Happy Tuesday. An investment company from England has launched a groundbreaking fund linking investment returns to biodiversity credits, which could shape a new era for sustainable investment.

In today’s edition:
⚡️ World’s biggest solar panel manufacturer sends a warning to Europe
🚜 Cocoa prices hit all-time due to poor harvests of cocoa
🌳 A brand new biodiversity credit fund created in England

🔋 Energy (1-Min Read)
World’s biggest solar company warns West not to cut out Chinese suppliers

What happened: The world’s biggest solar panel manufacturer has warned that Europe and the US risk slower decarbonisation of their economies if they restrict Chinese companies from their renewable energy supply chains.

Details:

China dominates solar manufacturing, accounting for over 80 per cent of global production following decades of deep state support, rapid domestic demand growth and intense local competition. 

But Western political and industry leaders have called for greater diversity in supply amid a glut of Chinese imports and expressing security fears about China-made components being used in critical infrastructure – Last month, a group of US senators called on Biden to increase tariffs on Chinese-made solar imports. 

Dennis She, vice-president of Longi Green Energy Technology, warned western geographies would at least ‘slow down’ their transitions’ if they cut back on Chinese solar – Europe produces < 3% of the solar panels needed to reach its 2030 renewables targets.

Wood Mackenzie, an energy consultancy, has forecast that after investments worth more than $130bn last year alone, China is set to continue to lead solar technology and dominate more than three-quarters of the world’s solar polysilicon, wafer, cell and module manufacturing capacity for the next three years at least.

Why it matters: Another example of the tightrope of balancing decarbonisation agendas with energy security, industrial policy, costs, supply, labour conditions and human rights. While capacity expansions on solar are happening in the EU and US – this will take time to come online, leaving governments few options to diversify away from Chinese supply, at least in the short term. (Full story here).

 🚜 AgriTech (1-Min Read)
Weather woes highlight the need for a resilient chocolate supply 

What happened: Global cocoa prices surged to a record high, with the New York commodities market seeing prices double since last year to just under $6k a ton. The price surge is driven by poor harvests in West Africa, exacerbated by the El Niño weather system.

Details: The El Niño weather system is bringing drier weather to Ghana and Côte d’Ivoire, the world’s two biggest producers of cocoa beans, which is lowering yields. Lower yields are reducing supply and driving up prices, with UK consumers experiencing a 50% increase in the price of chocolate boxes and squeezing major chocolate makers, like Hershey, whose sales dropped over 6% in the fourth quarter of 2023. 

Improving resiliency: The struggles faced by cocoa farmers, with 58% in Côte d’Ivoire and Ghana living below the extreme poverty line, are being intensified by El Niño – highlighting the need for a more resilient and fair supply chain. The Nestlé Income Accelerator Programme aims to do just that and shows promising results, with 10,000 cocoa-farming families enrolled and receiving incentives for implementing sustainable farming practices that are more resilient to adverse weather conditions, resulting in increased productivity. (Full story here).

🐘 Nature (1-Min Read)
 Banking on Nature’s Returns

What happened: A London-based investor, Gresham House, has partnered with the insurance company Willis Tower Watson to start a biodiversity credit fund in the wake of England’s Biodiversity Net-Gain (BNG) regulation coming into force.

The details: Under the BNG policy, development projects across England must achieve a net biodiversity improvement of at least 10% from Feb 2024. This new biodiversity credit fund will support biodiversity improvements by creating habitat banks. These habitat banks will result in biodiversity credits, which will be sold to ensure adherence to new BNG regulations while also generating returns. The plan is to develop 8,000 hectares of habitat banks, delivering biodiversity credits by 2026.

The bigger picture: The UK is in the bottom 10% globally for biodiversity, so this new fund provides an opportunity to deliver real environmental impact alongside financial returns in the natural capital space. Globally, biodiversity has become one of the fastest-growing corners of the ESG market, with the number of biodiversity-focused funds growing by 45% over the past year, with fund assets topping $3.3billion – up 18% over the same period. (Full story here).

💭 Little Bytes (1-Min Read)

💬 Quote: “If we get nature-based solutions right, it could be really transformational” —  Peter Bachmann, managing director of sustainable infrastructure at Gresham House.

📊 Stat: Half of the Amazon rainforest system could be pushed to a tipping point by 2050 — Nature

📺️ Watch: Cambodia ‘upcycler’ turns tonnes of plastic bottles into brooms

🛗 Snippets for your lift conversations (1-Min Read)

Google joins a new satellite mission to track planet-warming emissions, aided by artificial intelligence technology, to help build a global map of oil and gas infrastructure and survey it for leaks. (Link).

Geologists are signalling the start of a new energy “gold rush” for a previously neglected carbon-free resource — hydrogen generated naturally within Earth. (Link).

A landmark climate finance framework endorsed by world leaders as a way to fund the green transition in poorer countries is struggling to raise capital. (Link).

Global tree-planting initiatives drive massive biodiversity loss in African savannas, study finds. (Link).

One of the UK’s largest wholesalers to the food service industry, Sysco GB, is supporting its customers to adopt carbon labelling. The move will enable carbon labelling at schools, universities, hospitals and event venues. (Link)

Travellers will need to bear the cost of the transition towards green jet fuel, Singapore’s transport minister said as he announced the city state’s plans for a levy on flight ticket prices as the aviation industry seeks a viable funding model. (Link)

Australia’s nickel industry is confronting a crisis, with several companies suspending operations due to a collapse in the price of the metal driven by a supply glut from Indonesia. (Link)

 🎣 Gone Phishing (1-Minute Read)

Three of these stories are true, one we’ve made up. Guess which:

Local artist creates life-sized dragon sculpture using 100,000 recycled bottle caps

Man makes Chewbacca suit from 45 bags of hair extensions

Scientists invent new hybrid food by growing beef inside grains of rice

Lonely donkey to meet potential companions after goat best friend dies