Welcome to Climate Tech Pulse, your daily dose of market intelligence helping fuel the fight against climate change. From groundbreaking investments to cutting-edge research, we’re bringing you the latest in climate tech that’s shaping our future.
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Today’s newsletter:
🔝Today’s Top Story: Morgan Stanley Investment Management (MSIM) has successfully wrapped up its 1GT climate private equity fund, obtaining $750 million in equity capital commitments.
📊 Today’s Data Point: Study cautions that if fossil fuel investments persist, $557 trillion in assets could become stranded by 2050.
🌳 Climate Insider Intelligence: Fireside Chat with Charlie Tan, CEO at Global Impact Coalition.
Morgan Stanley Closes $750 Million Climate Fund to Combat Carbon Emissions
Image Credit: Morgan Stanley
Final Closing of the 1GT Climate Fund
Morgan Stanley Investment Management (MSIM) has successfully closed its 1GT climate private equity fund, securing $750 million in equity capital commitments. The fund focuses on growth-oriented investments in companies across North America and Europe, with a goal of collectively avoiding or removing one gigaton of carbon dioxide-equivalent (CO2e) emissions from the atmosphere by 2050. The investor group includes institutions from Europe, Japan, and North America, reflecting a strong commitment to addressing climate change.
Investment Strategy and Climate Goals
The 1GT fund is strategically designed to provide capital at critical growth stages for companies that contribute to significant reductions in the global carbon footprint. Vikram Raju, MSIM’s Head of Climate Private Equity Investing, emphasized the fund’s focus on transparency and measurable climate goals, which are linked to the financial incentives of the investment team. This unique structure encourages performance aligned with environmental impact, making it a significant player in the sustainable finance space.
Diverse Portfolio and Future Prospects
As part of MSIM’s $240 billion alternative investment business, the 1GT fund targets investments in sectors such as mobility, sustainable food, agriculture, and the circular economy. Notable investments include companies like Instagrid, Huel, and Everstream Analytics. With its designation as an Article 9 fund under the Sustainable Finance Disclosure Regulation, 1GT is committed to integrating sustainability into its investment processes, leveraging Morgan Stanley’s extensive resources to enhance portfolio growth and climate change mitigation efforts. Read More
Quote of the Day
“1GT’s close represents the best of Morgan Stanley’s thinking around delivering fiduciary returns to our clients while providing transparent, transformational climate impact,” said David N. Miller, Head of Morgan Stanley Private Credit and Equity. “We are also able to deliver to our growth stage investees the insight, expertise and access that come from being a leading global financial services firm.”
Significance: Miller emphasizes the fund’s commitment to generating fiduciary returns for clients while also making a measurable impact on climate change. This reflects a growing trend in finance where profitability and sustainability go hand in hand.
Reputation and Expertise of Morgan Stanley: The quote underscores Morgan Stanley’s reputation as a leading global financial services firm, highlighting how its extensive resources and expertise provide unique advantages to portfolio companies. This adds credibility and attractiveness to the fund for potential investors.
Transparent Impact Measurement: By mentioning “transparent, transformational climate impact,” Miller points to the importance of accountability in sustainable investments. This aligns with the fund’s goal of avoiding or removing one gigaton of CO2e emissions, appealing to investors who prioritize environmental responsibility.
Support for Growth-Stage Companies: The quote highlights the value that 1GT brings to its investees, particularly those at growth stages. This support is essential for fostering innovation in climate tech and can lead to significant advancements in sustainable solutions.
Alignment with Market Trends: Miller’s remarks reflect a broader market shift towards integrating environmental, social, and governance (ESG) criteria into investment strategies, appealing to a growing base of socially conscious investors. This positions the 1GT fund as a forward-thinking initiative in the climate tech sector.
Market Movers
- Holtec International has secured a $1.52 billion loan from the U.S. Department of Energy to restart the Palisades nuclear power plant, promising hundreds of jobs and positioning Michigan as the site for the world’s first small modular reactors, significantly contributing to the state’s clean energy future and climate change efforts. Read More
- UK-based clean energy provider GeoPura has secured £22 million in inaugural debt funding from various financial institutions, adding to its total capital raised to £114 million over two years, which will support its hydrogen generation, storage, and transportation operations as it scales up. Read More
- AmpUp, a leading electric vehicle charging platform, has raised $15 million in Series A funding to accelerate its U.S. market expansion and drive innovation in energy management solutions, building on remarkable growth that includes a sevenfold increase in subscription revenue and a 4% share of the U.S. commercial Level 2 charging market. Read More
Tech Spotlight
Unified Approach to Decarbonizing the U.S. Energy Sector
Source: Stanford Woods Institute for the Environment
A new white paper led by the Climate and Energy Policy Program at Stanford University and supported by the University of Notre Dame emphasizes the need for state regulators to rethink their strategies as competition between gas and electric utilities intensifies due to clean energy policies. The paper advocates for unifying electric and gas utilities and implementing coordinated planning to facilitate a more efficient transition to zero-carbon buildings.
Commercial Viability
Regulatory Challenges:
State public utility commissions (PUCs) face mounting challenges related to climate change, safety, and equity as they navigate the decarbonization of gas networks. The authors argue that by recognizing the competition between gas and electric utilities, regulators can better manage the transition toward sustainable energy.
Cost-Effectiveness:
The paper warns that ongoing competition could hinder decarbonization efforts, resulting in increased costs for ratepayers and unnecessary investments in fossil fuel infrastructure. A unified approach is posited as a means to reduce costs and improve efficiency.
Technical Viability
Integrated Planning:
The report urges PUCs to consolidate the planning processes of gas and electric utilities into a single energy sector, allowing for optimized investments across both systems. This strategy aims to prevent stranded assets and ensure equitable progress in decarbonization.
Utility Consolidation:
The authors recommend merging gas and electric utilities that serve the same areas into unified energy service providers. This could streamline the decarbonization process while maintaining safety and reliability.
Environmental Viability
Sustainability Alignment:
The white paper addresses the risks of inaction, noting that gas utilities may continue to expand fossil fuel infrastructure despite long-term decarbonization timelines. A coordinated approach to regulation is seen as essential for aligning utility operations with sustainability goals.
Climate Impact:
By managing the competition between gas and electric utilities proactively, the U.S. can accelerate its energy transition, reduce financial risks for consumers, and support broader climate objectives.
Scaling Potential
Investment Strategies:
The paper emphasizes the need for coordinated regulatory efforts to stimulate investments that foster a decarbonized energy system while protecting consumers from rising costs associated with maintaining duplicate utility infrastructures.
Future Opportunities:
Addressing inter-utility competition and promoting unified planning can help capitalize on emerging technologies such as electric heat pumps and induction stoves, ultimately facilitating a more rapid transition to clean energy.
Long-Term Implications
Transformative Impact on Energy Systems:
The successful implementation of a unified regulatory framework could revolutionize how gas and electric utilities operate, mirroring transitions seen in other sectors moving toward sustainability.
Strategic Planning for the Future:
As the landscape of energy regulation evolves, it is crucial for regulators to treat gas and electric utilities as components of a single energy ecosystem to achieve climate goals effectively. Read More
Policy Pulse
This section includes global updates on climate change policy, governance and regulation.
There are plans to build Europe’s largest green hydrogen plant in Kintore.
Statera Energy has submitted a planning application for the Kintore Hydrogen project in Aberdeenshire, aiming to invest £600 million in developing Europe’s largest green hydrogen facility with an initial capacity of 500 megawatts by 2028, ultimately scaling to three gigawatts, which would contribute significantly to Scotland’s 5GW hydrogen production target.
Why it Matters: This project is pivotal as it represents a significant investment in renewable energy infrastructure, helping to advance Scotland’s hydrogen production goals and contribute to the transition to a low-carbon economy. Read More
Today’s Climate Data Point
Study cautions that if fossil fuel investments persist, $557 trillion in assets could become stranded by 2050.
Source: “Stranded human and produced capital in a net-zero transition,” Environmental Research: Climate (2024)
A new study by Exeter and Lancaster universities highlights the severe economic risks associated with continued investment in carbon-intensive industries as the world strives for net-zero emissions by 2050. The research uniquely assesses both physical assets and the economic value of workers that could be stranded in the transition.
Key Findings:
- Stranded Assets at Risk: Stranded assets may include job losses for workers and depreciating values of coal power stations as renewable energy sources dominate the market.
- Capital Value Comparison: The study compares two scenarios: ceasing investments in carbon-intensive industries in 2020 versus delaying this action until 2030. A transition initiated in 2020 would leave $117 trillion of global capital at risk, whereas a delay to 2030 raises the figure to $557 trillion, representing 37% of total global capital today.
- Transition Dynamics: The longer the world waits to transition away from fossil fuels, the more chaotic and economically detrimental the shift will be. An orderly transition could create new opportunities, while a disorderly one risks post-industrial decline in certain communities.
Implications:
- Investment Risks: Continued investment in declining industries could lead to significant economic instability, putting workers and communities in jeopardy as industries diminish.
- Policy Recommendations: Researchers urge immediate action to embrace the transition, emphasizing the need for transformative educational and financial systems to create new opportunities, particularly in regions reliant on fossil fuel industries.
Conclusion:
The study underscores the necessity for rapid cuts in carbon emissions to meet the Paris Agreement goals. A proactive approach to the transition not only makes practical sense but is crucial in averting the impending economic risks of a delayed response. The findings advocate for policies that facilitate an orderly transition while ensuring communities are supported and not left behind. Read More
Climate Insider Intelligence: Fireside Chat with Charlie Tan, CEO at Global Impact Coalition
🌍 Fireside Chat with Charlie Tan, CEO of Global Impact Coalition
The chemical industry, responsible for 6% of global GHG emissions, is at a turning point. Charlie Tan, CEO of GIC, is leading an initiative that encourages collaboration to drive sustainability.
The coalition, born from a chemical industry initiative at the World Economic Forum, focuses on tangible action, from steel-in-the-ground pilots to advancing key technologies.
One example? The Pyrolysis Oil Supply Upgrade Project—cutting 375,000 tonnes of CO2 in plastics production! GIC is a game-changer in aligning industries for a net-zero future. 🌱Read the full interview here: https://lnkd.in/e6D6HWab
