The Brief | December 21, 2023

The Brief: At Stake in 2024: Playing climate offense to scale up and phase out

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Featured: At Stake in 2024

Playing climate offense to scale up and phase out. The transition to a low-carbon economy is a “mega force,” as BlackRock declares in its 2024 outlook. How quickly the transition unfolds, and whether that’s fast enough to avert catastrophic global warming, depends on factors both macro and micro. “We’re entering the two years that are the decisive years of the decisive decade,” said Ed Miliband, the UK Labour Party leader, who is campaigning on climate action in his bid to replace Prime Minister Rishi Sunak. Bolstering the case for optimism: “the astonishing scale-up of clean energy technologies,” as Mark Campanale of CarbonTracker puts it, driven by falling cost curves and exponential growth of renewable energy, electric vehicles, and battery storage. Supercharging it all are AI-based tools that promise breakthroughs in materials and processes, new cycles of innovation, and accelerated timelines for commercialization. Some of the signals we’re watching for in the year ahead:

  • Revving up the Great Deployment. How do you transform the entire economy? We’re about to find out. Since the US Inflation Reduction Act, or IRA, was passed in August 2022, $140 billion in private capital has been invested in clean energy manufacturing. EV and battery plants are popping up across the South and Midwest. Tax credits enable manufacturers to recoup almost half of the cost of new plants, especially when “bonus” credits are layered on for paying prevailing wages, using union labor, or locating operations in low-income communities. A new crop of organizations are helping entrepreneurs, project developers and city leaders in low-income or disadvantaged communities optimize the historic federal funding. “It became really evident that this was a pivotal moment for all philanthropy to engage and make sure that the federal funding is being reached by marginalized communities,” said Rachel Isacoff of the Rockefeller Foundation.
  • Supersized climate funds and specialist managers. Not long ago, a billion-dollar climate fund was a big deal. Brookfield Asset Management is looking to follow its inaugural $15 billion energy transition fund with a second fund that could hit $25 billion. TPG has committed more than two-thirds of its $7 billion Rise Climate Fund, raised in late 2022, and is actively marketing its next one. The UAE, looking to make a splash as host of the COP28 climate summit, topped them all with its $30 billion Altérra fund. On the other end of the spectrum, early stage funds are targeting specialized opportunities. Superorganism is one of the first venture firms focused on biodiversity and preventing extinction. Overture, founded by former Obama administration officials, helps portfolio companies navigate regulatory complexity. The women behind Overview.Earth are looking to solve near-term climate challenges like methane emissions.
  • Battle over the future of fossil fuels. In the face of the unstoppable march of clean energy, incumbent forces are staging only a tactical retreat. COP28, held in the petro state of the United Arab Emirates, called out the need to “transition away” from fossil energy for the first time in 28 years of global climate gatherings. Heralded as the “beginning of the end” for fossil fuels, the UAE Consensus created massive openings for near-term expansion. Saudi Arabia and OPEC cheered the agreement. “We may be increasing the good stuff, but we’re not yet cutting the bad stuff,” said Tzeporah Berman of the Fossil Fuel Non-Proliferation Treaty. Get ready for a flood of carbon capture and storage, or CCS, projects. And in the wake of the Ukraine war, the US has leveraged its fracking prowess to become the world’s largest natural gas exporter. New research from Cornell University suggests that, over its entire life cycle, liquid natural gas can generate 24% to 274% more greenhouse gas emissions than coal, depending on the tankers used to ship the gas.

Dealflow: Curbing Waste

  • Denmark’s Investment Fund for Developing Countries invested $35 million in Singapore-based Blue Planet to expand waste recycling operations in India. (Blue Planet)
  • Chile’s Cascara Foods clinched $415,000 in an equity crowdfunding round on the Broota platform to keep food out of waste streams and turn it into new products. (Startups Latam)
  • TPG’s Rise Fund will acquire a majority stake in UK-based special education provider Outcomes First Group from Stirling Square Capital Partners. (The Rise Fund)
  • Canadian impact fund of funds Realize Capital Partners inked nine deals totaling $35.2 million, investing in Jubilee Fund, a lender to nonprofits and social enterprises in Manitoba, and Indigenous-led and -focused investment firm Raven Indigenous Capital Partners. (Realize Capital Partners)
  • India’s small business lender U Gro scored $30 million from Dutch development bank FMO. “Impact investors are critical funding partners in enabling us to bridge India’s massive credit gap in the [small business] sector,” U Gro’s Shachindra Nath said. (YourStory)
  • Costa Rica-based Avify secured $800,000 in pre-seed funding with backing from Amplifica Capital, 500 Global and other investors to digitalize Latin America’s small businesses. (LatamList)
  • Apis & Heritage Capital Partners, through its $58 million employee-led buyout fund, transitioned the ownership of Oregon-based plant nursery Blooming Nursery to its roughly 100 Latino workers. (Apis & Heritage)

Agents of Impact: Follow the Talent

Jamie Beck Alexander is stepping down as director of Drawdown Labs… Latino Community Foundation is recruiting a senior executive assistant… The British Private Equity and Venture Capital Association seeks a sustainability policy executive in London… Also in London, New Philanthropy Capital is on the hunt for an impact investing senior consultant. 

The California Endowment is looking for an impact investment associate in Fresno… Temasek has an opening for an impact investing associate in Singapore… Investing for Good is looking for a pair of senior advisors of innovative finance in Europe… Regenerative Food Systems Investment seeks a remote relationship manager and sales lead… S2G Ventures is hiring an investments counsel in Chicago. 

👉 View (or post) impact investing jobs on ImpactAlpha’s new Career Hub.

Thank you for your impact!

– Dec. 21, 2023