In our weekly column, we round up the latest news and developments in the alternative protein and sustainable food industry. This week, Future Food Quick Bites covers Alpro’s collaboration with Peter Crouch, a new alternative protein jobs platform, and a host of university-related news.

New products and launches

In the UK, Alpro has partnered with Peter Crouch to kickstart its new Alpro Plant Protein Morning Trials campaign. The former England footballer tests celeb fitness routines, including waking up at 2:30 AM, multiple gym sessions, and plunging into ice baths to promote the recently extended Plant Protein range.

Also in the UK, there’s a new musical about the meat industry. Mad Cow will be coming to Canterbury’s new fully vegan Garlinge Theater next month.

Swiss meat analogues maker Planted has rolled out its fermentation-derived steak in Switzerland at Coop and in Germany at Rewe stores.

Belgian startup Bolder Foods is continuing to showcase its biomass-fermented cheese prototypes, with investors and entrepreneurs getting a taste of its product at an event hosted by ingredients leader Givaudan.

San Francisco-based startup Impact Food has announced its sushi-grade plant-based salmon, with wholesale pre-orders running now. The product premiered at Oisixs Ra Daichi’s annual World Oceans Day event in sashimi and nigiri formats in Japan.

That’s not all for vegan salmon this week – German alt-seafood producer BettaF!sh has also entered the space with SAL-NOM, a hot smoked salmon analogue made from seaweed. It retails for €3.29 per 130g jar, and will be launched as a tinned SKU too in the summer.

As part of its roster of new mini-campaigns, Veganuary ran its Choose Fish-Free Week from June 3-8, shedding light on alternative seafood brands and recipes. A BBQ Month and Choose Dairy-Free Week will be next.

Israeli 3D-printed meat producer Redefine Meat has rolled out its New Meat range of lamb kofta mix, pulled beef, pulled pork, burgers, beef mince and bratwurst in German retail via e-tailer Velivery.

Hybrid meat maker Mush Foods has partnered with French specialty meat purveyor Dufour Gourmet to introduce a charcuterie range made from its 50Cut mycelium meat. Offerings include a bratwurst, breakfast sausage, Italian-style sausage, and chicken sausage.

Californian food tech company MeliBio‘s vegan honey, which retails in some parts of Europe under the Better Foodie brand name, is now available in Switzerland and Liechtenstein through a distribution deal with Swiss wholesaler Honeydew.

Fellow Californian startup Upside Foods served its cultivated chicken at Industry Only LA, as part of buffalo chicken bao buns and cold sesame noodles.

In the US, catering giant Sodexo and the University of Cincinnati have introduced 513 Culinary Group, an immersive campus dining venture to spotlight inclusivity and local ingredients. The partnership entails new menu options with more plant-based foods and special care given to allergens.

If you’re in New York, the Fordham Plaza is hosting the Bronx Vegan Bazaar every third Saturday from noon to 6 PM starting this weekend on June 15.

The Roots drummer Questlove partnered with Stella Artois to host the Questlove’s Cheesesteak Diner pop-up, which features Impossible Foods’ beef. It was the first event of the beer brand’s Let’s Do Dinner: Summer Series, which brings together food, lifestyle and entertainment platforms.

Speaking of which, Impossible Foods‘ new beef hot dog has made its way into Safeway stores in California and Jewel-Osco locations in Chicago – and it’s gone straight into the meat aisle.

And Singaporean beanless coffee startup Prefer has moved into the frozen world with a gelato launched in partnership with local dessert parlour Aphrodite Waffles and Gelato. The ice cream uses Prefer’s bean-free coffee concentrate.

Finance and company updates

Accelerator programme ProVeg Incubator has announced its latest cohort of alternative protein startups, featuring Atlantic Fish Co, Optimised Foods, Friends & Family Pet Food Company (all US), AIProtein (Egypt/US), and Fisheroo (Singapore). The initiative has also been extended from 12 weeks to 20.

Danish startup EvodiaBio has raised €7M to produce natural aromas for the food industry using precision fermentation. Its tech can improve the taste of non-alcoholic beer by producing yeast-derived ingredients that recreate the taste of hops.

Fellow fermentation company The Better Meat Co has slashed the production costs of its mycoprotein, which is now on par with commodity beef when manufactured at scale.

Germany’s Veganz Group – which makes plant-based dairy, meat and snack products – has confirmed the drawdown of a grant from the State of Brandenburg’s investment bank to construct a new facility in Ludwigsfelde.

Fellow German company Tälist has introduced AltProtein.Jobs, an AI-led ‘matchmaking’ platform to connect employers with prospective candidates in the future food sector. Its algorithm has made 2,000 matches with a 9+ score, 9,400 with 8+, and 25,000 with a 7+ rating.

The US Department of Defense has released a call for alternative protein funding proposals under BioMade, the public-private biomanufacturing consortium, with projects receiving between $500,000 to $2M. One of its key focus areas is on fermentation-derived and cultivated proteins for military rations. It has already spawned an outraged response from a cattle association.

Research and policy developments

Researchers at the United Arab Emirates University and the National University of Singapore have teamed up to explore novel plant protein sources that can be incorporated into meat analogues for better taste, texture and nutritional attributes.

In the US, Western Oregon University has signed the Humane Society of the United States‘ Forward Food Pledge, committing to transition its campus dining menus to 50% plant-based meals by 2027.

In more university news, the UK’s Nottingham Trent University has launched a master’s degree in smart agriculture, which will explore how AI, vertical farming and precision agriculture can enhance food security and reduce energy costs. Students will develop ‘recipes’ to produce food crops much more rapidly than currently possible outdoors.

Finally, plant-based food company Strong Roots conducted a 1,000-person survey in the US, the UK and Ireland to find that 52% of consumers are more likely to purchase products with carbon footprints on their packaging, and 82% want to be informed about businesses that contribute to climate change.

Check out last week’s Future Food Quick Bites.

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Agri-fintech platform AgriG8 has received financing from Better Bite Ventures and The Trendlines Group to help rice farmers in Asia reduce methane emissions by up to 55%.

Singaporean VC firm Better Bite Ventures and Israel’s The Trendlines Group have invested an undisclosed sum in AgriG8, a startup that supports Asian rice farmers in decarbonising their production methods.

Some estimates suggest rice’s greenhouse gas emissions are nearly on par with the global aviation industry (around 2% of the global total). It also accounts for 10% of anthropogenic methane emissions, which is a shorter-lived, yet much more potent gas.

So, reducing the climate footprint of rice is essential for governments and food companies in Asia to meet their net-zero targets. It’s because more than 90% of the world’s rice, meanwhile, is grown in Asia, but increasing temperatures could shrink yields of the crop by 40% by the end of the century.

In China, extreme rainfall has reduced rice yields over the last 20 years. And in Vietnam, where rice generates more emissions than the entire transportation sector, almost 250,000 acres of land in the Mekong Delta – its rice bowl – is being taken out of production, partly due to climate change.

“Decarbonising rice production is one of the focus areas for Better Bite’s investments,” said Michal Klar, founding partner at Better Bite Ventures. “Rice is one of the top sources of food and agricultural emissions in Asia-Pacific. We believe AgriG8 will help to accelerate deployment of methane-reducing farming practices, using their unique set of tech and finance tools.”

A gamified platform to incentive farmers

Founded in 2021 by David Chen and Joshua Tan, AgriG8 works with “local farmer aggregators such as cooperatives and NGOs” to help farmers reduce emissions. It has built a gamified digital platform, CropPal, to receive data from producers, as well as finance and incentive methane-cutting agricultural practices.

“[The] CropPal platform consists of three components: the farmer-facing app, a dashboard for lenders and farm managers, and a background validation framework backed by machine learning,” Chen, who is the CEO of AgriG8, told Green Queen. “The app is deliberately gamified to reduce onboarding friction and to cater to a wider audience including farmers’ family members.”

Gamifying the design offers a “fun and easy onboarding experience”, he explained. “Farmers could report their seeding approach, water management and nutrient management via CropPal,” said Chen. “By submitting quality data, farmers unlock real-world rewards like loan rebates. For instance, optimising water usage and verifying it through CropPal can directly translate into financial savings.”

“We are thrilled to welcome Better Bite as our latest investor. Better Bite’s focus on decarbonising food and agriculture in Asia-Pacific is aligned with our mission. This investment will fuel our regional pilots of an inclusive financing solution that encourages sustainable practices among rice farmers and improves their livelihoods.”

Asked what caught Better Bite’s eye, Klar said: “David Chen has deep knowledge about the rice ecosystem in the region, with over 15 years of hands-on experience across the rice value chain. Supporting rice farmers in Southeast Asia to introduce better practices and offer better livelihoods has been his life’s work.”

Rice production is one of the five focus areas of Better Bite’s latest round of its First Bite funding scheme for food startups targeting climate solutions. “What we can do is provide that very first catalytic capital to amazing founders, who will go on and raise more funding to build impactful, transformative companies,” Klar told Green Queen in February.

How Asian rice farmers can reduce methane

One of the proven practices being advocated by AgriG8 is alternate wetting and drying (AWD). The water management system entails farmers going through several wet and dry cycles, rather than keeping the paddy flooded the whole time.

Farmers dig a measuring pipe in a corner and allow the water level to drop to 15cm below the soil’s surface, a level at which the roots are still submerged. The field is then flooded again at around 5cm level, and this cycle is repeated several times during the vegetative state of rice production.

Paddies can create ideal conditions for methane-producing bacteria, but drying the field at regular intervals can suppress their activity and significantly lower emissions, while also saving water. Most importantly for farmers, AWD maintains yields, so they don’t need to be worried about productivity.

This practice, combined with other solutions, can lead to a 55% reduction in methane emissions. AgriG8 has completed a pilot of its technology in central Thailand, with more trials to be held in Tra Vinh, Vietnam and Battambang, Cambodia during the next planting season.

“The first pilot successfully demonstrated farmer adoption of CropPal, with 80% of participants averaging 21 entries per season,” said Chen. “This data will enable AgriG8 to model farmer behaviour and inform the next pilot in September, which will test a digital plus commercial incentive approach to drive climate impact.”

AgriG8 is now also in discussions with several leading climate, food and agritech investors in the Asia-Pacific regions. Other startups innovating with future-friendly rice include Indian-American firm MittiLabs and France’s CarbonFarm, both of which use AI and satellite tech for carbon credits, though the efficacy of the voluntary carbon market has been called into question multiple times. Singapore-based Rize, meanwhile, buys seeds, fertilisers, and other inputs in bulk and sells them to farmers who implement AWD.

Disclaimer: Green Queen founder and editor-in-chief Sonalie Figueiras is a Venture Partner at Better Bite Ventures.

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US hybrid meat startup SciFi Foods has appointed an advisory firm to sell its assets as cultivated meat continues to face a bleak investment landscape.

San Francisco-based startup SciFi Foods, the maker of hybrid meat from cultivated beef cells and plant-based ingredients, is shutting down its operations.

The news comes months after the company successfully completed its first commercial-scale production run in a 500-litre bioreactor. It had also been in consultation with the FDA over its regulatory approval path in the US.

“Given challenges in the fundraising market, we’ve appointed an advisory firm to run a sale process,” co-founder and CEO Joshua March told AgFunderNews.

“Given the nature of the process, I can’t really say much more beyond this,” he added.

SciFi Foods had achieved price parity with conventional beef

Founded in 2019 as Artemys Foods, the startup rebranded in 2022 with a cultivated beef product to be used in hybrid meat formulations. Backed by Silicon Valley VC Andreessen Horowitz (a16z) and other investors like Coldplay, SciFi Foods has brought in over $40M in total financing.

Hybrid meat, which combines cultivated proteins with plant-based ingredients, is aimed at enabling scalability and driving down the high costs of cultivated meat. Investors say this is the only way it is currently commercially viable – Eat Just, the first company to ever sell cultivated meat, has previously rolled out versions with about 60-70% of cultivated cells, and its latest innovation is a retail offering with 3% of chicken cells.

Startups like Aleph Farms, Meatable and Vital Meat – which are all expecting regulatory approval in various markets over the next few months – are also using the hybrid approach for their products. Aleph Farms, which received the go-ahead from the health ministry in Israel in January, will soon roll out its hybrid beef at restaurants in the country.

Late last year, SciFi Foods opened a 16,000 sq ft pilot facility in San Leandro, California, where it began growing beef cell lines in single-cell suspension, in a 100% serum-free process. This is where it had finished its first run in the 500-litre bioreactor.

Single-cell suspension allows cells to be grown in any standard, stirred-tank bioreactor, without the need to try and scale up novel hardware. It also does away with the need for expensive substrates like microcarriers or scaffolding, which is crucial for cost control.

SciFi Foods, whose hybrid burger was a 90/10 mix of a soy protein base and cultivated beef, announced that it had achieved price parity with conventional beef using a combination of its proprietary high-throughput cell line engineering and CRISPR technology in 2022.

Cultivated meat feels the heat

The development comes amid what has been a highly turbulent time for the cultivated meat industry. As March alluded to, fundraising has been a mountain to climb – according to the Good Food Institute (GFI), investment in cultivated meat companies nosedived by 75% from 2022 to 2023. This came amid a wider decline in food tech funding (-61%), with alternative protein financing dropping by 44% to $1.6B.

The loss of faith among VCs has continued for cultivated meat startups this year, with Q1 witnessing merely 5% of the $226M invested in the sector in all of 2023. It’s why AgFunder has earmarked cultivated meat as a “category to watch” this year.

It has become a major headache for companies in this sector. Just last week, Aleph Farms confirmed it had laid off 30% of its local staff in Israel due to difficulties in securing capital amid its scale-up process, and as part of its asset-light growth strategy. Californian cultivated seafood producer Finless Foods had similarly carried out two rounds of layoffs in less than 12 months.

Also in California, cultivated pork startup New Age Eats ceased operations in March 2023. Eat Just, based in San Francisco, has been caught up in a lawsuit against its former contract manufacturer ABEC, which has claimed over $100M in payments for changes to the scope of the work and unpaid bills in relation to its cultivated chicken arm Good Meat. A judge has sided with both entities in several matters, and the case will now proceed to trial.

Another Californian startup, Los Angeles-based Omeat, has had its workforce cut by 80%, with its founder stepping down as CEO amid allegations of creating a hostile work culture.

Apart from the financial headwinds, the industry has also been met with legislative challenges. Italy became the first country to ban the production and sale of cultivated meat last year, with France and Romania contemplating the same. And last month, the US states of Florida and Alabama both passed similar bills, which were heavily criticised even by the meat industry.

Company closures were predicted to continue this year by alternative protein experts, and SciFi Foods has become the latest on that list. “We are in a phase of consolidation and correction that isn’t over yet. Given that venture capital is so scarce, fundraising and due diligence processes are taking extremely long, and especially lead investors are so hard to find, we expect to see more businesses going down,” Albrecht Wolfmeyer, director of ProVeg Incubator, told Green Queen in April.

He added: “At the same time, we are seeing a lot of exciting innovation in the ecosystem and also growing consumer and corporate interest in markets like Germany. This and parts of next year will be tough, then we’ll see more light at the end of the tunnel.”

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Some of the world’s richest and most polluting companies have been investing in carbon offsets that are “likely junk”, according to a new analysis.

In 2023, non-profit Corporate Accountability and the Guardian undertook a joint investigation analysing the top 50 carbon emissions projects globally, based on the number of credits sold. They found that 39 of these 50 (78%) were “likely junk” or worthless, owing to failures that undermine the promised emissions cuts.

Now, an update of the database has shown that, despite multiple reforms and updated initiatives, things have regressed further. Carbon offset projects with one or more fundamental failings were classified as likely or potentially junk, depending on the number and gravity of the failings, with strong evidence of even one failing meaning promised emissions can’t be guaranteed. These failings include whether emissions cuts would have happened anyway, or if the emissions were just shifted elsewhere.

These top 50 projects represent nearly a third of all the credits retired in offset schemes globally. They include forestry schemes, hydroelectric dams, solar and wind farms, waste disposal and greener household appliances schemes across 20 nations – most of which are developing countries – according to data from emissions trading database AlliedOffsets.

The investigation has found that, now, 42 of the 50 projects (84%) are likely junk, and seven (14%) potentially junk – the latter means there’s at least some evidence of a failing. These carbon credits were purchased by some of the largest companies in the world, including Disney, Nestlé, Gucci, Volkswagen, Delta Air Lines, easyJet, and ExxonMobil.

“These findings shed further light on the dangerous distraction that the voluntary carbon market remains, despite multiple reforms, new initiative launches, and rolling out of updated principles,” said Rachel Rose Jackson, Corporate Accountability’s director of climate research and policy.

“What the evidence increasingly points to is that this scheme effectively operates to evade, not guarantee, meaningful climate action, and to greenwash further fossil fuel use and pollution. We shouldn’t be plugging holes in a sinking ship, not when millions of lives are at stake.”

Fossil fuel and travel industry lead junk carbon credit purchases

The database shows that, for 33 of the top 50 corporate buyers, a third of their offset portfolios are likely junk. The fossil fuel industry is the largest investor in these schemes, with 43% of the 81 million carbon credits purchased by these companies found to be probably junk.

ExxoMobil, for example, bought 3.7 million credits, of which 49% were for two projects classified as worthless. “Carbon offsets are a viable way to [reduce emissions and reach net zero], which is why we continue to evaluate them. We’re working to verify the claims cited in this analysis,” the company told the Guardian.

Meanwhile, the transport industry is also relying on dubious carbon offsetting projects to curb their climate impact, which accounts for a fifth of all emissions. But over 42% of the credits bought by airlines and 38% by automotive companies for the analysed projects were likely junk.

Outside fossil fuels, Delta has purchased more carbon credits than anybody else, but 35% of these were from 11 projects deemed worthless or junk by the analysis. The carrier is in the middle of a lawsuit that alleges it misrepresented itself as carbon-neutral, though it has rejected the allegations and filed to dismiss.

Meanwhile, 72% of all the credits purchased by easyJet in its history were for projects classed as likely worthless. The airline announced plans to transition away from offsetting in 2022 for its net zero goal for 2050, suggesting it would work on more fuel-efficient aircraft, carbon capture and storage, and so-called sustainable aviation fuels – but these practices aren’t necessarily climate-friendly, and could even exacerbate the crisis.

“In the short period we did offset customer emissions, we had robust due diligence processes in place, with all projects recommended by expert partners and all required to meet the highest standards available,” easyJet said.

Both easyJet and Delta have previously been found to use ‘phantom’ carbon credits to claim carbon neutrality.

“These findings add to the mounting evidence that peels back the greenwashed facade of the voluntary carbon market and lays bare the ways it dangerously distracts from the real, lasting action the world’s largest corporations and polluters need to be taking,” said Jackson.

Food industry a major investor in worthless carbon credits

The food and beverage industry is a major polluter, too – agriculture is responsible for a third of all emissions. But 37% of the credits purchased by this sector are likely junk, according to Carbon Accountability.

Similarly, 36% of carbon credits bought by Nestlé – the world’s largest food company – came from five projects deemed likely junk. Nestlé claimed it had stopped purchasing carbon credits from these projects in 2021/22. “Reaching net zero emissions at Nestlé does not involve using offsetting: we focus on GHG emissions reductions and removals within our value chain to reach our net zero ambition,” the company said.

In the entertainment world, nearly 62% of Disney’s retired credits are from two ‘likely junk’ projects. And fashion giant Gucci has an even higher proportion of worthless carbon credit investments (75%) – it has now dropped its carbon neutrality claim and is finalising new commitments.

Such moves are part of a larger shift from companies that are realising the inefficacy of carbon offsetting projects. This is why the voluntary carbon market, which was valued at nearly $2B in 2022, fell to $723M last year (a 61% drop).

Last week, the Biden-Harris administration in the US published new guidelines on responsible carbon offsets, which the government says would drive credible climate action – but experts have criticised the move. However, not all policy interventions have been bleak: last year, the state of California passed climate laws designed to curb greenwashing from the voluntary carbon market.

“Research demonstrates over and over that carbon markets are fraudulent, prolong the fossil fuel industries, accelerate climate chaos and violate the rights of Indigenous Peoples,” said Tamra Gilbertson of the Indigenous Environmental Network. “Keeping fossil fuels in the ground stops climate change, not incentivising pollution.”

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The 50 countries most vulnerable to climate change are paying back 15.5% of their government revenues as debt to external creditors, the highest rate since 1990.

Debt payments by the 50 countries facing the worst impacts of the climate crisis have doubled since the Covid-19 pandemic, reaching their highest levels in 34 years, according to research by UK charity Debt Justice.

Using data from the World Bank and the International Monetary Fund, the report suggests that climate-vulnerable countries are now paying 15.5% of their revenue to external creditors, up from 7.7% pre-pandemic and 3.7% in 2010 (the lowest level in recent history).

“Record levels of debt are crushing the ability of the most vulnerable countries to tackle the climate emergency. We need a rapid and effective debt relief scheme to cancel debts down to a sustainable level,” said Heidi Chow, executive director of Debt Justice.

Zambia’s uneven debt restructuring deal

The charity found that Chad – the country most vulnerable to climate change – will pay 19.4% of its revenues to creditors this year. This is followed by four other African countries: Niger (10.4%), Guinea-Bissau (20.6%), Tonga (8.8%), and Sudan (16.6%).

But the climate-vulnerable nation that will see the highest share of its revenues end up as debt payments is Angola, which will give back a whopping 59.8% of its revenues to external creditors. But this isn’t a one-off, last year, this actually amounted to 60.2% of what the country made.

Sri Lanka and Zambia are joint second at 43.5%. The former actually had the highest percentage of debt payments last year (86.4%). Zambia, meanwhile, has declared a national emergency due to the ongoing drought, considered its worst in two decades. After three-and-a-half years of negotiations, its government has just sealed a debt restructuring deal with some (not all) of its private lenders.

This means that banks and asset managers will be repaid 13% more than governments, despite lending at higher interest rates. But while the deal allows for large increases in debt payments if the economy does better than expected, there’s no equivalent clause to decrease payments if a shock (like another drought) occurs.

Under the debt deal, Zambia will have to pay bondholders like BlackRock $450M this year. “It is outrageous that Zambia’s creditors have demanded a deal where they get huge increases in debt payments if things go well, but no losses if Zambia is hit by disasters such as droughts,” said Tim Jones, head of policy at Debt Justice. “The $450M going to bondholders this year is money which could have been used to respond to the national disaster.”

Rich countries must cancel debts to help climate-vulnerable nations

For 49 countries in the report, 38% of the external interest payments between 2023 and 2030 are earmarked for private lenders, totalling $50.9B. Debt Justice excluded India from this calculation because its large size skews the results, and its external debt payments are relatively low.

Of the remaining interest payments, 35% go to multilateral institutions, 14% goes to China, and 13% to other governments.

And, when you factor in principal payments – the amount originally borrowed – as well, multilaterals will receive 38% of the share ($208.8B), while private lenders will get 30% ($166.6M). This illustrates the high interest rates charged by the latter.

Debt Justice said its new report explains the urgent need for comprehensive debt relief, so low-income countries can invest in climate change adaptation measures. While two rounds of comprehensive debt relief in the late 90s and mid-00s led to a sharp decline in debt burdens, repayments rose in 2010 and have been soaring since 2020.

This is because the debt suspension scheme agreed by creditors at the start of Covid-19 has now ended, which means debts are now due to be repaid again. Countries borrowing the capital have also been hit by rising interest rates, compared to rock-bottom levels in the early 2010s. Plus, most debt payments are owed in US dollars, the value of which has increased the size of the debt.

World leaders are in the middle of a 10-day climate conference in Bonn, Switzerland, which focuses on countries’ ability to finance climate action. And, last month, an investigation by Reuters found that rich countries have been funnelling money back into their economies through climate finance programmes – primarily loans and grants with strings attached – putting the Global South in a “new wave of debt”.

With policymakers discussing climate finance and unsustainable debt levels in Bonn, Jones added: “As well as debt cancellation, rich countries urgently need to pay their climate debt by delivering grant-based, adequate climate finance.”

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Canada and the EU lead the way in terms of public funding for alternative proteins, while Asia is a region to watch for this year, according to a new policy-centric report.

Governments are investing more capital and implementing more supportive policies for alternative proteins as they recognise their potential as a solution to climate change, food security, public health, and employment – but they still have “plenty of ground to cover”, according to a new report.

Published by industry think tank the Good Food Institute (GFI), the State of Global Policy presents a snapshot of governments’ views on alternative protein across the planet in 2023. Its analysis estimates that public funding in the sector reached $523M last year, though this represented a 12.6% decline from the $599M poured into the industry in 2022.

Breaking this down further, $190M of this figure went to R&D, and another $163M was earmarked for commercialisation efforts. The remaining $170M was for mixed purposes. As for which alternative protein was most popular, it was a close call between plant-based ($189M) and fermentation-derived ($181M) innovations. Cultivated meat trailed behind with just $40M in government investments, while $112M was set aside for a combination of these proteins.

That said, GFI outlined that countries need to invest $10.1B annually for the industry to realise its full potential – this marks a nearly 30-fold increase from the actual investments that were disbursed in 2023 ($348M). But it’s just a fraction of the world’s spending on EVs, renewable energy and other climate-friendly technologies.

“By making public investments on par with other strategic priorities, policymakers can greatly accelerate the pace and scale of protein innovation and position their governments as leaders in a future industry,” the report states.

Here are the countries championing alternative proteins across different segments.

Who were the stars of 2023?

The report picks out Germany and the UK as the stars of 2023 for their dramatic increase in spending on alternative proteins. Germany surpassed its all-time funding into alternative proteins ($35M) with $44M in investment last year. The country is investing up to $20.4M in alternative proteins between 2023 and 2028, which includes a $547,000 grant to Kynda, as well as a new research project for cultivated seafood.

Germany has also set aside €38M ($41.3M) in its federal budget for 2024 to develop alternative protein production capacity and help farmers transition to plant-based agriculture. And, in March this year, it adopted a national nutrition strategy recommending that plant-based foods should make up at least 75% of people’s diets.

The UK, meanwhile, announced a $15.3M cellular agriculture research hub, funded over 20 research projects, and included cultivated meat and fermentation in a $2.2B national biotechnology plan. It also received its first two cultivated meat applications from Aleph Farms and Ivy Farm Technologies in 2023 (followed by Vital Meat last month), and is now overhauling its pre-Brexit regulations to clear the path for novel food companies. Cultivated pet food company Meatly is expecting the greenlight and a market launch imminently.

The public investment leaders

While the UK and Germany may be becoming major players, their investment is far eclipsed by a few others. Canada tops the charts with $129M invested in alternative proteins in 2023 (versus $174M in all-time funding before then). This is largely thanks to the allocation of $112M from Protein Industries Canada, a public-private partnership for novel proteins and one of the country’s economic clusters.

It was followed by the EU ($113M) and the US ($82M). Before 2023, Denmark was the leader on this list, investing a total of $223M in the sector – but it fell off last year, with just $891,000 in alternative protein financing.

The regulatory winners

Singapore has always been a flagbearer of progressive regulation when it comes to alternative proteins, but last year the US joined it as the only other country to approve the sale of cultivated meat, with Eat Just’s Good Meat and Upside Foods both launching their cultivated chicken products in restaurants.

The two countries had already given the go-ahead to precision fermentation company Remilk for its recombinant whey proteins, and its home country Israel joined that list, granting approval in April. Israel also became the third country to clear cultivated meat for sale at the start of this year. And Singapore followed its 2020 approval of Good Meat by giving the greenlight to Australia’s Vow.

The plant-based pioneers

GFI pinpointed three countries championing plant-based proteins by boosting local agriculture and manufacturing. Australia, which rescinded a grant for pulse protein factories after delays in enactment made the projects ineligible, saw four of its six states invest in alternative protein. One of them was Western Australia, which poured $3.3M into a factory producing oat milk enriched with lupin protein.

Neighbouring New Zealand, meanwhile, allocated $7M for a project developing alternative proteins from local crops like green peas, oats and hemp.

And in France, the government put restrictions on plant-based meat labels, but also led a $35M Series A fundraise of whole-cut vegan chicken producer Umiami. This was followed by its $8M grant for the company’s commercial-scale factory in 2022, which opened three months ago.

The cellular agriculture supporters

Six countries were highlighted by the GFI report for their biotech, research and infrastructure support for cultivated and fermentation-derived proteins. Two of the four pillars of Singapore’s $117M Food Story 2.0 programme are relevant to alternative protein, with a heavy focus on cultivated meat.

Israel awarded its previously announced funding of $13M for a precision fermentation contract development manufacturing organisation, while in the US, the Cornucopia programme seeks to create microbial foods, with $10.4M given to one of four fermentation projects over four years.

In February 2023, South Korea’s North Gyeongsang Province led a 28-member MoU to advance the cellular agriculture industry. The province also established a regulation-free zone for proof-of-concept prototypes, and a $6.7M Cellular Agriculture Industry Support Center.

The Netherlands, meanwhile, provided $1.1M from its Cellular Agriculture Netherlands programme for research into producing collagen and elastin through precision fermentation. And Finland supported local fermentation startup Solar Foods with the construction of two facilities through investments and grants, while funding a $5.3M research project for microbial fermentation.

The countries to watch

Among the six countries GFI outlined as laying the groundwork for significant investment in the sector, half are in Asia. India’s Ministry of Science and Technology announced a National Biomanufacturing Policy that includes alternative proteins as a key pillar, and created a funding programme to promote millets as a raw material for the plant protein industry, approving a $107,919 project for egg alternatives.

In November 2023, Japan accepted a proposal from three companies for R&D on cultivated wagyu beef, focused on scaling and commercialisation. And China, which included cultivated meat in its 14th five-year plan in 2022, “offered generous incentives to industry players” – while exact investment numbers are not known, its cultivated meat industry has grown as it’s a lower-cost environment than Europe or the US.

Elsewhere, Brazil may not have announced any new funding in 2023, but its new government’s “prioritisation of sustainability, the green economy, and low-carbon agriculture bodes well for the field”, the report suggests.

South Africa became possibly the first country in the continent to make a public investment in precision fermentation, injecting $700,000 into DeNovo FoodLabs’ development of whey protein. Finally, in Spain, the regional government of Catalonia awarded $7M for the construction of a scale-up facility for plant-based and fermented proteins.

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Californian biotech startup Prolific Machines has closed a $55M Series B1 round for its photomolecular platform, which leverages light to create novel proteins at significantly lower costs.

The $55M investment represents the first close of Prolific Machines’ Series B round, and was led by Fonterra’s VC arm The Ki Tua Fund. BreakthroughEnergy Ventures, Mayfield, SOSV, Shorewind Capital, Darco Capital, Conti Ventures, In-Q-Tel (IQT), and several others participated as well.

This means the company – which has previously set out its intention to raise a $170M full Series B round – has so far brought in $86.5M in total investment. Investors in its last round in 2022 included the likes of Shark Tank’s Mark Cuban and model and actress Emily Ratajkowski.

Since being founded in 2020, Prolific Machines has developed a photomolecular biology platform to grow and control cells with light, allowing manufacturers to create products across cellular agriculture for the food and medicine industries. It will use the Series B1 capital to commercialise this platform through industry partnerships.

“Photomolecular biology is the use of light and AI to precisely control and optimise cellular behaviour to more efficiently produce superior bioproduct solutions across wide-ranging applications, from food to pharmaceuticals,” co-founder and CEO Deniz Kent tells Green Queen.

“We set out with a vision to use one of our most abundant resources – light – to create an exponentially better way to control biology,” he says, suggesting that this control is “critical to making cheaper and higher-quality products”.

How does Prolific Machines harness light to create proteins?

Prolific Machines argues that current cellular biology processes are constrained by “expensive, inefficient, and imprecise molecular methods”. But the precision of light allows it to control these processes in “fundamentally new ways”.

“Prolific harnesses light to produce everyday essentials more efficiently, from food and lifesaving drugs to novel biosolutions,” explains Kent. “We use light as a signal to control cellular behaviour with unprecedented precision and instantly instruct cells on what to do, and where and when to do it. Our process creates significant cost, speed, yield, and quality advantages compared to existing processes.”

The company’s technology is inspired by the field of optogenetics, a combination of genetic and optical methods to control the activity and behaviour of cells through light.

“We use ‘non-ionising’ light at relatively low intensities in our process, which means it doesn’t carry enough energy to harm living cells. It is safe for use in the production of both food and non-food products,” says Kent.

How can light improve existing production techniques?

“Methods currently used to make bioproducts are limited to imprecise, inefficient, and expensive control levers – like temperature, chemicals, and proteins – to indirectly control cells,” Kent says. “Prolific’s first-of-its-kind photomolecular platform brings together safe and effective tools – light, bioengineering, hardware, and AI – to unlock unparalleled control and precision.”

He explains that living organisms can sense light because of light-sensitive proteins (LSP), which are naturally occurring proteins found in everything from plants and bacteria to human retinas. These exist to detect and respond to light, and can do this very quickly, causing action in cells within seconds.

“Proteins are at the heart of everything a cell does, from perceiving signals from other cells to switching genes on or off. By attaching LSPs to proteins that you want to control within the cell, Prolific makes it possible to precisely control subcellular biology using light,” he says. When met with light, which acts as a signal, the LSPs can control cells across key functions.

“Prolific unlocks dynamic control by pulsating light in specific patterns, intensities, and wavelengths to activate cellular functions when and where it matters most, which is a game-changer for biotechnology,” adds Kent.

What kind of products can Prolific Machines create?

So what kind of products can you produce using light? “Prolific is co-developing the future of biology with innovators across cultivated meat, nutritional and therapeutic proteins, disease models, tissue engineering, cell and gene therapy, and beyond,” he reveals.

“Examples include nutritional proteins used in supplements and infant formula, antibodies to treat diseases, whole cuts of cultured meat, higher fidelity disease models, and other innovations never before possible.”

Kent calls the process a “boon” for cultivated meat, with companies able to achieve “massive cost, scale, and sterility benefits without the need for recombinant proteins or growth factors”.

“Using light, our process can create structured or marbled products, like steaks. We can create all cuts of meat that would be impossible to make in a scalable manner with existing cultivated production methods,” he says. “Our process provides unparalleled spatial control, creating the patterning and structure to make alternative protein products with first-of-its-kind texture, taste, and affordability.”

As for “nutritional proteins”, this could entail many “high-value proteins”, including those found in infant formula, such as lactoferrin (whose precision-fermented version has only recently been commercialised).

Can light help make cultivated meat cheaper?

Prolific Machines suggests that the first applications of its technology will be announced via partnerships with manufacturers in the coming months. The company has already established two “robust” mammalian cell lines to support its food and pharmaceutical partners.

While more details on pricing will be available once these link-ups are established, Kent offers: “One of the key benefits of our photomolecular platform is cost efficiency due to our use of light, which is the cheapest possible input into biology. Our process also removes the need for costly growth factors, which are the most expensive part of the cultivated meat process.”

Reducing the cost and scaling up production are the two key manufacturing challenges facing producers in this space. While companies have managed to reduce costs by 99% in less than a decade, forecasts show these proteins won’t price parity until 2030. But startups like Meatly and BioCraft Pet Nutrition (both making cultivated pet food) have announced breakthroughs in their culture media to drastically bring down the cost of their products.

“Our platform elevates our partners’ existing cell lines and product approaches, providing a critical infrastructure layer for biology,” says Kent. “Think of us as the ‘NVIDIA for biology’. We are already co-developing the future of biology with a number of partners.”

While some countries and US states have imposed bans on cultivated meat, these proteins have been championed by UN climate bodies like the IPCC and the UNEP, since they have a much smaller environmental footprint, can secure the food system against climate and disease shocks, and feed an ever-hungrier planet poised to have 10 billion people by 2050.

The post Prolific Machines Nabs $55M to Create Cultivated Meat & Novel Proteins by Harnessing Light appeared first on Green Queen.

Israeli cultivated meat producer Aleph Farms has let go of 30% of its domestic workforce, reportedly due to difficulties in securing capital amid its scale-up process.

Aleph Farms, one of only four companies cleared to sell cultivated meat, has laid off about 30 of its 100 local employees, owing to difficulties in raising capital amid a wider investment decline in the sector, according to Israeli food tech publication CTech.

An Aleph Farms spokesperson confirmed the news. “As we transition towards larger-scale production and commercialisation, we are maintaining R&D and production in Israel while expanding globally through co-manufacturers, in line with our capital-efficient and asset-light approach,” they told Green Queen.

“We are adapting our organisation to align with this next growth phase, and need to part ways with approximately 30% of our local employees. We care for all affected employees and will be supporting them in the new job search.”

Aleph Farms had ‘expected significant expansion’ this year

Around the same time CTech reported the news last night, Aleph Farms posted an update on social media. “The ability to adapt is fundamental at all levels of life, enabling us to navigate change and foster growth over time,” it read. It’s unclear whether this was in reference to the restructuring, but it did mark a departure from the style of its other posts.

Aleph Farms started the year with the biggest milestone in its seven-year history, earning regulatory approval to sell its cultivated beef in Israel. The startup had announced its intention to roll out its Black Angus Petit Steak under the Aleph Cuts brand at select restaurants in the country, with a longer-term goal of making it available to retailers.

Since then, it has struck a deal to produce cultivated meat in Thailand, and partnered with a biotech startup to leverage AI to reduce costs and enable scalability. These advancements followed the 2022 opening of its 65,000 sq ft plant in Rehovot, Israel, allowing it to initially produce 10 tonnes of cultivated steak annually, the acquisition of another manufacturing facility in Modi’in, as well as the agreement with ESCO Aster in Singapore (the world’s first approved industrial manufacturer for cultivated meat).

The company has previously outlined its aim to reach $1B in revenue by 2030, and has so far raised $118M in funding. Its last investment round was in 2022, bringing in a sizeable Series B amount of $105M. But struggles in securing investment, the global decrease in alternative protein funding, and the geopolitical tension with the Israel-Hamas war have put pressure on the company, according to CTech.

The publication cited strategic plans and investor promises to suggest that Aleph Farms had hoped for a different year. One industry insider was quoted as saying: “They expected a very significant expansion this year, but the situation in Israel is difficult for the entire market. All companies are reexamining their expenses.”

Israel’s alternative protein challenges – and potential

Alternative protein investments saw a marked downturn in 2023, among a wider VC fallout from food tech. According to the Good Food Institute (GFI), food tech companies received 61% fewer VC dollars last year than in 2022, while alternative protein funding dropped by 44% to $1.6B.

Cultivated meat companies were hit especially hard, with investment down by 75% from 2022. And this loss of faith among VCs has continued, with the first quarter of 2024 seeing merely 5% of the $226M invested in the sector in all of last year. It’s why AgFunder has earmarked cultivated meat as a “category to watch” this year.

Within Israel, VC fundraising was down by 74% in 2023, hitting an eight-year low. Coupled with the struggles of the fintech sector, several other startups have been forced to make cutbacks in their workforce.

That said, despite a dip in alternative protein financing, interest in the industry remains strong in Israel. The country was responsible for 10% of the sector’s investments globally in the last decade, second only to the US, according to a recent report. Last year, a record 15 new startups began working on novel proteins, taking the total to 73. And in 2022, the Israeli Innovation Authority (IIA) established an $18M research consortium for cultivated meat, comprising 14 companies and 10 academic laboratories.

The analysis also outlined the industry’s long-term potential, forecasting that it will generate 10,000 additional jobs (a third of which would be manufacturing roles), have more than 200 companies and over a dozen manufacturing facilities, and contribute $2.5B to Israel’s economy by 2030. The report’s authors encouraged investors to take confidence in the IIA’s efforts and pump significant capital into the sector

But as Aleph Farms pointed out, challenges remain, especially for companies trying to expand their production capacity. “Scaling up manufacturing for Israeli startups is challenging due to infrastructure costs, mirroring challenges encountered by startups worldwide,” Alla Voldman, VP of strategy and policy at GFI Israel, told Green Queen last month.

She added that the geopolitical situation is heartbreaking. “However, the Israeli entrepreneurs proved their resilience in ensuring their companies meet the milestones,” she said. “We believe that the increasing need for food security solutions locally and across the globe will drive additional private and public investments in this sector toward innovative technological solutions.”

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In our weekly column, we round up the latest news and developments in the alternative protein and sustainable food industry. This week, Future Food Quick Bites covers Starbucks’ upcoming Oatly collaboration, a vegan certification for hospitality operators, and Bezos Earth Fund’s alternative protein centre.

New products and launches

For its summer menu, Starbucks is reportedly launching a vegan cinnamon crumble Frappuccino with Oatly‘s vanilla Oat Whip, which will be available for a free swap – a welcome policy change from the coffee chain. It will also offer a non-dairy vanilla sweet cream cold brew, and free plant-based cold foam substitutes for all core drinks.

Speaking of which, Oatly has now launched its 1.5-litre barista milk in the UK, which was teased in its latest earnings call to investors.

Also in the UK, The Coconut Collaborative has unveiled what it says is the country’s first vegan yoghurt and granola topper.

British vegan pet food maker Hownd has gained a listing for three hypoallergenic functional treat ranges – Keep Calm for stress relief, Got an Itch? for healthy skin and coat, and Yup You Stink! for bad breath – at Pets at Home, which will be available in stores nationwide in September.

Fellow UK startup Sun Bear Biofuture has joined the expanding roster of companies offering sustainable alternatives to palm oil. Its deforestation-free innovation is derived from fermentation and makes use of agricultural sidestreams as feedstocks.

Meanwhile, plant-based giant Beyond Meat has rolled out a new SKU in the UK. The spicy jalapeño burger is available at 280 Tesco and Sainsbury’s stores each, with a frozen version coming to 200 locations each in September.

In the US, Tomorrow Farms‘ animal-free milk Bored Cow, which uses Perfect Day‘s precision-fermented whey protein, has expanded into 2,000 new stores nationwide, with additional 11oz packaging for the original flavour plus four-packs now available in Albertsons, Safeway, Sprouts, Fresh Thyme, Central Market, and Shaws, among others.

Consultancy network Vegan Hospitality has launched a global certification programme for tourism and hospitality companies, offering companies expert strategy consulting, online staff training, promotional support, and free auditing.

In Germany, plant-based producer Planteneers has introduced a lineup of vegan desserts, comprising tiramisu, cheesecake, fermented oat dessert, pudding, and soft ice cream. They’re positioned as “healthy but indulgent” alternatives to their dairy counterparts.

German airline caterer LSG Group has teamed up with Unilever-owned plant-based meat brand The Vegetarian Butcher to offer vegan meals for onboard dining.

More news from the skies: Spanish meat analogues maker Heura and vegan cheese giant Violife have partnered with Vueling Airlines to launch a plant-based burger on the carrier’s summer menu, which is priced at €8.50.

There’s a new plant-based butchery in Prague. Located in the Czech capital’s Letná district, Bezmasna features meatloafs, cold cuts, deli salads, as well as chlebíček (Czech sandwiches).

Singaporean startup Jiro-Meat is aiming to commercialise its upcycled plant-based meat made from okara – the fibrous pulp leftover from soy milk and tofu production – in the next six months.

And in India, Nestlé has rolled out a limited-edition edible plant-based fork for its Maggi cup noodles. The two-piece fork is made from wheat flour and salt.

Finance and company updates

The Bezos Earth Fund has opened its first Center for Sustainable Protein at North Carolina State University, supported by a $30M fund. The facility aims to advance alternative protein production and commercialisation, and has onboarded Believer Meats (which is due to open its own cultivated meat facility in the state later this year) as a partner.

Germany’s Planteneers has also opened a Customer Center of Excellence in Aurora, Illinois as part of its North American expansion. The facility will let customers collaborate on product development and create ingredient solutions via a plant-based meat laboratory (it will soon have one for alt-dairy too).

Indian vegan seafood player SeaSpire has rebranded to PROT, as it diversifies into other plant protein sources. Its alt-seafood lineup is being relaunched as a ‘Gill-t Free’ range ahead of World Ocean Day (June 8), supported by Veganuary India‘s Fish-Free Week campaign.

Danish plant protein powder Nutrumami has closed a €450,000 seed funding round to expand its team and prepare for market launch.

Policy and research developments

A 9,272-person survey by YouGov shows that if cultivated meat was on par with conventional meat, only half would continue eating the latter (nearly a quarter remain unsure of what they’ll do). It’s an improvement from the 40% who would otherwise ‘definitely not’ eat cultivated meat. Meanwhile, Americans remain very split over bans on these products.

In the UK, Calderdale Council in West Yorkshire – which adopted a climate change emergency policy in 2020 – wants to make its menus fully plant-based, with a preference for seasonal, non-processed foods.

A joint venture between the Artevelde University of Applied Sciences and the City of Ghent has seen a food waste monitor installed in several restaurants, which will use the smart scale to better measure how much food is being thrown away.

Finally, advocacy group Eat Differently has rolled out a parody ad campaign called Hate Vegans? in Los Angeles. It aims to highlight the reasons people care about plant-based diets and their impact on the planet – ‘injuries’ sustained from preachy vegans could turn into settlements with the help of fictional attorney Seymour Loudermilk.

Check out last week’s Future Food Quick Bites.

The post Future Food Quick Bites: Non-Dairy Starbucks, Vegan Flights & A Bezos Protein Centre appeared first on Green Queen.

Rich countries have been sending climate funds to developing nations via programmes that financially benefit themselves, a new investigation shows.

In 2009, at COP15 in Copenhagen, developed nations pledged to send $100B a year to help low- and middle-income nations cut emissions and adapt to climate change. They finally met the annual goal in 2022, two years after the original deadline.

But really, while these funds are meant to help developing countries deal with climate change, the schemes have come with strings attached or interest rates that channel money back into the lenders’ economies, according to a new investigation by Reuters and Big Local News, a Stanford University journalism programme.

The news agency analysed data from the UN and the Organisation for Economic Cooperation and Development (OECD) to find that wealthy nations have loaned at least $18B at market interest rates. This is not the norm for climate and other aid-related loans, which carry low to no interest.

Additionally, another $11B in loans required recipients to hire or purchase materials from companies in the lending countries. Similarly, at least $10.6B in grants had similar strings attached, mandating developing nations to hire companies, non-profits and public agencies from specific nations to do the work or provide materials.

Providing loans at market rates or with such conditions attached means money meant to help developing countries just ends up back in the hands of affluent ones, something Liane Schalatek, associate director of think tank Heinrich-Boll Foundation Washington, called “deeply reprehensible”. By doing so, rich economies are contradicting their own concept of compensating poorer ones for the environmental damage they’ve caused through long-term pollution, according to multiple climate experts who spoke to Reuters.

Focus on loans over grants crippling debt-ridden nations

Roughly $353B was paid to poorer economies between 2015 and 2022 as part of the COP15 pledge, a sum that included $189B in direct country-to-country payments. But 54% of this direct funding came in the form of loans instead of grants.

Grants that require participants to hire suppliers from lending countries are less harmful than loans with the same conditions, as they don’t require repayment. Sometimes, when recipient countries lack technical expertise, these arrangements can be necessary too. But at other times, they benefit rich countries at the expense of the vulnerable nations they’re supposed to help.

In fact, three of the top four climate finance contributors prefer loans over grants. This includes France (90%), Japan (79%) and Germany (52%). The US, meanwhile, has provided 31% of its funding in loans, and 48% in grants.

Middle-income countries are the largest recipients of climate funding, and receive the highest share of loans too. Upper middle-income nations get 62% of this aid in loans, and lower middle-income countries get an even larger 70%. But this is the opposite for low-income states, meanwhile, which receive 83% of their climate funding in grants.

These funding structures mean countries in “the Global South are experiencing a new wave of debt caused by climate finance”, according to Andres Mogro, Ecuador’s former national director for climate change adaptation. Egypt, Kenya, Sri Lanka, Tunisia, Iraq, Pakistan, Ecuador, Argentina, Nigeria and El Salvador are already debt-stressed nations, and took on a combined $11.5B in climate finance loans between 2015 and 2020.

Debt payments limit countries’ ability to invest in climate solutions – a UNDP report from 2022 revealed that over half of the 54 most severely indebted developing nations were also the most vulnerable to the impact of climate change.

Meanwhile, analysts say rich countries are overstating their contributions to the $100B pledge, since a portion of their finance comes back to them through loan repayments, interest and work contracts. “The benefits to donor countries disproportionately overshadow the primary objective of supporting climate action in developing countries,” said Ritu Bharadwaj, principal climate finance researcher at UK think tank the International Institute for Environment and Development.

This comes just as countries are hoping to negotiate a better climate funding package by the end of the year. The UN estimates that to meet the targets of the 2015 Paris Agreement (which aims to limit postindustrial temperature rises well below 2°C), the world needs $2.4T in climate finance each year.

The importance of concessional loans

Japan is the largest contributor to climate finance, providing nearly $59B in funds between 2015 and 2020. But 32% of its loans required borrowers to use some of the money to hire Japanese companies, funnelling $10.8B back to its economy.

For example, Sumitomo Corp and Japan Transport Engineering Co won three contracts worth over $1.3B to supply 648 train cars for electrified rail projects in the Philippines. One of Sumitomo’s sister companies won two other contracts worth over $1B to build rail expansion and station buildings.

But development aid representatives from Japan, France, Germany, the US and the EU say loans allow them to inject much more money than grants. Some stakeholders who have worked on climate issues in developing countries add that loans can be necessary for ambitious climate projects since wealthy nations have allocated limited funding for climate finance, but they added that future pledges should require them to be more transparent about the conditions and offer safeguards against loans that create suffocating debts.

Simon Stiell, executive director of the UN Framework Convention on Climate Change, has previously implored developed nations to offer ‘concessional loans’, which have very low interest rates and long repayment periods, making them less costly than open-market rates. But 18% of these loans have been non-concessional, including over half of the loans provided by the US and Spain. This is likely an underestimate, as reporting on the nature of their loans is voluntary for affluent nations.

An example of the damage created by non-concessional loans comes from France, which funded $118.5M to build an aerial tramway in Guayaquil, a port city in Ecuador. Since its inauguration, the climate-friendly alternative to congested bridges saw underwhelming passenger numbers, with ridership only a fifth of what was expected. This meant lower revenue and environmental benefits than anticipated.

Early planning documents show that Guayaquil was to pay 5.88% interest, with France projected to earn $76M over 20 years in repayments. While the final interest rate hasn’t been disclosed, the loan debts have added $124M to the Ecuadorian city’s budget deficit. “This is a classic example where a bad loan, which has been given to a country in the garb of climate finance, will create further… financial stress,” said Bharadwaj.

Rich countries’ rhetoric highlights Paris Agreement shortcomings

Representatives of the climate finance agencies of the US, Japan, Germany and France told Reuters they consider how much debt a country is in before deciding whether to offer a loan or a grant.

“A mix of loans and grants ensures that public donor funding can be directed to countries that need it most, while economically stronger countries can benefit from better-than-market rate loan conditions,” said Heike Henn, climate and energy director at the Federal Ministry for Economic Cooperation and Development in Germany (52% of whose $45B in climate funding have been loans).

Atika Ben Maid, climate and nature head at the French Development Agency, meanwhile, said it offers developing nations low interest rates that would normally be available only to the richest countries on the open market. But as mentioned above, France’s share of loans is the highest of any nation at 90%.

And a US State Department spokesperson suggested that loans are “appropriate and cost-effective” for revenue-generating projects, with grants typically directed to other types of projects in “low-income and climate-vulnerable communities”.

“It should also be emphasised that the climate finance provisions of the Paris Agreement are not based on ‘making amends’ for harm caused by historic emissions,” they said. And while true in the most literal sense, the Paris Agreement does refer to “climate justice” and “equity”, and notes countries’ “common but differentiated responsibilities and capabilities” to grapple with climate change. It also makes it clear that wealthy nations are expected to provide climate finance.

However, the Agreement doesn’t say whether grants should be prioritised over loans, or prohibit developed countries from imposing advantageous conditions. “It’s like setting a building on fire and then selling the fire extinguishers outside,” said Ecuador’s Mogro.

Such investments should “serve the needs and priorities of recipient developing countries”, according to Schalatek. “Climate finance provision should not be a business opportunity,” she said.

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