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BFD Expert Voices - Climate Deals

BFD Expert Voices

A pair of startups raised seven-figure seed rounds for their efforts to bring renewed transparency and accountability to carbon credit markets.

Why it matters: Carbon markets have a credibility problem. 

These two companies, WattCarbon and Senken, represent the latest efforts by investors to fix it — and make a healthy return. 

What's happening: WattCarbon, a Bay Area-based carbon accounting startup that also manages a virtual power plant network, raised $4.5 million in seed funding, Megan reported this morning.

True Ventures led the all-equity round and took a board seat in the deal. CEO McGee Young declined to share the round's valuation.

Meanwhile, Senken, an online marketplace for on-chain credits, closed a $7.5 million all-convertible seed round, the company told Alan.

Obvious Ventures led and took a board seat. Offline Ventures, Inflection, Kraken Ventures and Climate Capital participated.

CEO Adrian Wons similarly declined to share the round's valuation. The company is based in Berlin and South Africa.

State of play: Companies bought fewer carbon offsets last year than in 2021, per a report from AiDash.

Executives are wary of relying on offsets to meet net-zero pledges given the multitude of headlines on loopholes and lack of standardization.

Indeed, this was the headline of a Guardian investigation of Verra last week: "More than 90% of rainforest carbon offsets by biggest provider are worthless." (Verra disputes the findings.)

Zoom in: Both WattCarbon and Senken say they're hyper-focused on credibility.

WattCarbon uses publicly accessible, open-source software to bring transparency to its accounting metrics. 

Senken uses blockchain technology for its credits, which it says makes them far more traceable. It plans to work with an insurance provider to support its "Carbon Forwards," which will fund projects still in development.

What we're watching: Whether investors remain cool to carbon credits schemes — and whether these latest attempts by WattCarbon and Senken rekindle interest. 

We're also standing by for whatever the next investigation might be. 

When it came to the alleged problems with Verra, a provider once seen as the standard-bearer for rigorous carbon credits regimes, "it feels like it was an open secret in this space," Senken's Wons tells Alan. "Everyone knew it."

1 big thing: Capitalizing on the carbon credits credibility gap

Illustration of a calculator that reads CO2

Generate Capital, the SF-based infrastructure investor and operator, raised a fresh $880.6 million, per a filing with the SEC, Alan writes.

Why it's the BFD: Generate is among the most well-known investors in climate tech and low-carbon infrastructure.

What's happening: Generate raised $880.6 million, according to the Jan. 6 filing. The sale opened Dec. 23. ImpactAlpha first reported on the raise.

Flashback: Generate previously raised $2 billion in 2021, chiefly from institutional investors.

It was co-founded by Jigar Shah, who now leads the Department of Energy's Loan Programs Office.

Context: The firm often holds onto the infrastructure assets it backs, taking the role of operator in addition to investor.

2. The BFD: Generate raises another $880M

Illustration of a tree with money as the leaves. 

✋ Manchin moves to limit EV tax credits: Sen. Joe Manchin (D-W.Va) wants to block the use of expanded consumer EV subsidies on cars that don't meet strict battery sourcing mandates in the U.S. climate law, Axios' Ben Geman writes.

His new bill would immediately impose limits the Treasury Department has delayed by failing to issue formal "guidance" on the requirements.

💧 Hydropanels deployed to Texas: Source Global is sending its water-generating solar-powered panels to communities along the U.S.-Mexico border, Axios' Ayurella Horn-Muller reports.

The panels essentially extract water from the ambient air. They're being sent to colonias, unincorporated, low-income communities that generally lack services like water infrastructure. 

🚢 Green methanol gets its moment: "Shipping giants AP Moller-Maersk A/S and Cosco Shipping Holdings Co. are banking on green methanol to fuel some of their fleets, making it a key part of the decarbonization of shipping," Bloomberg reports this morning. 

"By 2027, the production of e-methanol and biomethanol is poised to reach more than 8 million metric tons per year, according to the Washington, DC-based Methanol Institute trade group."

🏭 Cheaper CCS: Scientists at Pacific Northwest National Lab say they've developed a technique to extract CO2 from a smoke stack for as little as $39 per metric ton.

By comparison, current state-of-the-art CCS tech for a coal-fired power plant costs $57 per metric ton. CNBC has the details.

3. 🌡️ Temperature check

Illustration of an ice cream cone with a melted puddle of ice cream that looks like the earth.

• Otovo, a Norwegian residential solar marketplace, to finance 12,500 new solar assets. DNB Bank ASA and SpareBank 1 SR-Bank provided €100m in debt financing. Existing investors AxSol AB, Nysnø Klimainvesteringer, Agder Energi Invest and OBOS invested €20m in equity. https://axios.link/3XBBgjn 

• Scythe Robotics, a Longmont, Colo.-based developer of landscaping robots with pay-as-you-go pricing, raised $42m in Series B funding. Energy Impact Partners led, and was joined by ArcTern Ventures, Alumni Ventures and Amazon’s Alexa Fund. https://axios.link/3HuRchu 

• Log9 Materials, an India-based developer of an EV-focused battery system, raised a $40m Series B in a mix of equity and debt led by Amara Raja Batteries and Petronas Ventures. Incred Financial Services, Unity Small Finance Bank, Oxyzo Financial Services and Western Capital Advisors participated. https://axios.link/3JfNWYS 

• Terra Drone, a Tokyo-based drone manufacturer, raised $14m from Aramco’s venture arm, Wa'ed Ventures, to launch a Saudi subsidiary for drone surveying, inspection and unmanned traffic management. https://axios.link/3XCeo3b 

• Ampeco, a Bulgarian EV charging management platform, raised $13m in Series A finding. BMW i Ventures led, and was joined by LancHub Ventures and Cavalry Ventures. https://axios.link/3XZ4Zm7

• Milltrust Ventures, the venture investment arm of Milltrust International, launched a Smart Protein Fund in partnership with Earth First Food Ventures. The fund will invest in alternative protein makers. https://axios.link/3wpjjID

• CL-Invest AS, a company developing oil-and-gas emissions reduction projects, raised an undisclosed amount from London-based OGCI Climate Investments. https://axios.link/3wpk7x9

• enCore Energy, the Corpus Christi, Texas-based uranium developer, entered an underwriting agreement with Canaccord Genuity for the sale of ~9.2m units at a price of C$3.25/unit for gross proceeds of ~C$30m. https://axios.link/3XJcGgA 

• The Los Angeles Board of Public Works approved composting contracts with WM, Recology and Athens Services collectively worth up to $1.67b over a 15-year period, per Waste Dive. https://axios.link/3Di7Le7

• Onto, a London-based electric car subscription service, raised £100m in credit financing from CDPQ and Pollen Street. https://axios.link/3R7P7Ly 

• American Lithium agreed to buy back the remaining 1% of the TLC Lithium Project in Tonopah, Nevada, from Nevada Alaska Mining Co. https://axios.link/3WudAMt

• Exxon Mobil signed an MOU with Mitsubishi and Nippon Steel to consider a CCS project for Japanese steel plants, per Reuters. https://axios.link/3kB2gk9 

• Genera PR received a 10-year contract from the Puerto Rico Public-Private Partnerships Authority and the Puerto Rico Electric Power Authority to operate, maintain and decommission a 3,600 MW thermal power generation system. https://axios.link/3kJyZ6S 

• Sonatrach, Algeria’s state energy company, and Sasol, a South Africa-based petrochemical group, agreed to potentially develop a hydrogen and syngas production plant in Sicily. https://axios.link/3kJtKEw 

• Royal Helium, a Saskatchewan-based helium producer, signed an agreement with Guardyan Conservation, a Calgary-based carbon credits developer, to develop a carbon credit strategy for Royal’s Steveville Helium Recovery Plant. https://axios.link/3R9AFCT 

• The U.S. Nuclear Regulatory Commission rejected a request by PG&E to resume review of a life-extension application first submitted in 2009 for the Diablo Canyon nuclear plant. PG&E said it will submit a new application, seeking to extend the plant’s by 20 years. https://axios.link/3H6MWU7 

• Oklo, the Santa Clara, Calif.-based micro-reactor developer, submitted a licensing project plan to the Nuclear Regulatory Commission. The NRC last January rejected a license application from Oklo. https://axios.link/3wAg6G9 

• Peregrine Energy, a Boulder, Colo.-based utility-scale storage developer, announced plans to develop two mid-stage energy storage assets totaling 490 MW in the ERCOT market. https://axios.link/3HaDqiC 

4. Hot deals

• Strike Construction, a Houston-based energy infrastructure services provider, hired Matt McSorley as CEO. https://axios.link/3JfzHmW 

• Genera, a Vonore, Tenn.-based manufacturer of ag-based pulp and molded fiber products like compostable tableware, hired James Davidson as chief commercial officer. https://axios.link/3kvVdcv 

• Altus Power, a Stamford, Conn.-based commercial solar developer, named Diane Brink to its board of directors. Brink was previously chief marketing officer of IBM Global Technology Services. https://axios.link/3JgQeH4 

 • The American Council on Renewable Energy, the D.C.-based advocacy group, announced that president and CEO Gregory Wetstone is stepping down. https://axios.link/3j37Zii

5. It's personnel

🐪 We made it to Wednesday. Let's dive in.

Thanks to Michael Flaherty and Phoebe Neidl for today's edits.

And thank you for reading Climate Deals! Please share with your friends, family and everyone born on January 25.

January 25, 2023

1 big thing: Capitalizing on the carbon credits credibility gap