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 businessman established a family farm in 1995. Seeing the success of the father, his daughter and two sons also launched farms themselves.

Consequently, the farmer now declares 515 hectares of arable land, of which over 633 hectares he owns. Part of the land he owns is being farmed by family member, the whole family declares 2 300 hectares of arable land. 

The ecological farm grows mainly wheat and buckwheat. the businessman has various heavy-duty vehicles and also grain storage towers, where he can store up to 1 500 tons of grain. Therefore, he's also purchasing grain from other farmers to sell it later for a higher price.

The farmer has already fully repaid two of his loans (LT0000187; LT0000420) of 160 000 €. Currently, the farmer has three active loans (LT0000533; LT0000796, and LT000909) with the total active balance of 155 878 €. Investors has already received 25 509 € of interest from all of his loans.

With this Green loan, the farmer will fully repay 100 000 € of his existing obligations (LT000796 and LT0000909) and the remaining funds will be allocate to purchase boiler for dying grains and working capital.

After the refinance, the total active loan balance of the farmer will be 170 878 €.

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 352 hectares of arable land are included in the Green Loan program. It is estimated that this farm will generate up to 4 224 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 12% annual interest.

CO2 emissions to be removed from the atmosphere because of this loan are equal to 17,4 million kilometres driven by an average gasoline-powered passenger vehicle.

Annualized return forecast

• Conservative scenario (€20 per carbon certificate): 17.9% IRR*
• Today's scenario (€35 per carbon certificate): 26.7% IRR*
• Optimistic scenario (€100 per carbon certificate): 54.9% 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.