Greetings Agents of Impact! And a special shoutout to those of you in Philadelphia for ImpactPHL’s Total Impact Summit. Say hi to ImpactAlpha’s Roody Senatus, who is leading today’s discussion of “Big and bold impact investments,” with Betty Francisco of Boston Impact Initiative, Allison Clark of MacArthur Foundation, and Ben McAdams of Common Ground Institute (listen to Ben on the podcast, “Marrying public real estate and private capital”). Amy Cortese is headed up to Vermont for “Beyond Bretton Woods: Finance for a Regenerative Future.” – David Bank
In today’s Brief:
- How Microsoft, Apple and other tech giants are restoring forests and carbon market cred
- India lists a yen-denominated green bond
- Milken-led partnerships for community infrastructure
Featured: Carbon Markets
How Big Tech can restore forests – and credibility in voluntary carbon markets. In the Mexican state of Michoacan, Indigenous communities have been certified by the Forest Stewardship Council for their sustainably managed and biodiverse forests, which offer refuge to monarch butterflies, jaguars and other endangered species. But their verified emission reductions, in the form of “carbon reduction tons,” fetch less than $10 per ton from international buyers, barely enough to cover the cost of creating and verifying the credits. The meager economics have led communities to consider abandoning their carbon credit efforts altogether, writes Michoacan-based forestry veteran Shaun Paul, who has originated and sold carbon credits for three decades. Buyers of carbon offsets have pulled back after exposés of nature-based projects that did not live up to their carbon-sequestration promises. Now, buyers, sellers and certification bodies are scrambling to fix the voluntary carbon markets and stabilize vital funding for Indigenous land stewards, biodiversity protection and carbon sequestration.
- Carbon offtakers. Demand for quality credits from Big Tech titans may have the most immediate effect on strengthening standards and improving prices. The explosive growth in energy use for data centers and AI learning models has Microsoft, Apple, Salesforce and Latin American e-commerce giant MercadoLibre among the tech companies racing to purchase carbon offsets to complement their emissions reduction efforts. Microsoft procures high-quality carbon removal credits generated from forest restoration, direct air capture and other techniques, and has been willing to pay a premium to drive new technologies down the cost curve. Apple has invested in carbon removal projects via its Restore Fund, launched in 2021 with Goldman Sachs and Conservation International. Apple has added a $200 million restoration and regenerative agriculture fund managed by Climate Asset Management. Salesforce created a marketplace to connect buyers with ecopreneurs and vetted carbon credits.
- Quality credits. There is no shortage of good projects to invest in, says Paul. Project developer BioForestal Innovación Sustentable reports under Climate Action Reserve’s Mexico forest protocol, which covers eligibility, baseline, inventory, permanence, social and environmental safeguards. BioForestal is helping Michoacan communities sell their verified carbon removal tons. In Panama, Generation Forest buys degraded agricultural land and reforests it with native species to mimic naturally occurring rainforests; it has sold its carbon credits at $32 a ton. In Brazil, ReSeed is partnering with Equipe de Conservação da Amazônia to connect smallholder farmers with carbon markets.
- Keep reading, “How Big Tech can restore forests – and credibility in voluntary carbon markets,” by Shaun Paul on ImpactAlpha.
The Frontier tech alliance inks offtake agreement with Vaulted Deep. Houston-based Vaulted Deep takes carbon-rich waste from landfills, feedlots, paper mills and other industrial facilities and converts it to biomass to be buried underground. It says its process can sequester carbon for more than 10,000 years. The Frontier coalition of tech and corporate heavyweights agreed to pay the year-old company $58.3 million for carbon removal credits generated from its process. The capital will help Vaulted Deep launch commercial-scale production and remove more than 150,000 tons of CO2 by 2027, including more than 18,000 tons this year. Companies in the Frontier network, including Stripe, Meta and Alphabet, will use the credits to offset their hard-to-abate carbon emissions.
- Carbon removal. Credits generated by removing carbon from the atmosphere are considered higher quality than credits from “avoided” emissions. They’re also in shorter supply. Frontier has pledged to spend $1 billion on permanent removals by 2030. The corporate network recently bought its first batch of credits from Houston-based Mati Carbon, which uses “enhanced rock weathering” to sequester carbon underground. Mati Carbon’s credit sales are helping farmers in India boost incomes and soil health (see, “How Mati Carbon is using the carbon markets to address farmers’ adaptation finance gap and boost their incomes”).
- Check it out.
Dealflow: Energy Transition
India lists a yen-denominated green bond for renewable projects. About 70% of India’s electricity comes from dirty fuels, especially coal. The government is aiming to generate 50% of its power from renewable sources by 2030. The Ministry of Power’s financing arm, REC Limited, formerly the Rural Electrification Corp., provides loans to both public and private energy and infrastructure developments. Its 60.5 billion yen-denominated ($386 million) green bond was backed by Crédit Agricole, Bank of America, Citibank, KfW-IPEX Bank and Sumitomo Mitsui Banking Corp., attracting interest from both Japanese and international investors. The Italian export credit agency, SACE, guaranteed 80% of the bond, its first yen-denominated transaction. The bond will support financing for renewable generation and transmission, green hydrogen and ammonia, electric mobility and other green infrastructure.
- Leveraging guarantees. International export credit agencies offer guarantees of up to 85% of project costs, helping infrastructure developers secure bank financing. REC Limited’s Vivek Kumar Dewangan said he hopes the deal will enhance “Indo-Italian business relationships in green energy financing and sustainable projects capabilities.” In Africa, Acre Impact Capital notched $100 million to help African infrastructure developers finance the non-guaranteed portion of their projects (see, “Acre Impact Capital bridges a financing gap to catalyze capital for infrastructure in Africa“).
- Check it out.
Dealflow overflow. Investment news crossing our desks:
- Tanzania’s MazaoHub secured $200,000 in early funding from BFA Global’s Catalyst Fund to analyze soil samples and provide soil health and farming recommendations to smallholder farmers. (Climate Policy Initiative)
- Blue Earth Capital backed Achieve Partners’ EdTech Buyout Fund, which invests in edtech companies addressing obstacles to education access in the US. (Blue Earth Capital)
- British International Investment invested $19 million in ChargeZone to scale high-speed electric vehicle charging in India. (BII)
Signals: Deploy!
10,000 Communities: With partners, Milken Institute is building a market to drive investment in community infrastructure. The recent announcement of 60 winners under the $7 billion Solar for All program capped the Environmental Protection Agency’s rollout of Greenhouse Gas Reduction Fund awards. “Now, market makers must align to help make sense of new capital flows and build standardized products and systems so private capital can walk alongside the unprecedented public investment in climate resilience,” writes ImpactAlpha contributor Rachel Reilly, an advisor to the Milken Institute. Ahead of next week’s Milken Global Conference in Beverly Hills, Calif., the Milken Institute’s 10,000 Communities Initiative unveiled partnerships and open-source tools for project sponsors and capital providers.
- Community lenders. Over the past year, Milken has held a series of regional trainings and launched the Community Infrastructure Center to connect businesses, local government and philanthropic and community leaders with resources to get green projects off the ground. Milken is teaming up with project finance software developer Banyan Infrastructure, investor-accelerator Elemental Excelerator, and advisory firm Purpose Venture Group to launch a “clean energy loan pilot” for community development financial institutions (for context, see “Lenders face a steep learning curve in deploying capital for green community infrastructure”). The partners will work with community lenders that were awarded Solar for All funds, like Hope Enterprise Corp., GRID Alternatives and the Nevada Clean Energy Fund, to develop best practices and underwriting checklists, as well as compliance, monitoring and reporting standards.
- Access to finance. In partnership with the Milken Institute, HR&A Advisors will offer an Infrastructure Funding Navigator tool to provide a no-cost project readiness assessment. The California Strategic Growth Council, Streamline Climate and Replica will offer generative AI and data tools to semi-automate the grant writing process for under-resourced communities in California applying for state funding. Replica also is working with the CIC to provide applicants with land use, transportation and demographic data needed for grant submissions. The partnerships aim to “reduce project development costs and drive capital to under-resourced communities by linking investors, technical assistance experts, and community leaders through generative AI, online grant-matching and other innovative financing techniques,” said Milken’s Rachel Halfaker.
- More.
Agents of Impact: Follow the Talent
Fiorella Schiffino, previously with Inovia Capital, joins Raven indigenous Capital Partners as chief financial officer… Northern Trust’s Lyle Logan joins the board of Impax Asset Management as a non-executive director… The Beeck Center for Social Impact and Innovation promotes Molly Porter to managing director… Candide Group is hiring a director of operations… The Pop Culture Collaborative seeks a director of impact and evaluation… Growald Climate Fund is looking for a manager of network leadership.
The Merchants Fund is recruiting a programs and partnerships director in Philadelphia… ImpactAssets is hiring for several roles… Nonprofit Finance Fund has an opening for a chief credit officer… Telos Impact is looking for a venture philanthropy junior associate… Azolla Ventures is recruiting a summer intern in Boston or San Francisco… US SIF invites participation in its 2024 survey on US sustainable investing trends… Pro Mujer is hosting its Gender Lens Investment Forum Latam is in Buenos Aires, June 4-5. ImpactAlpha is a media sponsor. Use code 2C2S53 for 25% off.
👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.
Thank you for your impact!
– May 2, 2024
