Sustainable Finance News Roundup: BASF Venture Capital Invests in Waste-to-Fuels Developer LanzaTech

BASF Venture Capital Invests in Waste-to-Fuels Developer LanzaTech 

Industrial giant BASF has taken an equity stake in waste-to-fuel developer LanzaTech, a company that has developed a process to convert waste from heavy industry, like steel manufacturing, into transportation fuel and chemical products.

LanzaTech, based outside of Chicago, also broke ground on a $150 million waste-to-energy project in Belgium with ArcelorMittal, which will convert exhaust from ArcelorMittal’s blast furnaces into bioethanol. This is the first installation of its kind on an industrial scale in Europe; the plant is expected to produce 80 million liters of fuel per year, which will yield an annual CO2 savings equivalent to putting 100,000 electric cars on the road.

Also this month, LanzaTech and its joint venture partner Shougang Group, a Chinese iron and steel producer, commenced operations on the first commercial facility that converts industrial emissions into ethanol.

Details were not disclosed regarding BASF’s investment in LanzaTech, which it is making through its BASF Venture Capital unit. LanzaTech has raised $250 million in all from investors that include Khosla Ventures, K1W1, Qiming Venture Partners, Petronas, Mitsui, Primetals, China International Capital Corp, Suncor, China International Investment Corp. (CITIC) and the New Zealand Superannuation Fund.

Fuel Cell Maker Bloom Energy Files for a $100M IPO 

Sunnyvale, California-based Bloom Energy has applied to list its Class A common stock on the New York Stock Exchange under the symbol “BE.”

The company makes solid oxide fuel cells that convert natural gas or biogas into electricity through an electrochemical reaction, which results in lower emissions. Bloom focuses on commercial and industrial customers, which include AT&T, Equinix, Home Depot, Morgan Stanley and Apple.

Bloom’s investors include Kleiner Perkins Caufield Byers, Goldman Sachs, Credit Suisse Group, Morgan Stanley, GSV Capital, Apex Venture Partners, Mobius Venture Capital, Madrone Capital and SunBridge Partners and New Enterprise Associates.

The company posted $376 million in revenue last year. It has raised nearly $1.5 billion of equity and has $951 million in debt, according to its filing.

CPPIB Becomes First Pension Fund to Issue a Green Bond 

The bond sale will provide additional funding for the Canada Pension Plan Investment Board (CPPIB) as it “increases its holdings in renewables and energy efficient buildings as world demand gradually transitions in favor of such investible assets,” it says in a statement. The pension has announced plans over the past year to invest more than $2.3 billion in the renewable energy sector.

ING: Big Demand Driving Global Green Loan Growth

Appetite for green bonds and loans is growing across all sectors and types of companies as governments and companies seek to meet global targets to cut greenhouse gas emissions, according to Leonie Schreve, ING’s Global Head of Sustainable Finance.

The bank is now offering corporate loans that have incentives linked to the recipient’s sustainability performance and ESG ratings; ING was also the first to issue a sustainability rating-linked loan last year. It has now led 10 such loans and has been involved in green loan deals worth around $2.6 billion in total over the past year.

In January, ING launched a $124 million sustainable investment fund for “investments to support sustainable ‘scale-ups’ with a proven concept and a positive environmental impact.” The bank also plans to cut its coal power financing exposure to zero by 2025.

More Consumer-Friendly Loans for Residential Solar Systems 

More financing is coming available through traditional bank loan models to allow residential consumers to own their solar PV systems themselves.

In fact, 2017 was the first year since 2011 in which more residential solar systems were  purchased with cash and loans than with leases and Power Purchase Agreements (PPAs), according to GTM Research. In addition to more bank financing being available to customers, a key reason was Telsa’s shift away from third-party financing of solar leases for residential customers.

Capitalizing on this trend, New York-based solar financing company Sunlight Financial raised $50 million from FTV Capital on June 6.  Sunlight says it will use the funds to enhance its products and to create or improve business partnerships. 

In April, the company raised $225 million to finance more than 9,000 residential solar loans. Hudson Clean Energy Partners, a private equity firm specializing in renewable energy, will finance the loans. Sunlight has also received funding from Tiger Infrastructure Partners, CIT Group and Route 66 Ventures.

Meanwhile, residential solar installer Vivint Solar last week raised $811 million in new debt financing, through a combination of a private placement and capital markets issuance, to be used for various debt and corporate purposes. The money will also provide back-leverage financing for a portfolio of 16 tax equity funds and a subsidiary that owns a PV portfolio of 575MW and over 86,000 residential PV systems. Last year, Vivint Solar finalized an “exclusive strategic collaboration” with Mercedes-Benz Energy to deliver solar-plus-storage systems.

Macquarie Group Launches New $500M Green Loan Facility  

Macquarie Group, which acquired the UK’s Green Investment Bank last year, announced the issue of a £2 billion ($2.6 billion) loan facility , including £500 million in green tranches.  The green tranches will be used to support renewable energy projects initially, and energy efficiency, waste management, green buildings and clean transportation projects in the future, it says.  In fact, Macquarie is the first financial institution to issue a green loan under the Green Loan Principles published by the Asia Pacific Loan Market Association (APLMA) in March.

Macquarie intends to utilize its proprietary green impact assessment and reporting for eligible projects developed by its Green Investment Group.

New Sustainable Fund Launches: Major Institutional Investor Interest in Climate Change Mitigation & UN SDGs 

Sixty-eight percent of institutional investors globally consider responsible investing important to their organization to some degree, with fossil fuels/carbon footprint and climate change listed as the top ESG concerns, according to a new survey from Aon Hewitt Investment Consulting. This is driving the development of new sustainable funds, including vehicles that focus on impact investing themes outlined in the UN Sustainable Development Goals (SDGs.)

In June, major Danish pension funds ATP, PFA, PKA, PensionDanmark, PenSam and JOP/DIP invested in a new $650 million fund set up by the Danish government as part of the country’s contribution to the SDGs . The Danish SDG Investment Fund, a public-private partnership, will be managed by IFU and could mean as much as DKK 30 billion ($4.7 billion) in investments in fighting poverty and climate change in developing countries.

And Japan’s Nippon Life Insurance launched the Nissay SDGs Global Select Fund on June 1 with $45.6 million of Nippon Life’s insurance assets. It will invest in public companies globally that are expected to benefit from growing demand for SDG-related business.

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