Virtus: CORSIA and the Voluntary Carbon Market – A New Flight Path for Aviation
Welcome to the October edition of the Virtus newsletter!
Spooky season is upon us, and while pumpkins are popping up everywhere, we’re more interested in the climate action brewing around the globe this month.
In Our Take, “Grounded or Soaring – The Future of CORSIA in Meeting Aviation’s Climate Goals,” we examine how CORSIA might impact the voluntary carbon market and help the aviation industry reach its emissions targets for a greener future.
We highlight exciting updates from our client’s the U.S. Endowment for Forestry and Communities and the American Forest Foundation (AFF). Plus, this month’s episode of “Untangling Climate Finance” features Rita Hite, the President and CEO of AFF. She elaborates on the role of family forests in climate solutions and announcing AFF’s first carbon credit auction for nature-based solutions.
Our Climate Finance Deals section brings a host of global highlights, showcasing significant investments in carbon markets, industrial decarbonization, and forest preservation — from Colombia’s green transition to Brazil’s major forest fund.
In What We’re Absorbing, we present some topnotch climate storytelling and perspectives — Neal Stephenson’s Termination Shock tackles the ethics of geoengineering, Vinod Khosla and Elon Musk spar over climate policy in Zero: The Climate Race, The Wild Robot brings nature’s harmony to life, and Grist’s Moral Hazards series explores the complicated moral landscape of climate change.
Thanks for joining us this October as we uncover climate solutions and impactful investments — no tricks, just treats for a sustainable future!
All the best,
Gordian Knot Strategies
We are Igniting Climate Solutions: Mobilizing $1 Billion Per Year in Impact Investment by 2030!
The aviation industry is a major contributor to worldwide greenhouse gas (GHG) emissions, accounting for approximately 2-3% of total carbon dioxide (CO2) emissions globally. As international travel continues to grow, emissions from aviation are expected to rise, with projections that it could make up an enormous 25% of global GHG emissions by 2050.
Needless to say, this poses a significant challenge to our global climate goal of hitting net-zero emissions by 2050.
To address this, the International Civil Aviation Organization (ICAO) introduced the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), a global framework aimed at reducing emissions from international aviation.
Established in 2016, CORSIA is designed to complement other decarbonization efforts, such as technological innovation and sustainable aviation fuels (SAF). The scheme works by requiring airlines to offset their emissions growth by purchasing carbon credits.
This essay examines the mechanics of CORSIA and its broader impact on the voluntary carbon market (VCM), as well as its role in helping the aviation industry achieve its carbon reduction goals for a more sustainable sector.
To read the rest of this article, click here.
Gordian Knot Strategies has been engaged once again to help the U.S. Endowment for Forestry and Communities screen for investment opportunities, develop program criteria, evaluate proposals, and conduct due diligence for its Impact Investing Program. A second call for the submission of impact investing opportunities is planned for the winter of 2024/2025.
If you would like to be on the distribution list for the announcement of the next round of funding and informational webinars, please leave your details here, and we will keep you updated.
The American Forest Foundation (AFF) will hold the first auction for the Family Forest Carbon Program’s carbon credits in February 2025.
The American Forest Foundation Carbon Auction — the first of its kind for a U.S. nature-based carbon project — will offer buyers a transparent and streamlined way to secure high-quality carbon credits while supporting rural communities and family forest owners.
To read the full announcement, click here.
To view information on the auction, click here.
Global Client Served
We were engaged by a global climate specialist investment firm, which has the mission to invest in businesses and projects vital to making the net-zero future a reality. We provided expert advisory services on carbon portfolio financing that included risk mitigation, return expectations, financing structures, market dynamics, and contracting terms. Our support helped them in particular to navigate a rather significant investment opportunity in the United States.
“Utilizing Gordian Knot Strategies kept our process moving, helped us focus on key items and freed us up to really evaluate opportunities.”
Joie Moré — Chief Financial Office, US Endowment for Forestry and Communities
🎙️ In our October episode, Rita Hite, President and CEO of the American Forest Foundation, discusses the vital role of family forests in climate solutions and shares AFF’s innovative programs. Rita also announces AFF’s first-ever carbon credit auction for nature-based solutions, set for February 2025.
Resources Mentioned in the Episode:
Click any of the links below to listen!
📚 Though we haven’t yet read Termination Shock by Neal Stephenson, it’s high on our list. This speculative novel follows a billionaire’s radical, world-spanning plan to combat global warming, exploring the high-stakes choices and unintended consequences that ripple across continents and cultures. Epic and thought-provoking, it promises a gripping dive into the ethical and environmental dilemmas of geoengineering.
🎙️ Like many, we’re deeply concerned about a potential Trump presidency and its effects on climate action and environmental protection. In Episode 103 of Zero: The Climate Race from Bloomberg, titled “Vinod Khosla on What Elon Musk Gets Wrong About Trump, Economy, and Climate,” Khosla — Silicon Valley veteran and climate tech investor — discusses his attempts to sway Musk on issues like immigration, climate change, and Trump’s impact. Khosla, who backs climate-focused companies like Impossible Foods and LanzaTech, highlights why he’s voting for Kamala Harris, citing her climate policy stance as a critical factor in his decision.
📺 Although the new movie – The Wild Robot – isn’t directly about climate change, it beautifully captures the harmony of nature and reminds us why protecting our precious wildlife matters. This animated tale follows Roz, a shipwrecked robot, as she learns to survive on a wild island, forming heartfelt connections with its animal inhabitants and embracing her role as a parent to an orphaned gosling. This is great watch with the entire family!
✍️ In its thought-provoking series Moral Hazards, Grist dives into how climate change is reshaping our ethical landscape, challenging our concepts of right and wrong. Through essays on climate shaming, anxiety, displacement, and a scientist’s controversial critique, the series explores the tangled and often contradictory motivations behind our choices in a warming world.
Every week brings fresh climate finance deals and initiatives across various countries, fueling impactful projects and new opportunities. Here are some of the key headlines that caught our attention — click any title to read the full story.
Morgan Stanley Investment Management Closes 1GT Climate Private Equity Fund at $750 Million
Morgan Stanley Investment Management closed its 1GT climate private equity fund at $750 million, aiming to support North American and European companies that collectively reduce or remove one gigaton of CO2e by 2050. The fund, backed by institutional investors, focuses on growth-stage investments across sectors like mobility, sustainable energy, and agriculture, tying half of its team’s incentives to climate goals. As part of Morgan Stanley’s alternative investments, 1GT combines financial returns with measurable climate impact, supporting firms like Instagrid and Huel in scaling solutions for climate change mitigation and sustainable development.
Climate Investment Funds Eyes $1 Billon to Help Green Industries
The Climate Investment Funds (CIF) announced a $1 billion investment to support the decarbonization of heavy-emitting industries like cement, steel, and chemicals in developing countries. This funding, part of CIF’s $8.6 billion Clean Technology Fund, will provide accessible financing to help reduce industrial emissions, which make up roughly 25% of global greenhouse gases. By targeting cleaner production technologies, CIF aims to achieve substantial emissions reductions by 2050, fostering public-private collaborations and bolstering climate finance discussions ahead of COP29.
Colombia Adds Nature to the Mix With its $40-Billion Energy Transition Plan
Colombia has introduced a $40-million plan to support its shift from fossil fuels to sustainable energy, emphasizing green sectors like ecotourism and ecosystem restoration. The plan, backed by talks with potential donors like the UK, Germany, and the EU, aims to replace revenues from oil and gas with cleaner income sources, including $14.5 billion for renewable energy expansion. Colombia is also exploring debt swaps to fund environmental projects, seeking innovative financing options to ensure a balanced and equitable energy transition.
Donors Pledge $2.5bn to Cameroon, Partly via Carbon Finance
A coalition of donor nations, including the U.S., EU, and South Korea, has pledged $2.5 billion to support Cameroon in halting deforestation by 2035 through the Central African Forest Initiative (CAFI). This funding will combine $1.5 billion from the private sector with $500 million in grants and $500 million in sustainability-linked loans. Key goals include reducing forest loss and expanding access to carbon markets, leveraging carbon credits and sustainability-linked financing to drive Cameroon’s transition to deforestation-free agriculture.
The $20B US ‘Green Bank’ Program Just Funded its First Project
The Greenhouse Gas Reduction Fund has started disbursing funds with a $31.8 million loan to Scenic Hill Solar, aiming to turn $20 billion in federal support into $150 billion in private climate investment. The fund targets underserved communities, balancing strict federal mandates while attracting private capital. This first project will reduce emissions and cut energy costs for the University of Arkansas, showcasing the fund’s potential impact.
VanderStyn Launches $25m Green Carbon Fund to Capitalize on Increasing Demand for Carbon Credits
VanderStyn Asset Management has launched the Green Carbon Fund, allowing individual investors to enter the carbon credit market, historically dominated by large corporations. The Fund provides access to high-quality, nature-based carbon projects like reforestation and conservation, targeting a 20% annual return while supporting global sustainability.
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