ACCELERATING CAPITAL TOWARDS
According to the United Nations and the latest International Panel on Climate Change (IPCC) special report on the impacts of global warming, the world is on track to deplete the carbon emissions budget for 1.5°C by 2030 and is heading for a temperature rise in excess of 3°C this century. The UN states that the window of opportunity to achieve the 1.5°C Paris Agreement goal is closing fast and failure to do so could entail catastrophic results for billions of people.
International agencies such as the IEA and IRENA estimate that well over $100 trillion of investment into the energy transition is needed by 2050 to maintain the Paris target and to achieve net zero emissions.
G7 Ministers have recently agreed that urgent action is needed to meet these targets and that, furthermore, the entire financial system will be needed to do so, mobilising both public and private, domestic and international sources of capital, as well as innovative new vehicles. All investors globally are urged to align their portfolios with these goals.
The President of the European Central Bank also points to an investment shortfall of €0.3 trillion per year to achieve Europe’s 2030 climate and energy targets and highlights the role of the capital markets in doing so.
Climate Transition Capital’s mission is to mobilise capital to accelerate the climate transition and to achieve the 1.5°C goal. It believes that only the public capital markets are large enough to finance the climate transition. Annual flows from institutional investors into private equity allocations to these sectors are circa $80 billion, or 10% of the $0.8 trillion annual energy transition investment to date. Annual investment levels of $3 trillion to $5 trillion, as indicated by IEA and IRENA, will have to be met largely through public equity and fixed income allocations.
Climate Transition Capital will focus on opportunities in decarbonising energy, decarbonising transport, and decarbonising industry, particularly in the “harder-to-abate” sectors. These account for half of all global carbon emissions, but have so far seen limited investment in comparison to mature renewable energy technologies like wind and solar.
Climate Transition Capital will identify pioneering companies that it believes are poised to become climate transition leaders by providing a genuinely disruptive solution towards net-zero, rather than merely an incremental one.
Climate Transition Capital will seek businesses whose technology solution or business model is ready for mass market adoption and whose management team is ready to access public capital markets to scale up and accelerate growth.
Each of CTC’s leaders has over thirty years of experience in the energy sector and an impressive record of building early movers into industry leaders. They are proven innovators that have catalysed new markets and asset classes, including launching the world’s first offshore wind fund, creating the models for power purchase agreements and energy-storage-as-service agreements and the first yieldcos.