Green loan

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 certificate 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 farmer, who has been active in agriculture since 2013, currently manages a 199 ha crop farm. He grows spring and winter wheat, barley, rapeseed and peas.

The entrepreneur works on the farm using two tractors, a combine harvester and other implements such as a seed drill. 

The farmer has been using the services provided by HF since 2021 and one of the loans was fully repaid in 2022. The existing loan is currently being paid on time. With a loan from the HeavyFinance investor community, the farmer has been able to expand his fleet of agricultural machinery by purchasing a trailed sprayer. The farmer is engaged in arable farming and has therefore applied to HF for an additional Green Loan for the purchase of implements.

Main Terms

The principal will be repaid by the farmer in regular instalments over the span of 3,2 years in accordance with the repayment schedule.

All 80 hectares of arable land are included in the Green Loan program. It is estimated that a total of 588 carbon certificates will be generated in 4 years (based on a conservative estimation). Consequently, investors will receive a portion of sales proceeds from every carbon certificate generated throughout the span of 4 years as the following terms;

• 60% of income share during the loan period
• 40% of income share for the following year after the loan period

It is expected that the first carbon certificates will be generated and sold in the fourth 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 4 years has elapsed, it undertakes to reimburse 11,1% annual interest.

CO2 emissions to be removed from the atmosphere because of this loan are equal to 2,4 million kilometres driven by an average gasoline-powered passenger vehicle.

Annualized return forecast

• Conservative scenario (€20 per carbon certificate): 16.3% IRR*
• Today's scenario (€35 per carbon certificate): 28.6% IRR*
• Optimistic scenario (€100 per carbon certificate): 83.4% 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.