Sustainability watch: electric vehicles, hydrogen power, and natural capital

The Scottish government has proposed making the “fastest possible” transition away from oil and gas production, laying out an energy strategy that prioritises an accelerated shift to increased wind and hydrogen development. The proposal marks the ruling Scottish National party’s cleanest break yet with an oil and gas sector whose revenues it once believed could help make the financial case for independence.

India has announced the approval by cabinet of the National Green Hydrogen Mission. Its strategy is to establish India as a major green hydrogen production hub, with plans to reach 5 million tonnes of production and spur nearly USD 100 billon of investment by 2030. According to a statement by the government announcing the approval, the strategy is expected to help India become energy independent, and decarbonise major sectors of the economy, including industrial, mobility and energy. 

Italian energy company Eni have announced the launch of Eni Sustainable Mobility, a new vertically integrated company focused on the climate transition across the mobility sector value chain. The new company incorporates existing bio-refining and biomethane assets, and will oversee the development of new projects.

International investors with USD 2.2 trillion in assets will ask commodity giant Glencore Plc to show how its development of thermal coal mines meets the goals of the Paris climate accord to keep global warming to 1.5 degrees. Glencore is one of the world's largest producers and traders of the fossil fuel used in power generation. Major institutional investors including Europe's Legal and General Investment Management (LGIM) said in a joint statement they have co-filed a shareholder resolution that asks Glencore to reveal how its production and capital expenditure plans align with the Paris goals and the International Energy Agency Net Zero Emissions pathway.

IRA Sparks Solar Investments in US. The US is trying to boost domestic clean energy manufacturing in its fight against climate change and to cut reliance on imported panels. President Joe Biden’s landmark climate law, the Inflation Reduction Act, which includes generous incentives for solar, battery and electric-vehicle manufacturing, has sparked a wave of new factory announcements, including a USD 2.5 billion expansion of solar manufacturing in Georgia that was announced this week. Biden’s policy extends to encouraging foreign firms — including China-based manufacturers — to set up facilities locally, which can support development of supply chains and deliver jobs.

India will by May invite bids for subsidies for setting up green-hydrogen manufacturing and utilisation hubs, fertiliser and steel plants based on the fuel, and factories for making electrolysers. The bidding process is part of a first phase of a USD 2 billion incentive plan announced last week to boost use of green hydrogen to cut emissions and make India a major exporter in the field.

RMI, a leading nonprofit dedicated to accelerating the global energy transformation, announced the formation of the Virtual Power Plant Partnership (VP3). VP3 is an initiative based at RMI that works to catalyse industry and transform policy to support scaling VPPs in ways that help advance affordable, reliable electric sector decarbonisation by overcoming barriers to VPP market growth. Virtual power plants are portfolios comprised of hundreds or thousands of households and businesses that offer the latent potential of their electric vehicles (EVs), smart thermostats, appliances, batteries, solar arrays, and additional energy assets to support the grid.

Iberdrola has signed an alliance with Norway’s sovereign wealth fund, managed by Norges Bank Investment Management, to invest in 1,265 MW of new renewables capacity in Spain. Of the total capacity, 20% will come from wind and 80% from solar PV. Iberdrola will have a majority stake of 51% in the assets. Both companies are joining forces to accelerate decarbonisation in Spain initially and the agreement could be extended to other countries in the future. In total, the renewable energy portfolio will have the capacity to meet the electricity demands of more than 700,000 homes each year.

Telecom giant Verizon announced a series of new long-term renewable energy purchase agreements (REPAs), adding 410 MW of renewable energy from new facilities across the U.S. The new agreements bring Verizon’s projected renewable energy capacity to more than 3 GW, enough to power more than 707,000 homes for a year, and position the company to meet its goal to source or generate renewable energy equivalent to 50% of its total annual electricity consumption by 2025.

Henkel has announced an agreement with Shell to replace up to 200,000 tons of fossil-based ingredients for its laundry products with renewable feedstocks. The companies estimate that the five-year agreement will result in greenhouse gas emissions (GHG) reductions of up to 120,000 tons. Under the new agreement, Shell will produce renewable-based surfactants – an ingredient in cleaning products that help lather and lift dirt – in North America for use in Henkel’s laundry product brands including Persil, Purex and all. The renewable feedstocks will be combined with fossil feedstocks using a mass balance approach, in which Shell will attribute the total tns of renewable feedstocks used in the process solely to Henkel.

The U.S. Federal Reserve Board released details and instructions for its inaugural climate scenario analysis exercise for the six largest U.S. banks, designed to assess the banks’ climate-related risk management practices and their resilience to a range of climate outcomes. Results from the exercise are to be submitted by the banks by the end of July. According to the Fed, the goals of the exercise include generating a deeper understanding of climate risk management practices at the banks, and building capacity to identify, measure, monitor, and manage climate-related financial risks. The banks will explore the effects of two climate scenarios on specific areas of their loan portfolios.

 

Thematic link: The transition to a low-carbon and climate-resilient economy will require innovation, commitment and significant investment. Click here to find out more.

 

Some of the world's top central bankers aired concerns about being expected to tackle climate change as well as tame inflation, with Federal Reserve chief Jerome Powell told a conference of central bankers organised by Sweden's Riksbank in Stockholm. "We are not, and will not be, a 'climate policymaker'," said Powell, with the Fed's balancing act yet more delicate since the Republicans took control of the House of Representatives.

S&P Global Sustainable¹ and the UN Environment Programme (UNEP) have announced the launch of Nature Risk Profile, a new methodology aimed at enabling companies and investors to assess and analyse companies’ nature-related risks, including impacts and dependencies on biodiversity. The new methodology comes as businesses and financial institutions increasingly focus on nature and biodiversity risk, and as global efforts to address nature-related issues begin to pick up pace.

Property and casualty insurance company Chubb have announced the launch of a new global climate business unit, focused on providing insurance products and services to businesses engaged in developing or employing new technologies and processes that help reduce the dependence on carbon. The new business will also provide risk management and resiliency services to help those managing the impact of climate change.

Environmental, social credit risks to rise in 2023, according to ratings agency Moody's. Economic and political turbulence caused by the COVID-19 pandemic and Russia's invasion of Ukraine will be likely to heighten environmental, social and governance (ESG) credit risks this year.

 

Thematic link: We believe that assessing the risks and opportunities associated with the transition requires a forward-looking measure of decarbonisation trajectories. Click here to find out more.

 

Kerry takes Davos stage to launch US ‘Natural Capital’ survey. President Joe Biden’s administration will launch an effort to more accurately count the nation’s natural resources in official economic statistics, saying the data are needed to give a true picture of US output. President Joe Biden’s administration will launch an effort to more accurately count the nation’s natural resources in official economic statistics, saying the data are needed to give a true picture of US output.

Brazil’s president, Lula da Silva, signed a package of seven executive orders aimed at controlling deforestation in the Amazon and re-building the country’s environmental institutions. As part of the package, Brazil’s new leader reinstated the Amazon Fund, a USD 1.2 billion fund to protect of the world’s largest rainforest, after a three-year period of inactivity. The fund, which was established during Lula’s second term in 2008, supports 102 conservation projects in the Amazon, among them forests managed by indigenous people and small-scale farms.

 

Thematic link: Investors now have the opportunity to invest in companies that leverage the regenerative power of nature. Click here to find out more.

 

Azek has entered into a new recycling partnership to responsibly transform plastic waste into long-lasting, low-maintenance outdoor living products. The manufacturer of low-maintenance and environmentally sustainable outdoor living products will collect online resale platform Thredup’s post-consumer plastic Clean Out Bags, process and turn them into new long-lived composite decking.

Recycling company Nexus Circular has raised USD 150 million to accelerate its proprietary recycling solution supporting the production of virgin-quality plastics from hard-to-recycle and landfill-bound plastics. Nexus works with recycling organisations to capture used plastics and specifically, hard-to-recycle films from landfills. The company’s proprietary pyrolysis technology and process design converts these films and plastics into high quality materials for use by global companies to create circular plastic products. 

 

Thematic link: Transitioning to a circular model for plastic represents a USD 1.2 trillion global economic opportunity. Click here for more information.

 

EU countries are pushing back against the European Commission’s plans to expand new rules to curb pollution in the industrial sector to include livestock, citing concerns over increased administrative burden and unworkable thresholds. The proposed overhaul of the industrial emissions directive (IED), presented by the Commission in April 2022, aims to reduce harmful emissions coming from industrial installations. As it stands, the directive already covers a small number of livestock farms – about 4% of EU pig and poultry farms. However, the EU executive has proposed to adapt this framework and expand it to a larger portion of the livestock sector in efforts to help align the emission reduction pathway with the EU’s Green Deal objectives and methane strategy.

 

Thematic link: Food systems are transforming, enabling innovative companies to profit from the rise of sustainable solutions across the value chain. Click here for more information.

 

Islamic Development Bank Group (IsDB) has announced a USD 4.2 billion commitment to support Pakistan’s climate resilience efforts and development agenda and the country vision 2025 over the next three years including USD 600 million in ordinary capital resources from IsDB Group. This follows the devastating effects of Pakistan’s recent floods.

NASA has announced it has issued an award to The Boeing Company for the agency’s Sustainable Flight Demonstrator project, which seeks to inform a potential new generation of green single-aisle airliners. Under a Funded Space Act Agreement, Boeing will work with NASA to build, test, and fly a full-scale demonstrator aircraft and validate technologies aimed at lowering emissions. Over seven years, NASA will invest USD 425 million, while the company and its partners will contribute the remainder of the agreement funding, estimated at about USD 725 million. As part of the agreement, the agency also will contribute technical expertise and facilities.