$1.5 billion fund

FUNDRAISING

Just Climate announces $1.5 billion fund

• Just Climate has announced the closing of its inaugural fund, Climate Assets Fund I, raising $1.5 billion in institutional capital.

• The fund exceeded its $1 billion target and will invest in high-impact solutions that can significantly reduce or eliminate emissions while generating attractive financial returns.

• The fund attracted a diverse group of institutional investors from around the world, including pensions, sovereign wealth funds, insurers, financial institutions, endowments, foundations, and family offices.

• Founding investors of the fund include Microsoft’s Climate Innovation Fund, IMAS Foundation, Ireland Strategic Investment Fund, Harvard Management Company, Goldman Sachs’ Imprint Group, Hall Capital Partners, and others.

• Just Climate focuses on industrial climate solutions and will invest in growth-stage, asset-heavy companies globally in sectors such as energy, mobility, industry, and buildings.

• The fund has made investments in ABB E-mobility, H2 Green Steel, and Meva Energy.

• Just Climate’s approach includes an integrated performance fee structure where financial returns and greenhouse gas abatement goals are linked.

• The team at Just Climate combines expertise in growth equity, project finance, engineering, and impact measurement to identify and support transformative solutions for hard-to-abate industries.

HYDROGEN

Developers await guidelines on hydrogen “greenness”

• The Inflation Reduction Act in the US provides a subsidy for emission-free hydrogen production, but concerns arise over the pace of hydrogen production and the availability of emission-free electricity.

• The Inflation Reduction Act’s 45V Hydrogen Production Tax Credit offers up to $3 per kilogram of hydrogen produced for projects with low greenhouse gas emissions, with different tiers based on emission levels.

• The eligibility for the subsidy and the “greenness” of hydrogen will be determined by the US Treasury, with guidelines expected by August.

• Current hydrogen production in the US is mostly from fossil fuels, with only 1% from electrolysis.

• Hydrogen is targeted for decarbonization in industrial sectors and transportation.

• The US government’s ‘Hydrogen Shot’ aims for a significant increase in clean hydrogen use, requiring a substantial increase in emission-free power generation.

• The timing of capacity installation is debated between immediate production and reinforcing the grid first.

CARBON MARKETS

Cowboy Clean Fuels partners with Puro.earth to generate carbon removal certificates

• Cowboy Clean Fuels has partnered with Puro.earth to generate CO2 Removal Certificates (CORCs) for carbon dioxide removed from the atmosphere.

• Puro.earth, a trusted crediting platform for engineered carbon removal, will verify and issue the CORCs for Cowboy Clean Fuels’ operations in Wyoming.

• The process used by Cowboy Clean Fuels meets the requirements set in the Geologically Stored Carbon Methodology, which covers capturing and permanently storing CO2 in deep geological formations.

• Once verification is completed, Cowboy Clean Fuels will list its removal credits on the Puro.earth digital trading crediting platform.

• This partnership enables Cowboy Clean Fuels to offer carbon dioxide removal credits to corporate buyers, representing the actual and permanent removal of CO2 from the atmosphere.

INDUSTRIAL DECARBONIZATION

One week and two auto green steel deals

ArcelorMittal and GM sign sustainable steel agreement

• ArcelorMittal North America will supply General Motors (GM) with XCarb™ recycled and renewably produced (RRP) steel.

• The steel offers significantly reduced CO2 emissions compared to other carbon steel available in North America.

• The material will be supplied from ArcelorMittal Dofasco in Hamilton, Ontario, and shipments are expected to start in the second quarter of 2023.

• ArcelorMittal’s XCarb™ RRP steel is made through the Electric Arc Furnace (EAF) route and contains a minimum of 70% scrap, with the potential for up to 90% scrap.

• The steel has lower CO2 intensity and has undergone independent verification through a Life Cycle Analysis (LCA) that includes Scope 1, 2, and 3 emissions.

• The electricity used in the steelmaking process is sourced from renewable sources.

• The agreement showcases how strong supplier relationships can contribute to reducing emissions in the supply chain.

• ArcelorMittal Dofasco is undergoing a transformation to reduce carbon emissions by approximately 60% by transitioning to a Direct Reduced Iron (DRI) fed Electric Arc Furnace (EAF) steelmaking process.

• All ArcelorMittal facilities in North America that produce automotive steel will eventually utilize an EAF-based process.

• ArcelorMittal has committed to reducing the carbon intensity of its steel production by 25% globally by 2030 and achieving carbon neutrality by 2050.

Mercedes and H2 Green Steel sign supply agreement

• Mercedes-Benz AG and H2 Green Steel (H2GS) have secured a supply deal for approximately 50,000 tonnes of almost CO₂-free steel per year.

• The steel will be used in various Mercedes-Benz vehicle models and supports the company’s “Ambition 2039” goal.

• Mercedes-Benz and H2GS aim to establish a sustainable steel supply chain in North America through a “local for local” approach.

• The partnership includes plans to decarbonize the steel supply chain with various partners worldwide.

• The production of steel at the H2GS site is almost CO₂-free, using hydrogen and electricity from renewable sources.

• Mercedes-Benz is working towards a net-carbon neutral supply chain by 2039 and focuses on reducing CO₂ emissions rather than offsetting.

• The company has already introduced low-CO₂ steel made from scrap in four series models.

• Mercedes-Benz aims to increase the use of secondary raw materials and collaborate with H2GS to increase the scrap content.

• Both companies prioritize responsible and sustainable practices, including human rights due diligence and involvement in sustainability standards development for the steel industry.

ENERGY SECURITY

Visual of the week