Temasek launches investment platform company GenZero in global decarbonisation push

SINGAPORE: Temasek on Monday (Jun 6) announced the launch of GenZero, a new investment platform company that aims to accelerate decarbonisation globally.

Wholly owned by Temasek, GenZero will make investments around the world in three focus areas – technology-based solutions, nature-based solutions and carbon ecosystem enablers – as it “seeks to deliver positive climate impact alongside long-term sustainable financial returns”, Temasek said in a news release.

Temasek has committed an initial amount of S$5 billion to establish GenZero, and a number of investments have already been made in the company’s focus areas.

“The climate crisis is intensifying and the latest report by the Intergovernmental Panel on Climate Change has warned that the world is not on track to limit global temperature rise to 1.5 degrees Celsius above pre-industrial levels,” Temasek said.

“There is an urgent need to accelerate decarbonisation across all sectors to avoid irreversible damage to the planet by reducing global carbon emissions and address the emissions gap, which is estimated (to be) between 19 and 26 gigatonnes of carbon in 2030 for a 1.5 degrees Celsius scenario.”

GenZero will aim to “catalyse decarbonisation solutions with its ability to deploy long-term and flexible capital” and will invest in a range of opportunities, “from early-stage companies and solutions that require patient capital to commercialise and grow, to more mature ones that are ready to scale”.

GenZero’s focus areas “present a holistic and integrated approach to address the emissions gap, with solutions across both the near- and longer-term horizons”, the company added.

DRIVEN BY “COMMON PURPOSE”

Temasek International managing director for sustainable solutions Frederick Teo has been designated as GenZero’s CEO, and will fully transition to the role on Jul 1.

Mr Teo has held leadership positions in Temasek for nearly 12 years in roles across sustainability, portfolio management, business continuity and strategic stakeholder engagement.

“Recognising the importance of immediate action, we will focus on investment opportunities that can deliver positive climate impact by 2030 while ensuring sustainable financial returns,” Mr Teo said.

“Besides deploying capital, we will work with our investee companies to address operational challenges and accelerate the deployment of their solutions to achieve our shared net zero target.”

Temasek International chief sustainability officer Steve Howard said that GenZero “expands Temasek’s focus on deploying capital to catalyse solutions for a better world” and will help the company achieve its goal of reducing its portfolio’s net emissions.

“Achieving net zero globally will require deployment of around US$5 trillion annually by 2030, to rapidly adopt and commercialise sustainable energy solutions,” Dr Howard said.

“(GenZero’s) flexible approach will enable it to catalyse near- and long-term solutions to support ongoing efforts to achieve net zero globally.

“GenZero will not only support Temasek’s efforts as we strive towards halving our portfolio’s net emissions by 2030 and working towards a net zero portfolio by 2050, but also those of the wider ecosystem.”

TECHNOLOGY-BASED SOLUTIONS

GenZero will invest in “technology-based solutions that deliver deep decarbonisation impact through climate-driven technologies”.

“While many decarbonisation technologies and innovations currently exist, they require capital to further advance commercial viability and deployment to scale,” Temasek said.

“GenZero will invest in carbon-reduction and carbon-removal technologies such as low-carbon materials; carbon capture, utilisation and sequestration (CCUS); and advanced biofuels such as sustainable aviation fuel (SAF).

“These opportunities will help deliver fundamental decarbonisation impact in sectors such as power and energy, transport and building, industry and manufacturing.”

One company that GenZero has invested in is the United States-based Newlight, a manufacturer of biomaterial produced from methane as an alternative to plastics.

GenZero has also made a joint investment with C-Quest Capital to fund the deployment of energy efficient cookstoves to rural households in Southeast Asia.

“GenZero will also invest with third-party funds to expand its networks and collaborate with like-minded partners,” Temasek added.

“It is currently working with Decarbonization Partners, a Temasek-BlackRock partnership launching a series of funds that focus on late-stage venture capital and early growth private equity decarbonisation solutions investments; and Brookfield Global Transition Fund, which aims to accelerate the global transition to a net zero carbon economy by targeting investment opportunities relating to reducing emissions and energy consumption, as well as increasing low-carbon energy capacity and supporting sustainable solutions.”

NATURE-BASED SOLUTIONS

Another investment focus area is nature-based solutions.

These are “climate solutions such as the protection, restoration, and management of natural ecosystems to avoid, reduce, or remove carbon emissions, while empowering local communities and enhancing biodiversity,” Temasek said.

“They are a crucial factor in climate action as they can provide over one-third of cost-effective climate mitigation needed to achieve net zero emissions by 2050. Yet, less than 3 per cent of global climate finance is going into supporting nature-based solutions, signalling a clear mismatch between its climate mitigation potential and the investments towards that potential.

“GenZero will support and scale the deployment of nature-based solutions through investments and project co-development with partners in forestry and agriculture sectors, and leverage carbon credits as a market mechanism to accelerate funding into these solutions.”

The company has teamed up with the Global EverGreening Alliance to support farming communities in Kenya through land restoration and the planting of trees.

It has also invested in the New Forests Tropical Asia Forest Fund 2, “which aims to develop a diversified portfolio of sustainable forest plantation assets in Southeast Asia and support the region’s transition towards responsible forestry management”.

CARBON ECOSYSTEM ENABLERS

GenZero’s third area of focus is carbon ecosystem enablers.

“Carbon markets can play a critical part in delivering real emissions reduction and driving climate ambition, but only when it is done right,” Temasek said.

“An effective and trusted carbon market will help accelerate decarbonisation by providing a mechanism to fund decarbonisation technologies and projects; while a credible ecosystem and market will be critical to enhance transparency and confidence.

“To support this, GenZero will invest in carbon ecosystem enablers including areas such as climate advisory services; carbon trading infrastructure; monitoring, reporting and verification (MRV) technologies and rating providers.”

One such enabler GenZero has invested in is climate solutions firm South Pole, “which develops and implements emission reduction projects and strategies for companies, governments and organisations around the world”.

The company is also working with global carbon marketplace and exchange Climate Impact X, which is aiming to establish “a credible carbon trading infrastructure based in Asia”.

“In addition, GenZero has made an investment in Perennial, a US-based early-stage start-up using artificial intelligence and remote sensing to accurately quantify soil organic carbon sequestration on agricultural lands,” Temasek said.