Gustavo Bernal Torres
Energy Independence, 2021 CO2 Emissions, Maladaptation, and Airships
Here are 5 ESG insights you might have missed this week:
1. EU to Consider Massive Joint Bond Sales to Fund Energy, Defense-
The invasion has forced the bloc to rethink its most basic energy needs, as more than 40% of EU gas imports and one quarter of its oil come from Russia.
The proposal may be presented after the EU’s leaders hold an informal summit in Versailles, France, that starts Thursday, according to officials familiar with the preparations. Officials are still working out the details on how the debt sales would work and how much money they intend to raise, depending on the guidance they receive from leaders in this week’s meeting.
“The impact on energy prices from recent events and the importance of energy considerations in sanctions discussions could motivate lawmakers on both sides of the Atlantic to accelerate the shift to renewable energy,” Goldman Sachs Group Inc. economist Alec Phillips wrote in a note to clients on Monday. “EU leaders are expected to release a proposal in coming days in this area.”
Link to Source: https://financialpost.com/pmn/business-pmn/eu-to-consider-massive-joint-bond-sales-to-fund-energy-defense
2. IEA's Global Energy Review: CO2 Emissions in 2021-
Global CO2 emissions rebounded in 2021 reaching their highest ever annual level. A 6% increase from 2020 levels.
2021 pushed emissions to 36.3 gigatonnes (Gt), an estimate based on the IEA’s detailed region-by-region and fuel-by-fuel analysis, drawing on the latest official national data and publicly available energy, economic and weather data.
Spiking natural gas prices resulted in gas-to-coal switching, CO2 emissions from coal rose to all-time high. Renewable power also posted its biggest ever increase in 2021.
Link to Source: https://www.iea.org/reports/global-energy-review-co2-emissions-in-2021-2
3. Canada's Green Bond Framework-
Canada publishes Green Bond Framework in advance of inaugural issuance.
The transition to a net-zero emissions economy will require substantial public and private sector investment and expertise; to this end, the Government of Canada has introduced this first sovereign green bond framework, which will allow investors to support Canadian investments in climate action and environmental protection, while fostering further development of the Canadian sustainable finance market.
New financing opportunities will speed up projects ranging from green infrastructure, clean tech innovation, nature conservancy, and more.
Link to Source: https://www.canada.ca/en/department-finance/programs/financial-sector-policy/securities/debt-program/canadas-green-bond-framework.html
4. Short-Selling Does Not Count As A Carbon Offset-
Hedge funds need to assess the real impact of climate change on portfolios.
The argument that has been made is that investors should be able to net out their “long” holdings in higher carbon-emitting companies with short positions in such businesses to reduce the estimate of the overall carbon footprint of their portfolios.
While there is some merit to this view, it risks conflating two very different approaches to assessing climate change within investment portfolios: known in jargon as “financial materiality” and “double materiality”.
Link to Source: https://www.ft.com/content/65ec280b-e9b0-40f3-9e6f-b0b65827aab6
5. 'Maladaptation': How Not To Cope With Climate Change-
Maladaptation happens when you try to solve one problem and wind up creating another.
"We're finding that there are many cases in which adaptation projects don't work," said Clark University professor Ed Carr, lead author of a chapter in the IPCC report on climate resilient development. "Some have actually made things worse."
A study of more than 300 initiatives for coping with climate change cited in the IPCC report found that one-third may have unintended and negative consequences.
Link to Source: https://phys.org/news/2022-03-maladaptation-cope-climate.html
One more thing: A 20-min YouTube video from Bloomberg Quicktakes on how airships could overcome a century of failures.
Find the video here: https://www.youtube.com/watch?v=h0hpcpnWAsQ
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