Can capital help solve climate change?

Thanks to Green Loans, a new Heavy Finance investment product, the answer is yes!

Green Loans allow you to provide financing for environmental solutions making a real positive change to our climate while making a great return on your investment. At HeavyFinance, we open the door for retail and institutional investors to the growing market of carbon certificates, offering an opportunity for a significant return with a significant impact. We encourage you to learn more about the potential of the carbon certificates market on our blog.

What are carbon certificates?

A carbon certificate is a unit of exchange that companies and organisations can use to offset their greenhouse gas emissions. One carbon certificate is equivalent to one metric ton of greenhouse gases removed from the atmosphere, and farmers engaged in no-till practice on average remove 2.3 tonnes of carbon dioxide per hectare from the atmosphere every year.

As the current market price of a single carbon certificate is within the range of 25 - 35 EUR, only one hectare of agricultural land with adopted no-till practice can generate 58 - 81 EUR per year.

As more and more companies are targeting zero net emissions goals, the demand and therefore the price of carbon certificates is expected to increase over time. Moreover, as all HeavyFinance sustainability projects are verifiable and accurately track their actual carbon dioxide sequestration, the quality of our carbon certificates can be sold at a market premium, further increasing the return on investment. Read more on carbon certificate pricing in our blog and learn why HeavyFinance provides you with the best exposure to the carbon market.

About the farm

The entrepreneur, who has been farming since 2004, manages a crop farm of more than 280 hectares in Kaunas district. He currently sows oilseed rape and cereals on the farm, and this year he will expand the variety of crops he grows and dedicate part of the fields to pulses. The entrepreneur, who follows agricultural innovation, farms his land following the no-till approach, which saves energy and increases the soil quality. The farmer currently uses two tractors, a combine harvester, a loader, a bearim drill, etc. on his farm.

The entrepreneur currently has 3 loans (LT00004941, LT0000732, LT0000408) on the HeavyFinance platform, with a total current balance of EUR 205 736 and has been meeting his payment obligations on time. He has also fully repaid 2 loans early and currently has one loan (LT0001311) which is under the documentation process.

With this project, the farmer wishes to borrow money to increase his working capital and pledges the 21,42-ha of land he owns to secure the loan.

Main Terms

The principal will be repaid by the farmer in regular instalments over the span of 3 years in accordance with repayment schedule.

All 280 hectares of arable land are included in the Green Loan program. It is estimated that this farm will generate up to 5 160 carbon certificates in 10 years (based on a conservative estimation). Consequently, investors will additionally receive a portion of sales proceeds from every carbon certificate generated throughout the span of 10 years.

It is expected that the first carbon certificates will be generated and sold in the first quarter of 2024. The exact return will depend on the amount of sequestered CO2 levels and the sale price of the carbon certificates.

If the farm withdraws from the Green Loan without a period of at least 10 years have elapsed, it undertakes to reimburse 11,5% annual interest.

CO2 emissions to be removed from the atmosphere because of this loan are equal to 21,2 million kilometres driven by an average gasoline-powered passenger vehicle.

Annualized return forecast

• Conservative scenario (€20 per carbon certificate): 20.1% IRR*
• Today's scenario (€35 per carbon certificate): 29.6% IRR*
• Optimistic scenario (€100 per carbon certificate): 59.7% IRR*

Read more about the return scenarios in the document section

*The internal rate of return (IRR) is a metric used in financial analysis to estimate the profitability of potential investments. Learn more about it

Keep in mind that the return forecast is an estimation and does not guarantee you the returns mentioned above.