sustainable investment
Sustainability watch: solar panels, seaweed, and hydrogen taxis
A sustainability revolution is underway and we believe it provides one of the biggest investment opportunities in history. This shift is accelerating – driven by policy, technology, consumer demand and market forces. It is fundamentally disrupting three systems vital to the global economy: energy, land and oceans, and materials.
Below are a selection of stories from February which reflect the fast-moving pace of the sustainability transition and related investment implications.
The company names are provided for information purposes only – these businesses are not necessarily held in our portfolio or represent investment recommendations.1
Global elite produce almost half greenhouse emissions, according to the UN. The 10% most polluting people in society are responsible for almost half of the annual greenhouse gas emissions behind climate change, creating a “strong incentive” for policies targeting the elite group, a UN-backed report has concluded. The top 1% of global emitters were responsible for nearly a quarter of the total growth in pollution between 1990 and 2019.
The UK government plans to build a prototype nuclear fusion plant by 2040 as part of its move toward net-zero emissions. UK Industrial Fusion Solutions Ltd. will build the plant on a former coal site in West Burton, Nottinghamshire, in a bid to provide the power grid with fusion energy, according to a statement from the Department for Business, Energy and Industrial Strategy.
Japan's industry ministry on Thursday set a target of annual carbon dioxide storage capacity of 6-12 million tons by 2030 under a long-term roadmap for carbon capture and storage (CCS). Japan sees CCS technology - which removes CO2 emissions from the atmosphere and stores them underground, and which a host of Japanese companies said on Thursday they were working on - as essential to achieving its goal of carbon neutrality by 2050.
Exxon Mobil Corp will use technology from Honeywell International Inc to capture carbon dioxide at a proposed hydrogen production facility in Texas, Honeywell said. the technology would enable Exxon to capture about 7 million tons of carbon dioxide (CO2) per year, equivalent to emissions from 1.5 million automobiles for one year.
Only 0.4% of companies have disclosed credible climate transition plans, according to a new report released by environmental disclosure platform CDP, assessing the state of climate-related reporting from more than 18,600 companies. The new report is based on the 18,606 organisations that disclosed to CDP in 2022 in the climate category.
The EU is planning to hit back at the US’s USD 369 billion Inflation Reduction Act by easing restrictions to allow a wave of tax credits for green investment. Under a draft plan seen by the Financial Times, the European Commission will relax state-aid rules to support investment in green sectors, including via the creation of tax benefits.
US lawmakers seek repeal of Biden solar tariff waiver. A bipartisan group of U.S. lawmakers in the House of Representatives introduced a resolution to repeal President Joe Biden's suspension of import tariffs on solar panels from four Southeast Asian nations. The Congressional Review Act (CRA) resolution, which allows Congress to reverse federal rules with a simple majority, is aimed at propping up domestic solar manufacturers, which have struggled to compete with cheap panels made overseas - often by Chinese companies.
India sold its first sovereign “green bonds”, in a well-received USD 1 billion issue that analysts said boded well for its ability to bankroll the big investments needed to achieve its climate targets. The government sold Rs 80 billion (USD 1 billion) worth of five- and 10-year debt, achieving a “greenium”, or a lower borrowing cost than it would for a conventional bond of similar maturity.
The BMW Group is continuing its efforts to systematically reduce CO2 emissions in the supply chain. A particular focus is on CO2-intensive materials like aluminium, steel and plastics. The BMW Group therefore intends to source aluminium with significantly reduced CO2 emissions from Rio Tinto’s hydro-powered operations in Canada starting in 2024 and has signed a memorandum of understanding to this effect.
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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. |
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Nine global banks have invested a total of USD 45 million in a new platform to help scale up transactions of voluntary carbon credits and make it easier for their customers to participate in the market. Demand for carbon offsets, generated through projects such as tree planting or using cleaner cooking fuel, is expected to soar as companies seek to use the credits to help meet net-zero emissions goals.
Indonesia aims to issue emission quotas for some coal-fired power plants within this month as a first step towards creating a mechanism for domestic carbon trading. Among the world's biggest green house gas emitters, Indonesia last year set a more ambitious target for reducing carbon emission by 31.89% on its own or 43.2% with international support, by 2030.
Guyana, which has jumped into the forefront of offshore oil exploration, is using its inland forests to tap carbon markets, in a business the government sees as more profitable than using the acreage for mining or agriculture, Vice President Bharrat Jagdeo said on 15 February. The South American country, one of the fastest growing oil producing nations after a consortium led by Exxon Mobil Corp discovered billions of barrels of oil in the last decade, has 90% of its territory covered by forests. Its sales of carbon credits could generate USD 4 billion to USD 5 billion for the country,
The EU’s carbon price has climbed above EUR 100 a tonne for the first time, in a landmark moment for one of the bloc’s key tools to fight pollution. Allowances traded under the EU’s flagship emissions trading system (EU ETS) rose 2% on February 21st to hit an all-time high of EUR 101 a tonne.
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Thematic link: Carbon pricing is a key enabler of the transition to a CLIC® economy. We believe an active carbon strategy can help investors capture attractive return opportunities while hedging transition risks in their portfolios. Click here for more information. |
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India will blacklist renewable power companies for three-to-five years if they do not meet project completion deadlines. "If any renewable energy project is not completed by the prescribed date of completion, then its bank guarantee should be encashed and the developer blacklisted after asking to show cause," the order issued by the new and renewable energy ministry said.
Iberdrola, the world’s largest producer of renewable energy, announced that it has been awarded its first floating solar power plant in France, with a total capacity of 25 megawatts peak (MWp), in response to a call for tenders issued in June 2022 by the municipality of Kurtzenhouse in Alsace.
Barclays has said it was tightening lending criteria for coal power and would stop financing oil sands exploration and production but did not announce new restrictions on oil and gas lending as some rivals have. The British bank extended a previously announced plan to phase out financing for clients involved in coal-fired power generation by 2030 from the UK and European Union, to include other countries in the Organisation for Economic Cooperation and Development.
L’Oréal Group announced that it has signed agreements with power producer and service provider EDF to provide renewable energy from 2 new solar parks, capable of producing the equivalent of 25% of the beauty company’s electricity consumption in France.
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Thematic link: Click here to find out more about the sectors that are well-placed for the renewables transition, as well as the growing investment opportunities arising from climate adaptation. |
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From 2025, consumers in England will be able to claim some of their money back if they return the empty plastic bottle or can for recycling. The deposit return scheme, as it’s known, aims to reduce littering of drinks containers by 85% in England, Wales and Northern Ireland three years after launch. Similar programs have been in operation for decades in countries including Norway and Sweden, where they’ve helped to boost recycling and cut waste.
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Thematic link: Transitioning to a circular model for plastic represents a USD 1.2 trillion global economic opportunity. Click here for more information. |
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Amazon.com has granted EUR 1.5 million (USD 1.6 million) to a Dutch project testing the viability of commercially growing seaweed in between turbines of offshore wind farms, the company and organisers said on 16 February. The project, led by non-profit group North Sea Farmers, will also research the potential of using seaweed for carbon capture.
Germany is weighing phasing out crop-based biofuels by the end of the decade, as high agriculture prices renew concerns over using food crops for fuel production. The country is considering cutting the share of crop-based biofuels, a type of renewable energy source, in its greenhouse gas-reduction quota from the current 4.4% limit to 2.3% next year and zero by 2030.
UK-based insurance, wealth & retirement company Aviva announced a GBP 10 million to woodland conservation organization Woodland Trust, aimed at supporting the delivery of nature-based carbon removal projects, and contributing to Aviva’s sustainability goals.
EU legislators have agreed to pass a new law guaranteeing that products sold in the EU are not linked to the destruction or degradation of forests. Between 1990 and 2020, an area larger than the EU was lost to deforestation, according to the UN Food and Agriculture Organisation. EU consumption is a big driver of this, causing around 10% of the losses, according to the FAO.
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Thematic link: Investors now have the opportunity to invest in companies that leverage the regenerative power of nature. Click here to find out more. |
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German carmaker BMW has said it will invest EUR 800 million to step up electric vehicle production in Mexico, as the Latin American country stands to benefit from its inclusion in US subsidies that have sparked tension with Europe. The investment includes EUR 500 million for the construction of an assembly centre for lithium-ion batteries on the grounds of a BMW car plant in San Luis Potosí.
VINCI Energies has announced the completion of a USD 15 million investment in integrated hydrogen mobility platform and hydrogen taxi fleet operator, Hype. Launched 2015, France-based Hype is developing a hydrogen mobility platform that integrates supply, production, distribution and uses.
Boeing Co will more than double its purchases of blended sustainable aviation fuel (SAF) this year to 5.6 million gallons (21.2 million litres) to support its U.S. commercial operations, the planemaker said on 15 February. The fuel will be supplied by Neste, the world's largest SAF producer.
EU Falls Shy of Zero-Emission Target for Trucks by 2040. The European Union’s executive branch proposed cutting emissions from trucks and buses by 90% within two decades as it tries to bring the major polluters in line with ambitious net zero goals. The Commission wants all heavy-duty vehicles, both commercial and private, to reduce tailpipe emissions 45% by 2030 and then 65% by 2035, according to targets released on 14 February. New city buses will have to be zero-emission by 2030.
Dubai-based airline Emirates announced plans to conduct its first experimental flight using 100% sustainable aviation fuel (SAF) in one engine, in a test aimed at supporting expanded use of SAF for commercial flights. Sustainable aviation fuel (SAF) is seen as one of the key tools to help decarbonize the aviation industry, which currently accounts for 2-3% of global greenhouse gas (GHG) emissions.
European low-cost airline Wizz Air has announced an agreement with sustainable aviation fuel provider Neste, enabling the company to purchase 36,000 tons of SAF to supply its operations across Europe and the UK, beginning in 2025.
General Motors is trying to speed ahead in the race for metals underpinning the industry’s shift to electric cars. The US automaker is competing for a stake in Vale’s base metals unit, people familiar with the matter said this month. A deal may give GM access to the Brazilian mining giant’s copper and nickel resources that are key to making EV batteries.
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Thematic link: To find out more about the challenges and opportunities presented by the transport revolution, click here. |
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