The Brief | January 29, 2024

The Brief: Land-sharing to accelerate the energy transition

ImpactAlpha
The team at

ImpactAlpha

Greetings Agents of Impact! 

In today’s Brief:

  • Land-sharing to accelerate the energy transition
  • Investing in health for women and children
  • Water treatment in Asia
  • The growing impact fund universe

🔌 Join this week’s Plugged In: Training AI in Black and Brown history. Latimer.ai’s John Pasmore will join Plugged In host Sherrell Dorsey to explore how thoughtful design and intentional strategies for training large language models can combat what OpenAI’s Sam Altman calls “shortcomings around bias.” 

  • Join the conversation on LinkedIn Live, Wednesday, Jan. 31 at 8am PT / 11am ET / 4pm London. RSVP today.

Featured: The Transition

Pumpjacks and natural gas rigs start to make way for photovoltaics and windmills. Oil and gas fields are good places to produce energy – from wind turbines and solar panels. The often-lengthy permitting process for renewable energy projects is spurring an effort to site them on roughly 23 million acres of federal land currently leased to oil and gas companies, land that has already cleared environmental reviews and also may have roads, grid connections and other infrastructure. An analysis by Planet ReImagined, an incubator for innovation in climate action, suggests more than-three quarters of oil and gas fields on federal lands are suitable for wind or solar projects. The New York-based nonprofit is helping small oil and gas well owners make the transition to cleaner energy, as well as the state and municipal agencies that depend on them for revenues. “We need to find a path forward for the energy transition that is not going to rely on who’s in the White House,” Adam Met of Planet ReImagined (and bassist in the indie pop band AJR) tells ImpactAlpha.

  • Bipartisan appeal. The initiative, known as Common Grounds, has gained bipartisan backing, notably from Rep. John Curtis of Utah, a Republican member of the Conservative Climate Caucus, and Democratic Rep. Mike Levin of California. The representatives have urged the Department of the Interior to streamline and encourage such energy land-sharing; Met says the department has given tacit approval. That could pave the way for faster deployment of wind and solar, and mitigate obstacles slowing deployment of renewable energy assets. The sites may qualify for a 10% tax credit provided by the Inflation Reduction Act for clean projects in energy communities with recently retired coal plants or traditionally reliant on fossil fuel jobs.
  • Energy transition. Meeting demand for wind and solar energy could require up to 272 million acres of land, according to one study. The vast scale of the renewables buildout is forcing land-use tradeoffs between conservation, farming and recreation. Co-locating renewable energy on lands already designated for energy production could preserve natural habitat. In addition, it could mitigate economic dislocation for fossil fuel workers and communities that depend on those revenues. Some 80% of US oil and gas wells are owned not by giant oil majors, but hundreds of smaller operators. Revenues from renewable energy could spur the plugging of marginal or abandoned wells. “A lot of these mom and pop companies are in energy communities that are trying to figure out what their future is going to look like,” says Met.
  • Keep reading, “Pumpjacks and natural gas rigs start to make way for photovoltaics and windmills,” by Amy Cortese on ImpactAlpha. 

Sponsored by Tideline

The alpha in impact. What distinguishes impact-led value creation activities from those of traditional or ESG-oriented investors? Tideline and Impact Capital Manager’s forthcoming research report, “New frontiers in value creation,” identifies key characteristics of effective impact value creation. Join Tideline and International Capital Managers on Thursday, Feb. 8 for a discussion with leaders from Citi, EQT Group, HCAP Partners, Nuveen and W.K. Kellogg Foundation on effective and financially-material impact value creation.

  • RSVP today for “New frontiers in value creation.”

Dealflow: Investing in Health

Cross-Border Impact Ventures raises $90 million and starts putting it to work in five companies. The Toronto-based impact fund manager launched in 2021 to invest in health interventions for women and children. The firm closed its first fund at $90 million, just shy of its $100 million goal. Its latest backers include German development bank KfW, Dutch impact fund of funds Wire Group, Ceniarth, Skoll Foundation and many others. The new investors join existing backers, which include J&J Impact Ventures, Children’s Investment Fund Foundation and Grand Challenges Canada (disclosure: J&J Impact Ventures is an ImpactAlpha sponsor).

  • Early portfolio. Cross-Border Impact cuts early checks to companies based in North America and Europe that also serve the Global South. Its first investments include Pendulum, which uses AI to address supply chain challenges for essential medicine; gynecological care company Daye; portable neonatal incubator maker Mom Incubators; fetal ultrasound software company Sonio; and oncology care services provider OncoLens.
  • Share this post.

ResponsAbility backs CleanEdge Resources for wastewater treatment and waste-to-energy. About 80% of Asia’s wastewater gets discharged into waterways without treatment, threatening natural ecosystems and human health. ResponsAbility invested $20 million in Singapore-based CleanEdge to develop wastewater treatment and management facilities for corporate and industrial customers. CleanEdge finances, develops and operates the facilities and gets repaid from customers over time.

  • Asia climate action. CleanEdge is the first Asia-focused climate investment announced under a $500 million initiative that responsAbility launched last November. The fund aims to support technologies and infrastructure that reduce Asia’s carbon footprint by 10 million tons over the investments’ lifespan. The blended-finance initiative was anchored by German and Dutch development banks KfW and FMO.
  • Check it out. 

Dealflow overflow. Investment news crossing our screens:

  • The World Bank and Citi are partnering on a $100 million bond to address plastic waste and generate carbon credits in Ghana and Indonesia. (Financial Times)
  • Creation Investments Capital Management backed Latin America-focused insurer AVLA’s $25 million equity round to expand its small business insurance coverage to the US. (Creation Investments)
  • FMO invested $10 million in Nithio to finance clean energy companies improving access to renewable energy for African households and businesses. (FMO)

Short Signals: What We’re Reading 

💲 The growing impact fund universe. Impact investors launched 153 new “financial first” funds in 2023, representing growth of 16.7% (compared to 11.4% growth in 2022), according to Phenix Capital. Total committed capital grew €50 billion to €589 billion, a growth rate of 9.3% (compared to 13% in 2022). (Phenix Capital)

👩🏽‍🦱🧑🏼‍🦱👨🏾‍🦲👩🏻‍ Inclusive asset management. Less diverse capital markets are less efficient at allocating capital. To capture value and mitigate risk, asset managers can expand their talent pipeline to historically Black colleges and universities and other diverse educational institutions. Other steps include standardizing a governance diversity pledge and expanding access to diverse managers. (Milken Institute)

🚀 Offensive vs. defensive sustainability strategies. Companies that put sustainability at the core of value creation (offensive strategies) have been shown to outperform companies that pursue sustainability selectively to mitigate specific risks (defensive). (Nawar Alsaadi / Kanata Advisors)

🔭 In 2024, authentic impact beats political agendas. Within the apathy and disillusionment with ESG lies “a story of resilience, pragmatic action and quiet optimism,” writes Stax’s Anuj Shah in a 2024 look-ahead. Impact investing can emerge as a beneficiary with operational models that allow for scale and valuation premiums for impactful businesses. (Stax)

⬇️ Download project finance term sheets. To facilitate more capital flow, CrossBoundary Access has shared three project finance term sheets used for over $80 million of mini-grid projects in Africa. The documents “allow others to adopt a mini-grid project finance approach more quickly and at [lower] cost,” writes CrossBoundary’s Terry Otinga. (CrossBoundary Access)

🔮 Welcome to 2034. The single biggest threat to global prosperity in the coming decade is climate change, according to an Atlantic Council survey of nearly 300 (mostly American) strategists and foresight experts. A bright spot in an otherwise gloomy outlook is technology. Respondents have a positive view on the impact of biotechnology, quantum computing and artificial intelligence. (Atlantic Council) 

Agents of Impact: Follow the Talent

Don’t miss these upcoming ImpactAlpha partner events:

Former Massachusetts Gov. Deval Patrick, previously with Bain Capital, joins Vistria Group as a senior adviser on fundraising, deal sourcing and portfolio performance… Jeremy Coller Foundation appoints Fiona Reynolds to president of the FAIRR Initiative… Amir Chireh Mehr, a former vice president at Climate Real Impact Solutions, joins Elemental Excelerator as a senior investment director. Mark Chambers, previously a director at Earth Alliance, joins the nonprofit climate tech investor as VP of partnerships.

CapShift seeks a client experience manager, as well as six summer interns and fellows… Morgan Stanley is hiring a London-based ESG data specialist for its global sustainability group… New Energy Nexus is on the hunt for a CEO… Maycomb Capital is looking for a finance and operations analyst in New York… The California Infrastructure and Economic Development Bank (IBank) has released a request for information to gain insight from impact investors, local governments and others on real-time climate-related market conditions and financing gaps. 

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

Thank you for your impact!

– Jan. 25, 2024