Capital

Deploying catalytic capital to bridge financing gaps for climate action. Climate finance is on a roll. Climate finance is stuck. Both statements are true. Investors have poured record sums into climate funds and startups in 2021. With falling costs for solar and wind power and a raft of big fund raises, climate financing may top $1 trillion this year. But experts say three or four times that amount is needed each year to keep the goals of the Paris climate agreement in range, and significant gaps remain in key geographies, sectors and stages. “Climate investment should ideally count in the trillions, whereas fossil fuel investments should virtually stop this decade,” said Barbara Buchner of Climate Policy Initiative. “This decade will make or break the transition to a sustainable natural world.” Needed to bridge the gaps: a catalytic capital toolkit that includes blended financing, guaranteed off-take agreements and targeted project financing.

Dealflow: Climate Tech

CarbonCapture secures $35 million to suck carbon from the atmosphere. Direct air capture technology that can remove billions of tons of carbon from the atmosphere may be critical in keeping global warming below 2 degrees Celsius. L.A.-based CarbonCapture says its modular clean energy-powered machines can be connected in large arrays to suck up carbon using zeolite, a cheap and non-toxic mineral. Companies using direct air capture technology “will capture upwards of five to 10 gigatons of CO2 from the atmosphere each year by 2050,” said Brandon Simmons of Prime Movers Lab, which led the Series A round. Participating investors include Rio Tinto, Idealab Studio, Marc Benioff’s TIME Ventures and several family offices and venture capital firms.

Series: Optimizing for Impact 

Assign an ABC goal type to each investment (video). Not all impact investments are the same. The “ABC” classification system from the Impact Management Project helps investors differentiate investment goals: A – investments that avoid harm, B – those that benefit stakeholders, and C – investments that contribute to solutions. This week’s short video from the new Coursera course, “Impact Measurement and Management for the SDGs,” developed by CASE at Duke and the U.N. Development Programme, can help investors assign the ABCs to investments. The classification, says Duke’s Cathy Clark, makes it easier for investors to decide what impact data to ask of investees and to understand if an investment is meeting its targets. “As more investors use the goal levels, impact performance will be easier to communicate up and down the investment value chain.” Learn your ABCs.

Agents of Impact: Follow the Talent

ImpactAlpha partner event: Join more than a thousand registrants at Next Normal Now from the Global Impact Investing Network to explore the regeneration of human and natural ecosystems, Wednesday, Oct. 27. Vicki Benjamin of Karner Blue Capital, Angelique Brathwaite of Blue Finance, Eric Hallstein of NatureVest, and Sophie Heading of KPMG International will discuss clean water investments to build resilience. RSVP today.

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