News: IFM Investors commits to US biogas developer

By Rachel Alembakis (FS Sustainability) - IFM Investors is acquiring a majority stake in a US-based biogas developer, owner and operator. The purchase of GreenGasUSA is part of IFM Investor's IFM Net Zero Infrastructure Fund (IFM NZIF). It is the first investment into the low-carbon fuels sector, which is a core target sector for the fund.

"The Net Zero Infrastructure fund is open-ended and focused on driving change to the net zero future," said IFM Investors global head of infrastructure Kyle Mangini. "We've got a fair amount of flexibility in the fund around different technologies. We started with solar assets and wind assets, but I think when you recognise that the technologies are changing and there is so much R&D behind it, we want to be flexible enough to move with the technology. The biogas sector is one of the core tenants of the strategy."

GreenGas is a "fully integrated renewables platform headquartered in Charleston, South Carolina with a track record of originating, developing and operating" renewable natural gas (RNG) - biogas - projects, IFM Investors said. GreenGas uses existing technologies to capture, purify and transport biogas from existing organic waste streams for its end use as pipeline-quality RNG.

IFM Investors noted that GreenGas sells the RNG and associated environmental attributes under long-term offtake contracts with investment-grade commercial and industrial customers including Mercedes-Benz, Berkshire Hathaway Energy and Duke University.

Biogas captures methane, which has a 25 times more harmful impact on atmospheric warming than CO2, IFM Investors said, citing the Environmental Protection Agency.

CEO and founder Marc Fetten will continue to lead GreenGas alongside the existing management team.

"This displaces fossil fuel consumption," Mangini noted. "... More importantly, these are effectively fugitive emissions that are being captured. You have the double benefit of taking the methane out of the system and not introducing CO2 by burning CO2 emissions.

"We looked at a range of biogas opportunities, and this one stood out as compelling. We have two operating facilities, with a third that is coming online in the first quarter of this year, and a really solid pipeline and opportunity to grow it out."

Mangini noted that the passage of the US Inflation Reduction Act, which is targeting carbon reduction and increased investment in renewable and low carbon energy, is a "step change" for investment in the sector in the US.

"We have a global remit for the fund and we have assets now in European markets and the US and the geographic overlay in this case wasn't particularly important," he said. "That said, I think the Inflation Reduction Act is a step change, essentially. The EU has been way ahead of the US, and now everyone shares a view that this bring the US on par with the EU and some say it puts things ahead of the EU. The economics of it are real, and when you look at how the act comes into play, this has real impact on returns.

"One of the things I like about the deal is that it's good ESG and it's profitable - it's not about investing to drive an ESG outcome. It's an ESG outcome that's driving profit to members."