Europe's Energy Plan, Climate Disclosure Costs, EVs, Minerals, and Carbon Bombs

Here are 5 ESG insights you might have missed this week:

1. EU Unveils $220bn Plan to Ditch Russian Energy-

• The measures include a mix of EU laws, non-binding recommendations to governments in the EU’s 27 member countries.

• Taken together, Brussels expects them to require 210 billion euros in extra investments by 2027 and 300 billion euros ($314bn) by 2030 on top of those already needed to meet the bloc’s 2030 climate target. Ultimately, it said the investments would slash Europe’s fossil fuel import bill.

• Those investments include 86 billion euros ($90bn) for renewable energy and 27 billion ($28bn) for hydrogen infrastructure, 29 billion euros ($30bn) for power grids and 56 billion euros ($59bn) for energy savings and heat pumps.

• Link to Source: https://www.aljazeera.com/news/2022/5/18/eu-rushes-out-210-billion-euro-investment-to-ditch-russian-energy

2. Survey Reveals Cost of Climate Disclosure for Issuers and Investors-

• The new study explored the costs and benefits perceived by corporate issues and institutional investors of climate-related disclosures.

• A survey commissioned by Persefoni and Ceres and undertaken by ERM, has revealed what organizations are currently spending to measure, manage, and disclose climate-related financial information. While these numbers represent a current and historical baseline, the cost of climate change disclosure will decline even further as more organizations move away from manual processes and leverage carbon accounting software.

• The ERM survey found that, on average, corporate issuers are spending $533,000 annually on climate-related disclosure activities, while institutional investors are spending an average of $1,333,000 annually to acquire and analyze climate data to inform their investment decisions. These results are based on survey responses from 39 corporate issuers and 35 institutional investors.

• Link to Source: https://www.persefoni.com/newsroom/new-survey-reveals-the-actual-cost-of-climate-change-disclosure-software

3. Economic Impacts of Climate Change-

• Exploring short-term climate-related shocks with macroeconomic models.

• To advance financial industry knowledge on this important topic, UNEP FI and UK-based National Institute of Economic and Social Research (NIESR) have partnered to explore short-term climate-related shocks for financial actors with macroeconomic models.

• This report features three new climate-driven macroeconomic shock scenarios developed by UNEP FI and NIESR as part of UNEP FI’s Taskforce on Climate-related Financial Disclosures (TCFD) Programme. The three short-term scenarios are: sudden rise in carbon price, spike in oil price, and trade war.

• Link to Source: https://www.unepfi.org/publications/economic-impacts-of-climate-change-exploring-short-term-climate-related-shocks-with-macroeconomic-models/

4. “Carbon Bombs” - Mapping Key Fossil Fuel Projects-

• Fossil fuel companies are planning nearly 195 projects capable of producing at least a billion tons of CO2 pollution.

• The document identifies the 425 biggest fossil fuel extraction projects globally (defined as >1 gigaton potential CO2 emissions). We list these “carbon bombs” by name, show in which countries they are located and calculate their potential emissions which combined exceed the global 1.5 °C carbon budget by a factor of two.

• Climate change mitigation efforts cannot ignore carbon bombs. Defusing them could become an important dimension of climate change mitigation policy and activism towards meeting the Paris targets. So far, few actors, mainly from civil society, are working on defusing carbon bombs, but they are focussing on a very limited number of them. We outline a priority agenda where the key strategies are avoiding the activation of new carbon bombs and putting existing ones into “harvest mode”.

• Link to Source: https://www.sciencedirect.com/science/article/pii/S0301421522001756?via%3Dihub

5. Zero-Emission Vehicles Progress Dashboard-

• EVs are shoving aside real volumes of oil.

• Global oil demand in road transport reached roughly 43.7 million barrels per day in 2021, a slight increase since 2015. The adoption of electric vehicles and fuel cell vehicles avoided almost 1.5 millions of barrels of oil per day in 2021–about 3.3% of total demand. The displaced demand is roughly equivalent to one-fifth of Russia's total oil and oil products exports prior to the war.

• Avoided oil consumption has more than doubled in the past six years, up from ~725,000 barrels of oil per day in 2015. Two-and three-wheeled EVs accounted for 67% of the oil demand avoided in 2021. This is due to their rapid adoption, particularly in Asia. Buses, with 16% of total oil demand avoided, were next, followed by passenger vehicles, the fastest growing segment, accounting for 13%. Commercial vehicles accounted for just 4% of total oil demand avoided in 2021, largely from light commercial EVs.

• Link to Source: https://assets.bbhub.io/professional/sites/24/BloombergNEF-Zero-Emission-Vehicles-Progress-Dashboard-May-2022.pdf

One more thing: Great visuals from IEA on how price surges in critical minerals threaten the decades-long trend of cost declines for clean energy technologies.

Find the visuals here: https://www.iea.org/commentaries/critical-minerals-threaten-a-decades-long-trend-of-cost-declines-for-clean-energy-technologies

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