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Ottawa is currently developing a transition taxonomy – essentially a guideline as to which types of investments are appropriate in the transition to a net-zero economy. However, natural gas still produces CO2 emissions and expanding supply and demand is inconsistent with net-zero plans.
Former chair of the Committee on Climate Change Lord Deben believes the country can get back on track to netzero and regain its status as a global leader. The new government must rectify this and produce a detailed, complete programme showing how it will reach netzero by 2050,” he advised. It’ll be a mess.”
Although we’ve promised to introduce a cap on energy sector emissions, this cap will not address Scope 3 emissions (those up and down a company’s supplychain), which account for around 88% of total emissions from the oil and gas industry.
For financial institutions such as banks, insurance companies and investment managers, scope 3 emissions from supplychains and lending/investment portfolios are often more complex than for other industries. Financial institutions have a major role to play in decarbonising the economy toward netzero over the coming three decades.
This step, which doubles down on the pension fund’s climate investing plans for the next seven years, underpins the comprehensive strategy that CalPERS laid out for achieving its goal of cutting emissions from its portfolio investments to netzero by 2050 while assuring long-term financial results for its pensioners.
The financial system is increasingly seen as crucial to averting such a scenario – not only to shift toward green investments, like renewable energy, but also to reallocate capital from fossil fuel-related investments to be consistent with net-zero goals. Today, we need three to six times more investment to maintain a livable climate.
Or that slashing regulation means being more competitive, even though a fossil fuel-led race to the bottom exposes our economies to insecurity, instability and strandedassets. There is a better story to tell one rooted in both present market realities and a vision of a liveable and prosperous future.
Build more investor confidence in green infrastructure projects The greatest fear that many investors have around investing in green infrastructure projects is that they become “strandedassets.” To prevent this, governments must make a long-term commitment to a green energy source such as hydrogen or nuclear.
If you’re struggling to work out whether big oil is serious about reducing carbon emissions in line with netzero 2050 targets, you’re in good company. Scope 3 is set to be the big issue beyond the energy sector this year, as shareholders and regulators seek greater clarity along the corporate supplychain.
For example, Brazilian meatpacker JBS has set science-based climate targets and are aiming to have full supplychain traceability by 2025. With only seven years left to halve global emissions and halt and reverse biodiversity loss, we can’t wait for new technologies to step into play – we have to get to netzero with what we have.
With global trade highly dependent on shipping, achieving netzero may put wind in the sails of other industries’ climate ambitions. For the first time, the IMO has also agreed on an overarching objective to achieve netzero greenhouse gas (GHG) emissions by or around 2050.
In a letter to the Commission, WindEurope explained how low volumes of permitted projects have impacted Europe’s wind turbine manufacturers and wider supplychain. Increasing gas infrastructure must be avoided to avert dangerous climate impacts and strandedassets.”.
These might include capex plans and their alignment with the company’s climate strategy, but also netzero commitments, as well as the policies they are or are not supporting through lobbying. This has echoes of the issue of strandedassets arising from decarbonisation of the energy supply over the past decade or so.”
Many have set science-based targets aligned with 1.5ºC, others are starting their journey to net-zero. For business, investments in fossil fuels are now far riskier because the market expects them to become strandedassets in the foreseeable future. The Glasgow Pact has given them the direction of travel.
According to the International Energy Agency , the world needs to cut 90% of coal use by 2050 and phase out all unabated coal power plants by 2040 to achieve net-zero emissions and avoid the worst impacts of climate change. These plants are expected to operate for decades and risk becoming “strandedassets” if they retire early.
According to research by MSCI, nearly half (44%) of listed companies have now set decarbonisation targets, representing an eight-percentage-point increase than was reported in the October 2022 MSCI Net-Zero Tracker , but only 17% of those targets would align with the 1.5°C
Nature is at the base of every supplychain. For now, business understanding and disclosure of nature risk – both from investee firms’ direct operations and along their supplychains – is patchy at best, with firms in the APAC region lagging global peers. Ecosystem services are absolutely critical to the creation of GDP.
With the transport sector a significant generator of greenhouse gas emissions, electric vehicles are an important element of the netzero transition. In most countries, the transport sector is the largest contributor to greenhouse gas emissions and wide-scale adoption of EVs features in many countries’ netzero transition plans.
Given the diversity described above, it’s no surprise that many already see financing opportunity across the continent and its energy sector’s supplychain, as it embarks on its green transition. . How are investors currently getting involved in Africa’s energy transition? .
The actions being taken by signatories to WorldGBC’s NetZero Carbon Buildings Commitment to tackle whole life carbon are critical because they are driving emissions reductions now and in the future. The businesses and organizations signed up to the commitment account for approximately 6.5 ANALYSIS: . ANALYSIS: .
The AG letter contends that BlackRock’s commitment to accelerate netzero emissions across all of its assets, regardless of client wishes, is somehow political or unfair to clients who don’t want to invest in the energy transition.
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