Sustainability Newsletter #36

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#Figure of the month - 1 million tons of CO2

Climeworks, Gulf Coast Sequestration Partner to Remove & Store 1 Million Tons of CO2

Direct Air Capture (DAC) provider Climeworks, and carbon sequestration solutions provider Gulf Coast Sequestration (GCS), announced a new partnership in November, signing an agreement to work together to permanently remove one million tons of carbon dioxide from the air annually by 2030. In the new partnership, GCS will supply Climeworks with geologic pore space suited for its carbon-storage DAC technology, creating a carbon storage hub on the Gulf Coast in Louisiana.

DAC technology, listed by the IEA as a key carbon removal option in the transition to a less carbon intensive energy system, extracts CO2 directly from the atmosphere for use as a raw material or permanently removed when combined with storage. Climeworks co-CEO Jan Wurzbacher, said:

“Direct air capture (DAC) is a key technology for removing unavoidable and historic CO2 from the air. Climeworks is excited to work with GCS on the development of a U.S. hub to scale up the DAC industry in support of a more economically and environmentally sustainable future in Louisiana.”

Source : ESG Today


Trends and Initiatives

Switzerland adopts law requiring mandatory climate reporting for public companies and banks

Large Swiss companies and financial institutions will be required to publicly disclose information on their climate-related risks, impacts and plans, according to new legislation passed in November by the government’s Federal Council. Under the newly adopted “Ordinance on Climate Disclosures,” public companies, banks and insurance companies will be required to provide reporting based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

The rules will apply to companies with 500 or more employees, at least CHF 20 million (USD$21 million) in total assets or more than CHF 40 million in revenue. Mandated disclosures under the new ordinance include reporting on climate-related risks, as well as on the impact of company activities on climate change. Reporting obligations also include disclosures of all direct and indirect greenhouse gas (GHG) emissions, as well as emissions reduction targets and on how the companies plan to implement these goals.

Sources : ESG Today, Federal Council


ECB sets timetable for banks to manage their climate risk

One study follows another. After the mixed results of European banks in the climate stress tests published last summer by the European Central Bank (ECB), the results of the thematic study published by the supervisor on Wednesday 2 November on how banks manage climate and environmental risks are hardly encouraging. The ECB is very clear in stating in a press release that "despite improvements, banks still need to better identify and manage climate and environmental risks".

So there is still progress to be made and the banks examined (186, 107 of which are large) are now under time pressure. The ECB is ordering the financial institutions it supervises to adequately categorise climate and environmental risks and to carry out a full assessment of their impact on their business "by March 2023 at the latest". Then, in the following months, and by the end of 2023 at the latest, the ECB expects banks to integrate climate and environmental risks into their governance, strategy and risk management. Finally, the central bank requires that by the end of 2024, banks meet all remaining prudential expectations regarding climate and environmental risks.

Banks have already started to do this and 85% of them have now carried out an initial mapping of their risk exposures, defined key performance and risk indicators, or developed a qualitative mitigation strategy for at least part of their risk exposures, the ECB notes. But the institution stresses that "the approaches still lack methodological sophistication, use of granular risk information and/or active portfolio and risk profile management".

Sources : L'AGEFI, Allnews


Sustainable Finance

Bankers bet billions on new wave of debt-for-nature deals

The Galapagos Islands, whose thousands of unique species inspired Darwin's theory of evolution, have incalculable ecological value. But what are they worth? Perhaps around $800 million, judging by the size of a "debt-for-nature" swap deal that could see Ecuador's debts cut in exchange for protecting its offshore territory's fragile ecosystem, according to people with knowledge of the talks.

"There's now a big push to get nature into sovereign debt markets," said Simon Zadek, executive director at NatureFinance, which advises governments on debt-for-nature swaps and other types of climate-focused finance.

Ecuador isn't among the world's richer nations. It's a serial defaulter and its sovereign bonds are again trading at "distressed" levels, or a deep discount to their face value. But it does have a wealth of biodiversity that it could leverage in a wider region where much of the wildlife has been wiped out. The country is holding talks with banks and a non-profit group in an attempt to reach a deal that would see about $800 million of its debt refinanced more cheaply, freeing up the savings for conservation efforts, according to the three people with knowledge of the deal, who declined to be named as the discussions are confidential.

The potential deals for Ecuador, Sri Lanka and Cape Verde, reported here in detail for the first time, point to a jump in interest for this form of financial alchemy, which was conceived decades ago but has remained something of a niche area until recently. The combined value of swap deals to date is $3.7 billion, according to the data. That's a fraction of the $400 billion of emerging market sovereign debt analysts at Capital Economics recently estimated had fallen to distressed levels.

Sources : Reuters,


Society and Planet

Yellowstone, the Pyrenees and Kilimanjaro: iconic glaciers will disappear under any climate scenario

Several of the world's most iconic glaciers, including Yellowstone, the Pyrenees and Kilimanjaro, will disappear by 2050 "under any climate scenario". These are the grim predictions of UNESCO, which published a study in November. The United Nations Educational, Scientific and Cultural Organisation (UNESCO) is calling for a "rapid reduction in CO2 emissions" to preserve the other glaciers it has listed as world heritage sites.

The melting is happening everywhere. In Africa, all the listed glaciers will disappear by 2050, including those in Kilimanjaro National Park in Tanzania and on Mount Kenya. In Europe, the glaciers of the Pyrenees-Mont Perdu in France and Spain are expected to disappear, as are those of the Dolomites in Italy, the Swiss tectonic mecca Sardona and the Yellowstone and Yosemite national parks in the United States. Glaciers in Switzerland are also disappearing. They have lost 6% of their total volume since the beginning of the year alone.

The study covers 18,600 glaciers covering a total of 66,000 km2, spread over 50 World Heritage sites, or 10% of the earth's total glacier surface, according to UNESCO. In one third of these sites, the glaciers will disappear completely. The others "could be saved if we limit global warming to 1.5 degrees" by a "drastic" reduction in greenhouse gas emissions, the organisation warns.

World Heritage glaciers are melting at the rate of 58 billion tonnes of ice each year, the same amount of water used annually by France and Spain, contributing 5% to global sea level rise, the report said. The speed of glacier retreat is "worrying", especially as "melting is accelerating", Tales Carvalho Resende, co-author of the study, told AFP.

Sources : Novethic, Reuters


U.S. aims to sanction Brazil deforesters

The United States is looking to crack down on environmental criminals behind surging deforestation in the Brazilian Amazon, using penalties such as Magnitsky sanctions to tackle climate change more aggressively, U.S. sources and officials told Reuters. The plan represents a major shift in Washington's strategy to combat global warming, adding the bite of direct sanctions to its toolkit of tax incentives, diplomatic nudges and complex, slow-moving multilateral accords.

Magnitsky sanctions aim to punish those accused of corruption or enabling human rights abuses. They would freeze any U.S. assets and bar all Americans and U.S. companies from dealing with sanctioned individuals or entities. The U.S. plan began taking shape in June, at the Summit of the Americas in Los Angeles, when the United States and Brazil announced a joint task force to fight illegal deforestation in the Amazon rainforest, a U.S. source working on the plan said.

Among the working group's goals is "disincentivizing the use of the international financial system in association with illegal activities with forest products," according to a statement from the U.S. State Department at the time. In more precise terms, a separate U.S. official with knowledge of the plan told Reuters, Washington is looking to penalize major deforesters, and perpetrators of other environmental crimes such as illegal gold mining.

Source : Reuters


Company news

SEC charges Goldman Sachs Asset Management with not following ESG investments policies

-          Company : GOLDMAN SACHS

-          Sector : Diversified Banking & Financials

-          Clover rating : 4/10

The U.S. Securities and Exchange Commission charged Goldman Sachs Asset Management with failing to follow its policies and procedures involving environmental, socially oriented and other investments, and fined the company $4 million. The charges were specifically over "policies and procedures failures involving two mutual funds and one separately managed account strategy marketed as Environmental, Social, and Governance (ESG) investments," the regulatory agency said in a statement.

"From April 2017 until June 2018, the company failed to have any written policies and procedures for ESG research in one product, and once policies and procedures were established, it failed to follow them consistently prior to February 2020," the SEC said.

Sources : Reuters, ESG Today


Enel SPA, world’s largest energy retailer, set to sell green power in US

-          Company : GOLDMAN SACHS

-          Sector : Diversified Banking & Financials

-          Clover rating : 4/10

Enel SpA, Italian utility giant and the world’s largest power retailer, is set to sell electricity directly to US businesses for the first time. Enel North America has received its Texas retail license and is in the process of signing up business customers, said Greg Rizzo, who is heading the initiative. These contracts -- which will likely range from one to three years or longer --  will be backed by output from more than 4 gigawatts of wind and solar Enel is operating or building in the state.

The retail push comes as Enel is significantly stepping up its investments in the US after Congress recently passed the Inflation Reduction Act with generous incentives for renewable facilities. Last week, Enel said it will build one of the country’s largest factories to build solar modules and cells.

Without having to commit to long-term contracts, companies are able to acquire smaller amounts of power for shorter periods without big capital commitments, making it easier for them to go green.

Sources : Bloomberg, IEEFA


Australian court blocks Clive Palmer coal mine on climate grounds

-          Company : CLIVE PALMER

-          Sector : Mining

-          Clover rating : Not rated

An Australia court has moved to block an $8.4bn coal mine development in Queensland on human rights grounds in a landmark case that highlights the mounting legal challenges to fossil fuel extraction around the world. Fleur Kingham, president of the Land Court of Queensland, said in November that “climate change was a key issue” in the decision and that the project would have infringed on the rights of First Nations people in Queensland because of its climate impact.

The Galilee Coal project’s developer is Waratah Coal, which is owned by Clive Palmer’s group Mineralogy. It would have produced 40mn tonnes of coal a year if fully developed, making it the largest coal mine in Australia. A growing number of legal cases in jurisdictions from the Netherlands to the Philippines have been launched to challenge government policies and block fossil fuel extraction on climate grounds.

The ruling in Queensland comes after Australia recently tightened its climate targets, passing legislation to cut emissions by 43 per cent by 2030. The emissions produced by the coal — projected at around 1.58bn tonnes over the mine’s lifetime, or the equivalent of three years of Australia’s current annual emissions — would jeopardise the country’s commitment to the Paris climate accord.

Sources : Financial Times, Bloomberg



Europe warms more than any other continent in last 3 decades

Europe has warmed more than twice as much as the rest of the world over the past three decades and experienced the greatest temperature increase of any continent, according to a report by the World Meteorological Organization.

The report on the state of the climate in Europe follows a summer of extremes. A record-breaking heatwave scorched Britain, Alpine glaciers vanished at an unprecedented rate, and a long-lasting marine heatwave cooked the waters of the Mediterranean. "Europe presents a live picture of a warming world and reminds us that even well prepared societies are not safe from impacts of extreme weather events," WMO secretary-general Petteri Taalas said in a statement.

From 1991 to 2021, temperatures over Europe warmed at an average of 0.5 degrees Celsius per decade, the report said, while the global average was just 0.2 degrees C. Last year, extreme weather events made worse by climate change - chiefly floods and storms - delivered damages exceeding $50 billion in Europe.

The reason Europe is warming faster than other continents has to do with the fact that a large part of the continent is in the sub-Arctic and Arctic - the fastest warming region on Earth - as well as changes in climate feedbacks, scientists said. For example, fewer clouds over Europe during the summer has meant more sunlight and heat now reaches the continent, said Freja Vamborg, senior scientist with the Copernicus Climate Change Service.

Sources : Reuters, Carbon Brief



Emission trends

Analysis: EU’s CO2 emissions from energy use fall 5% in three months after post-Covid surge

The analysis for Carbon Brief is based on a new near-real-time emissions tracker developed by the Centre for Research on Energy and Clean Air (CREA). It shows the recent fall in emissions has brought to an end a 16-month surge that began in the wake of the Coronavirus pandemic. The tracker draws on real-time data from the EU electricity and gas transparency platforms, as well as on monthly Eurostat data on oil consumption. It shows demand for fossil fuels is falling due to high prices and strong wind and solar output, contrary to fears of a resurgence due to the energy crisis.

With many countries looking to coal and other domestic supplies to shore up their energy security in 2022, there have been suggestions that emissions could increase once again after the pandemic phase. However, the new analysis of EU emissions in near real-time proves the opposite is the case, with the bloc’s CO2 output having declined by 5% in the most recent three-month period. The fall accelerated to 8% in October.

Emissions from transport and electricity started rebounding from the Covid-19 lows in the summer of 2020. From March 2021 until July 2022, their CO2 emissions increased year-on-year every month. The increase in CO2 emissions has now reversed as high fossil fuel prices have suppressed electricity and gas demand, particularly in industry and households.

Source : Carbon Brief


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