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‘Carbon Bubble’ Could Cost World Trillions

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Singapore-Supertrees are generating solar power, acting as air venting for conservatories, and collecting rain water, June 11, 2015 (Photo by Güldem Üstün) Creative Commons license via Flickr

By Sunny Lewis

CAMBRIDGE, UK, June 7, 2018 (Maximpact.com News) – Globally, the consumption of fossil fuels will slow down or decline in the near future as a result of fast-moving technological change and new climate policies, creating a “dangerous carbon bubble,” finds a newly published study by an international team of scientists.

If not deflated early, the carbon bubble could lead to a discounted global wealth loss of between US$1 trillion and $4 trillion, a loss comparable to what triggered the 2007 financial crisis, the study shows.

Relying on groundbreaking modeling techniques, researchers from Radboud University in the Netherlands, the University of Cambridge’s Centre for Environment, Energy and Natural Resource Governance (C-EENRG), Cambridge Econometrics, The Open University in the UK and the University of Macau were able to show that the demise of the fossil-fuel industry will have profound economic and geopolitical consequences.

The study is published in the current issue of the journal “Nature Climate Change.”

“If countries keep investing in equipment to search for, extract, process and transport fossil fuels, even though their demand declines, they will end up losing money on these investments on top of their losses due to limited exports,” explains co-author Dr. Jean-Francois Mercure of Radboud University and C-EENRG.

“Countries should instead carefully deflate the carbon bubble through investment in a variety of industries and steady divestment,” he advises. “The way in which this is done will determine the impact of the ongoing low-carbon transition on the financial sector.”

This transition will result in clear winners, importers such as China and the European Union, and losers, exporters such as Russia, the United States and Canada, which could see their fossil-fuel industries nearly shut down.

If these countries keep up their investment and production levels despite declining demand, the global wealth loss could be huge. Even the United States could not pull out from this transition, as it would only hurt itself even more, the researchers warn.

This new study is more conservative in its warnings than a 2013 research paper from Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. That paper calls for regulators, governments and investors to re-evaluate energy business models against carbon budgets, to prevent a $6 trillion carbon bubble in the next decade.

The Underlying Reasoning

Quite a few major economies rely heavily on fossil-fuel production and exports. The price of fossil-fuel companies’ shares is calculated under the assumption that all fossil-fuel reserves will be consumed.

But to do so would be inconsistent with the tight carbon budget set in the 2015 Paris Agreement, which limits the increase in global average temperature to “well below 2°C above pre-industrial levels.”

According to a 2015 study in the journal “Nature,” an estimated third of oil reserves, half of gas reserves and more than 80 percent of known coal reserves should remain unused in order to meet global temperature targets under the Paris Agreement.

To date the Paris accord has not deterred continuing investment in fossil fuels because of the belief that climate-friendly policies will not be adopted, at least not in the near future.

But the researchers show that ongoing technological change, by itself and even without new climate policies, is already reducing global demand growth for fossil fuels, which could peak in the near future.

Examples are clean technologies in power generation, cars and households that become more efficient and so reduce the use of fossil fuels.

For instance, countries, states and cities representing 75 percent of new passenger car sales in 2016 have established electric vehicle targets totaling 15.1 million, providing policy certainty of a transition away from oil consuming vehicles.

New climate policies would aggravate the impact of policies like this, Dr. Mercure and his colleagues believe.

Because the Trump Administration has proclaimed the United States’ intention to withdraw from the Paris Agreement, the scientists also modeled what would happen if the United States did continue to invest in fossil-fuel assets instead of diversifying and divesting from them.

The analysis shows the GDP of the United States would be reduced even further.

Dr. Mercure clarifies this point, saying, “With a declining global fossil-fuel demand, fossil-fuel production in the USA is becoming uncompetitive, and may shut down.”

“If the USA remains in the Paris Agreement, it will promote new low-carbon technologies and reduce its consumption of fossil fuels, creating jobs and mitigating its loss of income, despite losing its fossil-fuel industry,” he said.

“If it pulls out, it will nevertheless lose its fossil-fuel industry, but by not promoting low-carbon technologies, will miss out on job creation opportunities, while increasing its fossil-fuel imports by not reducing its domestic fossil-fuel consumption. The outcome is therefore worse if the USA pulls out,” said Dr. Mercure.

The process of transition towards a low-carbon economy is now becoming “inevitable,” as policies supporting this change have been developed and gradually implemented for some time in many countries, the authors point out.

Hector Pollitt, study co-author from Cambridge Econometrics and C-EENRG, says, “This new research clearly shows the mismatch between the reductions in fossil fuel consumption required to meet carbon targets and the behavior of investors.”

“Governments have an important role to play in emphasizing commitments to meet the Paris Agreement to ensure that the significant detrimental economic and geopolitical consequences we have identified are avoided,” warned Pollitt.

The authors conclude that economic damage from a carbon bubble burst could be avoided by decarbonizing early.

Divestment is Prudent

“We should be carefully looking at where we are investing our money. For instance, much like companies, pension funds and other institutions currently invest in fossil-fuel assets. Following recommendations from central banks, commercial banks are increasingly looking at the financial risks of stranded fossil-fuel assets, even though their possible impacts have not yet been fully determined,” said Mercure.

“Until now, observers mostly paid attention to the likely effectiveness of climate policies, but not to the ongoing and effectively irreversible technological transition,” Mercure concludes. “This level of ‘creative destruction’ appears inevitable now and must be carefully managed.”

Another new study, released June 4, bolsters these findings.

Policymakers are being misinformed by the results of economic models that underestimate the future risks of climate change impacts, according to the new paper by authors in the United States and the United Kingdom.

Published in the “Review of Environmental Economics and Policy” calls for the Intergovernmental Panel on Climate Change (IPCC) to improve how it analyzes the results of economic modeling as it prepares its Sixth Assessment Report, due to be published in 2021 and 2022.

The IPCC is the UN body for assessing the science related to climate change. It has 195 member states.

The paper’s authors point to “mounting evidence that current economic models of the aggregate global impacts of climate change are inadequate in their treatment of uncertainty and grossly underestimate potential future risks.”

This study, “Recommendations for Improving the Treatment of Risk and Uncertainty in Economic Estimates of Climate Impacts in the Sixth Intergovernmental Panel on Climate Change Assessment Report,” was written by Thomas Stoerk of the nonprofit Environmental Defense Fund, Gernot Wagner of the Harvard University Center for the Environment and Bob Ward of the ESRC Centre for Climate Change Economics and Policy and Grantham Research Institute at the London School of Economics and Political Science.

They warn that the assessment models used by economists “largely ignore the potential for ‘tipping points’ beyond which impacts accelerate, become unstoppable, or become irreversible.”

Featured image: Heavy seas engulf the Block Island Wind Farm, the first U.S. offshore wind farm, located off the coast of Rhode Island in the Atlantic Ocean. It came online in December 2016. (Photo by Dennis Schroeder / National Renewable Energy Laboratory) Public domain


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Institutional Cooking Stoves in Uganda

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The Dissemination of Improved Institutional Cooking Stoves to Primary and Secondary Schools in Uganda

The pupils of 600 schools need your help. See how a Ugandan cooking stove project intends to improve their lives. 

Uganda, East Africa, February 2, 2018 – Part of the Maximpact mission includes assisting worthwhile projects to raise awareness. Today we would like to introduce one such project, ‘The Dissemination of Improved Institutional Cooking Stoves to Primary and Secondary Schools in Uganda’. The initiative is helping to improve the lives of children and their communities, while reducing emissions through the distribution of improved institutional cooking stoves.

The project’s purpose is to deploy up to 1,200 institutional improved cook stoves (IICS) into 600 schools all over Uganda by the end of 2019. This will provide benefits to approximately 360,000 pupils.

The current traditional cooking technologies consume tremendous amounts of firewood, causing significant CO2 emissions, as well as creating health issues for the people working in the kitchens.

VEW’s Institutional Stoves achieve the following benefits:

  • Reduces firewood consumption by around 70%. This represents significant financial savings. After 5 years of operation they will have saved more than the cost of the stoves.
  • The firewood savings from a single stove will result in a reduction of approximately 70 tons of CO2 per year thereby helping to mitigate the global climate crisis.
  • Saves more than 8,000 ha of forests and decrease environmental degradation.
  • Improves the indoor air quality, reducing the prevalence of respiratory diseases in the kitchens.
  • Decreases unsustainable deforestation.

The project is being implemented by Virunga Engineering Works (VEW), the local producer of the Stoves together with the environmental consultancy, mkaarbon safari. 

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Context Description & Problem Statement

The Uganda National Alliance for Clean Cooking (UNACC) estimated in 2012 that only 7% of the population were using clean and efficient cooking stoves. Institutions in Uganda, like schools, health centres, prisons, commercial buildings and restaurants primarily rely on traditional cooking technologies, such as three stone stoves, open fires etc.

The most prevalent cooking fuel in the schools of Uganda is wood. 96% of schools use wood as their main cooking fuel. The remaining 4% of schools use charcoal.

Unsustainable deforestation results in environmental degradation, jeopardizing biodiversity, decreasing soil fertility, and causing water run-off and soil erosion, while smoke and particulates related to cooking in the kitchens results in the premature death of both the cooks and their assistants.

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Project Objectives

The project objective is to achieve an annual reduction of 45,000 tons of greenhouse gas emissions. To give you an idea, 1 ton of CO2 would be emitted if you drive continuously for 38.85 hours in your car, or the energy used by the average house over a 28 days period.

This will be achieved by distributing 1,200 long-lasting IICS of 300 l capacity to 600 schools all over Uganda.

The IICS are manufactured by Virunga Engineering Works (VEW), who are based in Uganda. Along with emission reductions (SDG 13), the project will contribute to other Sustainable Development Goals (SDGs) in the following ways:

  • For schools to reduce the money spent for purchasing firewood (SDG 1)
  • For schools to reduce the money spent for replacing IICS (SDG 7)
  • For cooks/assistants in the kitchen to reduce respiratory illness caused by indoor air-pollution (SDG 3)
  • To decrease unsustainable deforestation and environmental degradation (SDG 15)
  • Help mitigate climate change and contribute positively to SDG 13, by stabilizing forests, increasing biodiversity, enhancing soil fertility and water retention, as well as preventing soil erosion (SDG 15).

The savings each school will make by not having to purchase an IICS, as well as the on-going savings on the cost of firewood, can be utilised for other purposes, such as:

  • Offering scholarships
  • New classrooms
  • Refurbished dormitories
  • Learning materials
  • Improved nutrition

The savings will mean each school has more money to invest in providing a quality education to its pupils in line with SDGs 2 and 4. 

 What makes VEW IICS stoves different 

The IICS stoves durability far exceeds normal expectations. While other models and brands on the market last 2-3 years, VEW’s stoves last 25+ years when properly utilised and with only basic maintenance. With the occasional replacement of spare parts, the IICS can potentially last much longer than this.

This durability comes from VEW’s use of ultra-heavy duty construction materials. They use a combination of galvanized and stainless steel, cast iron and volcanic rock.
VEW IICS stoves

The project is focusing on institutional cooking stoves, rather than on household ones, because they can achieve the same degree of impact with less administrative burden and buy-in of less individuals. 

The project will be certified as a Gold Standard carbon project, hence a rigorous monitoring, quality assurance and quality control have to be followed. Usage and maintenance of the IICS will be continuously monitored, reported and verified for at least 15 years by VEW and mkaarbon safari.

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Schools need your help…

The main challenge schools face is paying for the stoves. Schools don’t have the financial means to pay the full IICS price.

The aim of this fundraising is to allow schools to get access to the improved stoves by providing the funding for them. However, schools do have to contribute a fraction of the cost in order to strengthen the feeling of ownership and appreciation for the improved stove.

Schools need your help to eliminate the use of inefficient and dirty cooking methods, and so they can start enjoying the benefits of an efficient and clean cooking stove.


For more information on how to help contact: 

Virunga Engineering Works (VEW): Max Gold (Managing Director)  Email: contact@VirungaEngineeringWorks.com

mkaarbon safari: Johann Thaler (Managing Director)
Email: johann.thaler@mkaarbonsafari.com

The Cancer Risk of Carbon Capture

The International Energy Agency hosted a CCS meeting in June: From left: Jim Carr, Minister of Energy, Canada; Wan Gang, Minister of Science and Technology, China; Dr. Fatih Birol, Executive Director, International Energy Agency; Rick Perry, Secretary of Energy, USA; Terje Søviknes, Minister of Petroleum and Energy, Norway (Photo courtesy IEA) Posted for media use

The International Energy Agency hosted a CCS meeting in June: From left: Jim Carr, Minister of Energy, Canada; Wan Gang, Minister of Science and Technology, China; Dr. Fatih Birol, Executive Director, International Energy Agency; Rick Perry, Secretary of Energy, USA; Terje Søviknes, Minister of Petroleum and Energy, Norway (Photo courtesy IEA) Posted for media use.

 

 

 

 

By Sunny Lewis

OSLO, Norway, August 3, 2017 (Maximpact.com News) – China has decided to develop and implement carbon capture and storage (CCS) on a massive scale. But there is a problem. The process of capturing carbon can lead to the formation of carcinogenic chemicals.

To resolve this issue, Chinese researchers are collaborating with Norwegian scientists from the Department of Chemistry at the University of Oslo (UiO) and the Norwegian Technology Centre Mongstad (TCM), the world’s largest facility for testing and developing CO2 capture technologies.

“China is now the world’s most progressive nation when it comes to research on CCS, and they also have the most comprehensive plans for implementation,” says Professor Claus Jørgen Nielsen at the UiO Department of Chemistry.

“They have in fact decided that China is going to be the first nation in the world to implement CCS on a large scale. The reason is of course that CCS is one of the technologies that have the potential to save the global climate,” said Nielsen.

Current short-term, medium-term and long-term projections for global energy demand still point to fossil fuels being burned in quantities incompatible with levels required to stabilize greenhouse gas concentrations at safe levels in the atmosphere, according to the International Energy Agency (IEA).

The IEA defines carbon capture and storage as, “…a family of technologies and techniques that enable the capture of CO2 from fuel combustion or industrial processes, the transport of CO2 via ships or pipelines, and its storage underground, in depleted oil and gas fields and deep saline formations.”

“CCS can have a unique and vital role to play in the global transition to a sustainable low-carbon economy, in both power generation and industry,” the IEA says.

Still, the capturing part of the technology comes with a problem that has not been much studied in China, and certainly not in the United States, but where Norway is at the forefront of research.

“The problem is that the process for capturing carbon can give rise to carcinogenic chemicals in the environment. This is a problem that we Norwegians can help the Chinese to avoid, and at the same time we are making an important contribution towards reducing global climate problems,” said Nielsen.

Earlier this year, Nielsen was part of a Norwegian delegation to China that included UiO Senior Executive Officer Kari Kveseth and researcher Liang Zhu from the Amine Research and Monitoring project (ARM).

“China is today the world’s largest investor in research and development overall. The USA remains in the lead of R&D investments per capita, but China is in second place and is still growing. China has developed a remarkable policy with leaders who are convinced that research is going to lead to a renewed nation, and they are thus on the road to becoming the world’s leading R&D nation,” said Kveseth.

CCS falls into two parts. First, carbon in the form of CO2 gas must be captured or separated from the exhaust flue gases produced by combustion in, for example, fossil fueled power stations. After separation, the gas must be stored in a safe and permanent manner, so that it does not escape into the atmosphere.

The Sino-Norwegian cooperation is all about reducing the environmental impact of the technology for capture.

“The common way to capture CO2 from gases makes use of an old technology where amines, which are chemical bases, capture the acidic CO2 gas. When used to capture CO2 from exhaust in a chimney, some of the amines are emitted into the air,” explains Professor Rolf David Vogt, one of the pioneers in the Norwegian-Chinese research collaboration.

But in 2008, Nielsen and colleagues pointed out that amines emitted to air from CO2 capture plants can be broken down into nitroamines and nitrosamines.

The nitrosamines are known for being carcinogenic but short-lived, so they should not be released into the air in densely populated areas. The nitramines are more stable, and little is known about their effects on human health – but there is a risk that they are as bad as the nitrosamines.

The persistence of the nitramines makes it necessary to map their presence in the environment around CCS plants. Where do they end up? Are they stored in soils, so that they can affect the bacterial flora – or are they washed out so that they may be bio-accumulated in the aquatic food chain?

Are there other important sources for nitramines and nitrosamines in the environment?

The Norwegian researchers agree that these questions must be answered before choosing the best technology for capturing CO2.

“If we are to reach the IPCC target of only 2 ºC global warming the CCS technology must account for roughly 30 % of the solution. Then we are going to need qualified researchers, who are going to be educated both in Norway and China in a joint program,” says Nielsen.

The Sino-Norwegian cooperation is already underway. UiO researchers have collaborated with Chinese environmental research institutions for almost 30 years, with projects on acid rain, mercury and water quality. But the collaboration ground to a halt when the late Chinese dissident Liu Xiaobo received the Nobel Peace Prize in 2010. By the end of 2016, relations between China and Norway were normalized after Minister of Foreign Affairs Børge Brende visited China.

The largest Chinese partners in the renewed cooperation are the Air Pollution Control Division at Tsinghua University; Huaneng Power International, which is China’s largest energy producer; and the Institute of Engineering Thermodynamics (IET) at the Chinese Academy of Sciences .

Tsinghua holds a leading role in research on air pollution, especially in Beijing and northern China. During the summer of 2017, their instrument park will be supplemented with measuring instruments from the Department of Chemistry in Oslo. Dr. Liang Zhu will contribute to this in Beijing.

But Norway is not the only country working with China on capturing and storing carbon.

The energy ministers of Canada, China, Norway, and the United States, as well as heads of delegation from Australia and the European Commission, along with leaders from the industry and key organizations, were invited by the International Energy Agency and China to review how to increase collaboration in order to drive further deployment of carbon capture, utilization and storage (CCUS).

The meeting was held in June ahead of the 8th Clean Energy Ministerial, in Beijing. Ministers and panellists discussed the factors that have attracted investment to current CCUS projects and highlighted the importance of identifying where these factors could converge to replicate recent success with CCUS projects.

The discussion centred on the vital role of CCUS in reducing carbon dioxide emissions while ensuring energy security. Participants acknowledged the importance of revenue streams, such as from CO2 utilisation, available transport and storage options, and political leadership in securing investment in CCUS projects.

Hosting the event, IEA Executive Director Dr. Fatih Birol said the IEA would undertake detailed analysis of the conditions and factors that have led to the investment in existing CCUS projects, and how they may be replicated.

The countries represented in the discussion host 19 of the 22 projects currently in operation or construction globally.

China, the host of the 8th Clean Energy Ministerial, recently announced the beginning of construction on the country’s first large-scale CCUS project in Shaanxi Province. China’s Minister for Science and Technology Wan Gang, co-hosted the discussion.

U.S. Energy Secretary Rick Perry said, “I don’t believe you can have a real conversation about clean energy without including CCUS. The United States understands the importance of this clean technology and its vital role in the future of energy production.”

“We have already seen the success of projects like Petra Nova in Texas, which is the world’s largest post-combustion carbon-capture system,” Perry said. “Our experience with CCUS proves that you can do the right thing for the environment and the economy too.”

The system at Petra Nova can capture 1.6 million tons of CO2 each year from an existing coal-fired power plant unit, a capture rate of up to 90 percent from a supplied slipstream of flue gas. By using CO2 captured from the plant, oil production at West Ranch oilfield is expected to increase from around 500 barrels per day to up to 15,000 barrels per day.

Canada’s Minister of Natural Resources Jim Carr said, “Carbon capture, use and storage holds enormous potential to enable economic growth and create jobs, while ensuring the environment is protected.”

“Canada hopes to continue working with domestic and international partners — including through the Clean Energy Ministerial and Mission Innovation — to help us all address the technical and policy challenges around wide scale implementation of this important technology.”

The IEA has consistently highlighted the importance of CCUS in low carbon energy systems. “Our analysis consistently shows that CCUS is a critical part of a complete clean energy technology portfolio that provides a sustainable path for mitigating greenhouse gas emissions while ensuring energy security,” said Dr. Birol.

“Investment has flowed to CCUS projects where there is a confluence of factors which constitute a viable business case,” he said. “We need to find more such opportunities, where a commercial case for CCS can be built with reasonably modest, well targeted public interventions.”


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 Featured Image: View of rooftops and smokestacks, China. (Photo by Curt Carnemark / World Bank) Creative Commons license via Flickr)

Investors Assess Their Climate Risks

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Greenhouse gas emissions from the coal-fired cogeneration Hanasaari B power plant at sunset in Helsinki, Finland, March 9, 2013 (Photo by Fintrvlr) Creative Commons license via Flickr

By Sunny Lewis

OAKLAND, California, October 20, 2016 (Maximpact.com News) – Investors are being put on notice that some mutual funds and exchange traded funds labeled “sustainable,” “ecology,” “green” or “integrity” may actually have very high carbon footprints.

Now, a free software tool that empowers investors to track the carbon pollution that companies embedded in their funds are emitting has expanded its analysis to cover funds worth US$11 trillion.

FossilFreeFunds.org, a website created by the environmental advocacy nonprofit As You Sow, has added carbon footprinting of over $11 trillion in global mutual funds and ETFs to the site – the largest-ever analysis of this kind.

Fossil fuel investments carry real financial risks,” says FossilFreeFunds.org on its site. Their analysis covers more than 8,500 global mutual funds, including 3,000 of the most commonly-held funds in U.S. retirement plans, so that all investors can be aware of the climate risk in their retirement accounts, with financial data provided by Morningstar.

In August, Morningstar introduced a Sustainability Rating for Funds that offers an objective way to evaluate how investments are meeting environmental, social, and governance challenges, helping investors put their money where their values are.

Transparency leads to transformation,” said Andrew Behar, CEO of As You Sow. “Measuring a company’s carbon emissions is a critical way to understand the specific climate risk of your investments.

We have aggregated this data for all of the companies embedded in each of the 8,500 most-held global mutual funds and ETFs,” said Behar. “This tool enables every investor to answer the question, ‘Am I investing in my own destruction or the clean energy future?

The analysis uses data from global sustainability solutions provider South Pole Group, and yourSRI.com, a carbon data analyst and reporting solution provider for responsible investments.

Intially, the analysis will cover funds in Denmark, France, Germany, Hong Kong, the United Kingdom and the United States. The developers plan to expand to include every fund in every exchange around the world.

Institutional investors such as California’s CalPERS and Sweden’s AP4 have embraced carbon footprinting as a way to protect their assets from climate risk.

Major index providers are increasingly offering low-carbon options that incorporate a footprinting analysis.

Traditional fossil-free investment approaches avoid companies with reserves of coal, oil, and gas that represent potential future emissions.

Carbon footprinting turns the focus to current greenhouse gas emissions, helping reveal businesses that operate with higher and lower footprints than their industry peers.

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ConocoPhillips oil refinery, Rodeo, California, December 11, 2012 (Photo by ah zut) Creative Commons license via Flickr

As You Sow explains that, “Carbon footprinting a mutual fund means accounting for the quantification and management of greenhouse gases. It is the first step towards understanding an investor’s impact on climate change.

A carbon footprint is calculated by measuring and/or estimating the quantities and assessing the sources of various greenhouse gas emissions that can be directly or indirectly attributed to the activities of the underlying holdings.

 “Decarbonizing” a portfolio involves investing in companies that have lower carbon footprints than their peers.

The FossilFreeFunds.org platform allows investors to see real scores that are updated every month with Morningstar’s latest holdings data.

A few examples from the analysis:

  • Given that BlackRock recently published a major report on portfolio climate risk, it may be a surprise that the BlackRock Basic Value Fund’s (MABAX) has a carbon footprint 170 percent higher than its benchmark, the Russell 1000 Value Index.
  • Dimensional Social Core Equity (DSCLX) has 85 percent more carbon than the MSCI All World Index, with 13 percent of the portfolio made up of fossil fuel companies including Shell, BP, and tar sands giant Suncor.
  • The State Street SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX) holds 40 fossil fuel companies, including companies with reserves like Phillips66, Valero, and Marathon; coal fired utilities Duke Energy and Southern Company, and oil field services leader Halliburton.

Having funds with smaller footprints is one way to avoid climate risk,” said Andrew Montes, director of digital strategies at As You Sow. “It also actively rewards companies that have made positive decisions to lower the climate impact of their operations.

Investor demand will drive fund managers to drop companies with high carbon footprints and include those companies that are shifting to the clean energy economy,” explained Montes.

By providing a way to examine carbon demand and consider the value chain when measuring climate impact, the data can help investors large and small reconcile their investing with their values.


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Carbon Budgets Ignore Trees on Farms

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Trees and grass established as part of a riparian buffer on the Ron Risdal farm in Story County, Iowa. The Iowa State University AgroEcology team has helped landowners along this stream, Bear Creek, establish miles of buffers and earn the stream recognition as a U.S. national demonstration site, June 6, 2016 (Photo by U.S. Dept. of Agriculture) Public domain

By Sunny Lewis

NAIROBI, Kenya, August 30, 2016 (Maximpact.com News) – Globally, 1.2 billion people depend on agroforestry farming systems, especially in developing countries, the World Bank calculates. Yet, trees on farms are not even considered in the greenhouse gas accounting framework of the Intergovernmental Panel on Climate Change (IPCC).

Agroforestry systems and tree cover on agricultural lands make an important contribution to climate change mitigation, but are not systematically accounted for either in global carbon budgets or in national carbon accounting, concludes new research conducted by a team of researchers in Africa, Asia and Europe.

The scientists assessed the role of trees on agricultural land and the amount of carbon they have sequestered from the atmosphere over the past decade.

Their study, titled “Global Tree Cover and Biomass Carbon on Agricultural Land: The contribution of agroforestry to global and national carbon budgets,” looks at biomass carbon on agricultural lands both globally and by country, and what determines its distribution across different climate zones.

Robert Zomer of the World Agroforestry Centre in Nairobi, lead author of the study, said, “Remote sensing data show that in 2010, 43 percent of all agricultural land globally had at least 10 percent tree cover, up from eight percent in the preceding decade.

 “Given the vast amount of land under agriculture,” Zomer said, “agroforestry may already significantly contribute to global carbon budgets.

Large forest areas in the tropics are still being cleared for agricultural production to feed the world’s swelling population, now approaching 7.5 billion.

The researchers found that while tropical forests continued to decline, tree cover on agricultural land has increased across the globe, absorbing nearly 0.75 gigatonnes of the greenhouse gas carbon dioxide (CO2) every year.

Study results show that existing tree cover makes a major contribution to carbon pools on agricultural land, demonstrating the potential to add to climate change mitigation and adaptation efforts,” said Jianchu Xu of the World Agroforestry Centre.

If tree cover is accounted for, the total carbon stock is over four times higher than when estimated using IPCC Tier 1 estimates alone,” said Xu.

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Acacia tree seedlings in Ma Village, Vietnam, May 30, 2016 (Photo by the International Center for Tropical Agriculture) Creative Commons license via Flickr

In the IPCC system, a tier represents a level of complexity used for categorizing emissions factors and activity data. Tier 1 is the basic method; it utilizes IPCC-recommended country-level defaults. Tiers 2 and 3 are each more demanding in terms of complexity and data requirements.

Given the vast stretches of agricultural land where the potential for tree cover is not yet realized, the study suggests that a huge greenhouse gas mitigation potential exists and should be explored more systematically.

For this study, researchers mapped and tabulated regional and country-level variation in biomass carbon stocks and trends globally, and for each country.

Brazil, Indonesia, China and India had the largest increases in biomass carbon stored on agricultural land, while Argentina, Myanmar, and Sierra Leone had the largest decreases.

The results of our spatial analysis show that trees on agricultural land sequestered close to 0.75 gigatonnes of carbon dioxide globally per year over the past decade,” said Henry Neufeldt, head of climate change research at the World Agroforestry Centre.

If we can harness good policies to enhance positive examples and stop negative trends, trees in agricultural landscapes can play a major role in greenhouse gas mitigation,” Neufeldt advised. “But no one should say that this is already solving the problem for agricultural emissions as long as we do not know what is actually happening on the ground.

 The Global Tree Cover and Biomass Carbon on Agricultural Land analysis is part of on-going research at the Center for Mountain Ecosystem Studies, an applied research laboratory jointly managed by the Kunming Institute of Botany, part of the Chinese Academy of Sciences, and the World Agroforestry Centre. Their research is focused on mountain ecosystems, biodiversity, traditional communities, and development pressures affecting natural and cultural resources.

Identifying which climate-smart agriculture practices should be supported for upscaling is an investment question, says Dr. Leocadio Sebastian, regional program leader for the CGIAR  Research Program on Climate Change, Agriculture and Food Security (CCAFS) in Southeast Asia.

Answering this question can be most successful when it is the outcome of a participatory planning process during which local farmers share their knowledge in the development of a village-level land-use planning map to help improve community farming decisions.

As one of the most vulnerable regions in the world, Southeast Asia is on the front lines of the battle against climate change. Hundreds of millions of people are at risk as increasing temperatures, flooding, and rising sea levels threaten livelihoods, incomes and food security.

Ma Village, population 729, lies in Vietnam’s Yen Bai province. It is one of CCAFS’ six Climate-Smart Villages in Southeast Asia. These communities are prone to climate change impacts, so CCAFS has been introducing climate-smart agriculture practices to enhance food security and capacity to adapt to and mitigate climate change.

Despite its great agricultural potential, the sustainability and profitability of agricultural production in Ma Village remain inadequate as the climate-risk area suffers from the depletion of natural resources, land degradation, and water pollution.

During spring, water shortages due to deforestation compromise the supply of irrigation water, which affects agricultural production, with the rice paddies most at risk.

A community land-use planning activity this year concluded with the farmers’ decision to replace the cultivation of rice crops with drought-tolerant cash crops during the spring season and support reforestation in the upland area of the village.

In residential areas, farmers agreed to replace mixed gardens with fruit trees such as pomelo, lemon and banana.

Village leader Le Van Tam said, “Recovering natural forest and growing more trees within resident land is an option to solve water shortage, soil erosion, and many other unfavored weather events.

Community-based forestry may hold great promise for sustainable development, but it has not yet reached its full potential, according to a February report by the UN’s Food and Agriculture Organization, “Forty years of community-based forestry: A review of its extent and effectiveness.

 While almost one-third of the world’s forested areas are under some form of community management, the approach has not reached its full potential.

 The FAO report recommends that governments provide communities with secure forest tenure, improve regulatory frameworks, and transfer to them appropriate and viable skills and technologies.

Indigenous peoples, local communities and family smallholders stand ready to maintain and restore forests, respond to climate change, conserve biodiversity and sustain livelihoods on a vast scale,” said Eva Müller, director of FAO’s Forestry Policy and Resources Division.

What is missing in most cases is the political will to make it happen,” said Müller. “Political leaders and policy makers should open the door to unleash the potential of hundreds of millions of people to manage the forests on which the whole world depends for a better and sustainable future.”


 Featured Images: Trees on a tea farm in China, April 2012 (Photo by vhines200) Creative Commons license via Flickr

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Carbon Pricing Gathers Momentum

SteelWorksTeesside

@Maximpactdotcom

By Sunny Lewis

WASHINGTON, DC, April 26, 2016 (Maximpact.com News) – “There is a growing sense of inevitability about putting a price on carbon pollution,” said World Bank Group President Jim Yong Kim on the eve of the April 22 signing ceremony at UN Headquarters of the Paris Climate Agreement.

Kim joined government and corporate leaders in issuing a set of fast-moving goals – to expand carbon pricing to cover 25 percent of global emissions by 2020, and achieve 50 percent coverage within the next decade.

“In order to deliver on the promises of the historic Paris Climate Agreement, a price on carbon pollution will be essential to help cut emissions and drive investments into innovation and cleaner technologies,” said Kim.

“Prices for producing renewable energy are falling fast, and putting a price on carbon has the potential to make them even cheaper than fuels that pollute our planet,” he said.

Currently, some 40 governments and 23 cities, states and regions put a price on carbon emissions, accounting for 12 percent of annual global greenhouse gas emissions. This is a three-fold increase over the past decade.

The latest call for action comes from members of the Carbon Pricing Panel, including: Canada’s Prime Minister Justin Trudeau, Chile’s President Michelle Bachelet, Ethiopian Prime Minister Hailemariam Dessalegn, French President François Hollande, German Chancellor Angela Merkel, and Mexican President Enrique Peña Nieto, together with World Bank Group President Kim, International Monetary Fund Managing Director Christine Lagarde, California Governor Jerry Brown, Rio de Janeiro Mayor Eduardo Paes and OECD Secretary-General Angel Gurría.

Kim_Legarde

World Bank Group President Jim Yong Kim, left, and International Monetary Fund Managing Director Christine Lagarde at the Spring Meeting, Washington, DC, April 16, 2016. (Photo courtesy World Bank Group) Creative Commons via Flickr

The Vision Statement accompanying their announcement defines three steps to widen, deepen and promote global cooperation on carbon pricing.

First, the number of countries and businesses that participate in a carbon pricing system needs to increase.

Second, prices need to be significant enough to account for pollution as an operating cost, and incentives for investments in low carbon solutions need to be established.

And third, better links between the various regional and national pricing systems already in place need to be set up.

There are two main types of carbon pricing – emissions trading systems and carbon taxes.

An emissions trading system, such as the EU’s pioneering system established in 2005, is sometimes called a cap-and-trade system. It caps the total level of greenhouse gas emissions and allows those industries with low emissions to sell their extra allowances to larger emitters, establishing a market price for greenhouse gas emissions.

The cap helps ensure that the required emission reductions will take place to keep all emitters within their pre-allocated carbon budget.

A carbon tax directly sets a price on carbon by defining a tax rate on greenhouse gas emissions or on the carbon content of fossil fuels. It is different from an ETS – the emission reduction outcome of a carbon tax is not pre-defined but the carbon price is.

Other forms of pricing carbon emissions can occur through fuel taxes, the removal of fossil fuel subsidies and regulations that incorporate a “social cost of carbon.”

Greenhouse gas emissions also can be priced through payments for emission reductions. Private entities or sovereigns can purchase emission reductions to compensate for their own emissions (so-called offsets) or to support mitigation activities through results-based finance.

In any case, say the carbon pricing leaders, carbon emissions must be priced so that pollution becomes an operating cost.

Speaking at this month’s high level meeting of the Carbon Pricing Leadership Coalition, the IMF’s Lagarde emphasized the value of cutting emissions.

“If the top 20 emitters in the world were to impose carbon charges that reflect only their domestic and environmental benefits, this would already reduce global emissions by over 10 percent,” she explained.

The Carbon Pricing Leadership Coalition is a global initiative that includes more than 20 national and state governments, more than 90 businesses, and civil society organizations and international agencies, aims at garnering public-private support for carbon pricing around the world.

As 175 world leaders signed the Paris Agreement at United Nations Headquarters on April 22, Earth Day, UN Secretary-General Ban Ki-moon said the next critical step is to ensure that the landmark accord for global action on climate change enters into force as soon as possible.

“Today is an historic day,” Ban told reporters after the signing event. “This is by far the largest number of countries ever to sign an international agreement on a single day.”

Ban said the participation by so many countries and the attendance by so many world leaders leaves “no doubt” that the international community is determined to take climate action. He also welcomed the strong presence of the private sector and civil society, saying they are “crucial to realizing the great promise of the Paris Agreement.”

Adopted in Paris by the 196 Parties to the UN Framework Convention on Climate Change at a conference known as COP21 last December, the Agreement’s objective is to limit global temperature rise to well below 2 degrees Celsius, and to strive for 1.5 degrees Celsius.

It will enter into force 30 days after at least 55 countries, accounting for 55 per cent of global greenhouse gas emissions, deposit their instruments of ratification.

“If all the countries that have signed today take the next step at the national level and join the Agreement, the world will have met the requirement needed for the Paris Agreement to enter into force,” Ban said, congratulating the 15 governments that have already deposited their instruments for ratification.

Ban has said, “We must put a price on pollution and provide incentives to accelerate low carbon pathways. Market prices, market indices, and investment portfolios can no longer continue to ignore the growing cost of unsustainable production and consumption behaviors on the health of our planet.”

At the Spring Meetings of the World Bank Group earlier this month in Washington, DC, Kim said more action is needed on carbon pricing to help halt global warming and spur more investments into clean technologies.

“The current situation won’t put us on a pathway to limiting global warning. We need greater ambition, and greater leadership,” he said.

Globally, momentum for putting a price on carbon emissions is growing. At least 90 countries included mention of carbon pricing in their national plans, called the Nationally Determined Contributions (NDCs), prepared for the Paris climate conference.

In addition, more than 450 companies around the world report using a voluntary, internal price on carbon in their business plans and more plan to follow suit in the next two years.

The number of implemented or scheduled carbon pricing plans has nearly doubled since 2012, amounting to a total value of US$50 billion.


 

Main image:  A steel works emits carbon dioxide at Teesside, England. (Photo by Ian Britton) Creative Commons license at Freefoto.com

 

Jury Still Out on Carbon Capture & Storage

SaskPower's Boundary Dam Power Station near Estevan, Saskatchewan

SaskPower’s Boundary Dam Power Station near Estevan, Saskatchewan

By Sunny Lewis

LONDON, UK, April 5, 2016 (Maximpact.com News) – Since the Paris Climate Agreement was reached in December, preventing the greenhouse gas carbon dioxide (CO2) from entering the atmosphere has become a top priority for many governments, utilities and private individuals who believe climate change to be the major problem of this generation.

Carbon capture and storage (CCS) enables a power station or factory that burns coal, oil or gas to remove the CO2 before it reaches the atmosphere and store it permanently in an old oilfield or a deep saline aquifer formation.

Some attempts at capturing and storing CO2 have been more successful than others.

First, capture technologies allow the separation of CO2 from other gases produced by power generation and factories by one of three methods: pre-combustion capture, post-combustion capture and oxyfuel combustion.

The captured CO2 is then transported by pipeline or ship to the storage location. Millions of tonnes of CO2 are now transported for commercial purposes each year by road tankers, ships and pipelines.

Once at its destination, the captured CO2 is stored in geological rock formations typically located several kilometers below the surface.

At every point in the CCS chain, from production to storage, industry can use a number of process technologies that are well understood and have excellent health and safety records, says the London-based Carbon Capture and Storage Association (CCSA).

Alberta Minister of Energy Diana McQueen and Conservative MP Mike Lake tour the Quest Carbon Capture and Storage facility at Shell's Scotford plant near Fort Saskatchewan on April 17, 2014. The project is retrofitting the Scotford bitumen upgrader for carbon capture, designed for up to 1.2 million tonnes of CO2 captured per year, piped 80 kilometers north and injected more than two kilometers below the Earth's surface. (Photo by Chris Schwarz courtesy Government of Alberta) Public Domain

Alberta Minister of Energy Diana McQueen and Conservative MP Mike Lake tour the Quest Carbon Capture and Storage facility at Shell’s Scotford plant near Fort Saskatchewan on April 17, 2014. The project is retrofitting the Scotford bitumen upgrader for carbon capture, designed for up to 1.2 million tonnes of CO2 captured per year, piped 80 kilometers north and injected more than two kilometers below the Earth’s surface. (Photo by Chris Schwarz courtesy Government of Alberta) Public Domain

The Canadian province of Quebec is excited enough about this possibility that it just bet Cdn$15 million on a new enzyme-based technology.

Quebec has established a goal to reduce its greenhouse gas emissions by 20 percent below 1990 levels by 2020, and 37.5 percent below this same level by 2030.

In its 2016-2017 Budget, released March 17, the Quebec provincial government announced that it has allocated $15 million over the next three years to create a consortium that will promote adoption of CO2 Solutions’ patented enzyme-enabled carbon capture technology.

The process is now ready for commercialization.

In the Canadian province of Saskatchewan, the Boundary Dam Integrated Carbon Capture and Storage Project is SaskPower’s flagship CCS initiative.

This project transformed the aging Unit #3 at Boundary Dam Power Station near Estevan into a long-term producer of up to 115 megawatts of base-load electricity, capable of reducing greenhouse gas emissions by up to one million tonnes of carbon dioxide (CO2) a year, the equivalent of taking more than 250,000 cars off Saskatchewan roads annually.

The captured CO2 is sold and transported by pipeline to nearby oil fields in southern Saskatchewan to be used for enhanced oil recovery. CO2 not used for enhanced oil recovery will be stored in the Aquistore Project.

Aquistore is a research and monitoring project to demonstrate that storing liquid CO2 deep underground in a brine and sandstone water formation is a safe, workable solution to reduce greenhouse gases.

Through the development of the world’s first and largest commercial-scale CCS project of its kind, SaskPower hopes to make a viable technical, environmental and economic case for the continued use of coal.

In Norway last December, Aker Solutions signed a contract with the city of Oslo for a five-month test CCS project to capture CO2 emissions from the city-operated waste-to-energy Klemetsrud plant.

The project is funded by Gassnova, the state enterprise that supports the development and demonstration of technologies to capture CO2.

“This is pioneering work with significant potential as the world focuses on finding ways to limit carbon emissions,” commented Valborg Lundegaard, head of Aker Solutions’ engineering business. “This pilot project is of international importance.”

The test will be key to qualifying Aker Solutions’ amine-based CO2 capture technology for commercial application at the world’s waste-to-energy plants. There are about 450 such plants operating in Europe and about 700 globally.

Japan is preparing to test its biggest project yet for capturing and storing CO2 under the ocean floor despite concerns about cost and the safety of pursuing the technology in a region prone to earthquakes.

Starting this month, engineers plan to inject CO2 into deep saline aquifers off the coast of Hokkaido at the northern tip of Japan. The gas will be captured from a refinery operated by Idemitsu Kosan Co. under the government-backed project.

Some Japanese companies are already lending their expertise to and investing in CCS projects overseas.

Mitsubishi Heavy Industries Ltd. designed and built a project in the U.S. state of Alabama with the utility Southern Company.

Three of the six companies building the world’s largest CCS project on Barrow Island off the northwest coast of Western Australia are Japanese. Although a Class A Nature Reserve, Barrow Island is said to be a location where industry and the environment co-exist.

All 51 modules required for the three LNG trains have been delivered to Chevron's Gorgon CCS project on Australia's Barrow Island. (Photo courtesy Chevron)

All 51 modules required for the three LNG trains have been delivered to Chevron’s Gorgon CCS project on Australia’s Barrow Island. (Photo courtesy Chevron)

The Gorgon Project is a liquefied natural gas (LNG) and domestic gas joint venture supplied by the Greater Gorgon Area gas fields.

The Chevron-operated Gorgon Project is a joint venture of the Australian subsidiaries of Chevron (47.3 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent).

On March 20, Chevron announced that its first shipment of LNG from the Gorgon Project had left Barrow Island. The cargo goes to Chubu Electric Power, for delivery into Japan.

“Departure of the first cargo from the Gorgon Project is a key milestone in our commitment to be a reliable LNG provider for customers across the Asia-Pacific region,” said Mike Wirth, executive vice president, Chevron Midstream and Development. “This is also important for our investors as we begin to generate revenue from a project we expect will operate for decades to come.”

But bad news appears to dog the CCS industry.

On Friday, the Gorgon project had to temporarily halt production due to technical difficulties with a propane refrigerant circuit at the Gorgon plant site.

Chevron and its Gorgon partners are facing a repair bill that could amount to “hundreds of millions of dollars” after “a major mechanical problem flared as soon as the maiden LNG cargo was sent,” reported the “West Australian” newspaper on Friday.

There are many skeptics, given that it can cost billions of dollars for a CCS facility and none have a long record of successful operation at an industrial scale. Some investors initially put their money into carbon capture and storage (CCS) technologies only to see their CCS plans fail or get tossed out by governments.

“It is our view that CCS is unlikely to play a significant role in mitigating emissions from coal-fired power stations,” authors including Ben Caldecott, director of the sustainable finance program at the University of Oxford’s Smith School of Enterprise and the Environment, wrote in a report published in January.

“Deployment of CCS has already been too slow to match” scenarios presented by the International Energy Agency and the Intergovernmental Panel on Climate Change, they warned.

Another concern is whether stored CO2 will leak from storage sites, releasing the gas back into the atmosphere.

“There is no guarantee that carbon dioxide can be stored in a stable way in Japan where there are many earthquakes and volcanic eruptions,” Kimiko Hirata, a researcher for Kiko Network, a Kyoto-based environmental group, told Bloomberg News.

In 2015, the FutureGen Alliance, a U.S. industrial group with a high-profile carbon capture project in Illinois, lost its Department of Energy financing.

FutureGen, a partnership between the U.S. government and an alliance of coal-related corporations, was retrofitting a coal-fired power plant with oxy-combustion generators. The excess CO2 would be piped 30 miles (48 km) to be stored in underground saline formations. Costs were estimated at US$1.65 billion, with $1 billion provided by the U.S. government.

But the U.S. Department of Energy ordered suspension of FutureGen 2.0 in February 2015, citing the alliance’s inability to raise much private funding. At the time of suspension the power plant part of the project had spent $116.5 million and the CCS part had spent $86 million.

In the UK, the British National Audit Office (NAO) has announced plans to investigate then-Chancellor of the Exchequer George Osborne’s 2015 decision to scrap a £1bn prototype carbon capture scheme that has already cost the taxpayers at least £60 million.

The spending watchdog said that this summer it will examine the expenses incurred in running, and then prematurely halting, a CCS competition for financing.

In the competition, the Department of Energy and Climate shortlisted two projects. Shell was developing a trial scheme at Peterhead in Scotland alongside one of the big six energy suppliers and power station owner SSE. A separate White Rose project was being developed by Drax at its coal-fired plant in Selby, North Yorkshire.

They were awarded multi-million pound contracts to finalize these proposals before a final investment decision could be taken.

But in November 2015 the agency withdrew funding for the program, suspending the competition.

The NAO will review the government decision, what impacts it will have on the department’s objectives of decarbonization and security of supply, and the costs incurred by government in running the competition.

Dr. Luke Warren, chief executive of the CCSA, called the funding cut “devastating.”

“Only six months ago the government’s manifesto committed £1 billion of funding for CCS,” said Warren. “Moving the goalposts just at the time when a four year competition is about to conclude is an appalling way to do business.”

In February, the UK Parliament’s Energy and Climate Change Committee reported on the future of CCS in the country in view of the funding cut.

The government’s decision to pull funding for carbon capture and storage at the last minute will delay the development of the technology in the UK and could make it challenging for the UK to meet its climate change commitments agreed at the Paris COP21 summit, the Energy and Climate Change Committee report warned.

Said Angus MacNeil MP, Energy and Climate Change Committee Chair, “If we don’t invest in the infrastructure needed for carbon capture and storage technology now, it could be much more expensive to meet our climate change targets in the future. Gas-fired power stations pump out less carbon dioxide than ones burning coal, but they are still too polluting.”

“If the government is committed to the climate change pledges made in Paris, it cannot afford to sit back and simply wait and see if CCS will be deployed when it is needed,” said MacNeil. “Getting the infrastructure in place takes time and the government needs to ensure that we can start fitting gas fired power stations with carbon capture and storage technology in the 2020s.”


Featured image Coal Pile courtesy of 123R

20,000 Investment Funds Rated for Sustainability

20000_Investment_Funds_Rated_for_Sustainability

Morningstar Head of Sustainability Steven Smit (right with glasses) and Morningstar Chairman and CEO Joe Mansueto. (Screengrab from video courtesy Morningstar)

By Sunny Lewis,

CHICAGO, Illinois, March 3, 2016 (Maximpact.com News) – Evaluating mutual funds and exchange-traded funds based on how well the companies they hold manage their environmental, social, and governance (ESG) risks and opportunities just became easier.

Based in Chicago, the publicly-traded provider of independent investment research, Morningstar, Inc., has just introduced the Morningstar Sustainability Rating™ for some 20,000 funds around the world.

“Given the widespread and growing interest in sustainable investing around the world, investors need better tools to help them determine whether the funds they own or are considering adding to their portfolios reflect best sustainability practices,” said Steven Smit, CEO of Morningstar Benelux.

Smit has been named Morningstar’s head of sustainability. He will be responsible for leading the company’s initiative to bring the new ratings and metrics to investors globally.

He says the goal is to create transparency and get to one global measure – a global sustainability standard for funds worldwide.

“Creating more insight into sustainability investing is a passion of mine and many others at Morningstar,” Smit shared. This initiative will help us better serve investors who place particular importance on incorporating ESG factors into their investment decisions.”

Morningstar has operations in 27 countries in North America, Europe, Australia, and Asia. The company offers investment management services through its subsidiaries, with more than US$180 billion in assets currently under advisement and management.

“Our Sustainability Rating and related metrics will provide investors with an ESG lens they can use to evaluate funds and, eventually, other managed products,” said Smit. “It’s not so much about what the fund says it does, but what it actually holds.”

Sustainable investing goes beyond the exclusionary approach of socially responsible investment, or SRI, strategies, say Morningstar executives. Sustainable investing is a long-term approach that incorporates ESG factors into the investment process.

Jon Hale, PhD, CFA, former head of manager research for North America, has been named head of sustainability research.

“Many investors are interested in sustainable investing but unsure how to put it into practice,” Hale said. “Our new rating makes it easier to compare funds based on their ESG attributes.”

“In that way, investors can better determine how to incorporate sustainable investing into their portfolios, or assess the extent to which their fund investments are upholding best sustainability practices,” said Hale.

Morningstar calculates the ratings based on the underlying fund holdings and company-level ESG research as well as ratings from Sustainalytics, an independent provider of ESG and corporate governance ratings and research.

Sustainalytics has been analyzing companies’ ESG performance and impact since its origin as Janzi Research in Canada in 1992. The company has since joined with other analytics groups around the world and now has offices in North America, Europe, Australia and Singapore.

To help investors compile a low-carbon portfolio, Sustainalytics offers an expanded suite of Carbon Solutions, which includes portfolio analytics, data and research. Increasingly, investors are aiming to better understand their portfolio exposure to carbon, to reduce this exposure and to implement low-carbon mandates.

The new Morningstar Sustainability Rating calculation is a two-step process.

First, each fund with at least 50 percent of assets covered by a company-level ESG score from Sustainalytics receives a Morningstar®Portfolio Sustainability Score™.

The Portfolio Sustainability Score is an asset-weighted average of normalized company-level ESG scores with deductions for companies involved in controversies over such activities as environmental accidents, fraud, or discriminatory behavior.

The Morningstar Sustainability Rating is the Portfolio Sustainability Score compared with at least 10 category peers, assigned in a bell curve distribution.

 

SustainabilityRating

Sustainability is indicated with globe icons. Funds can receive any of five Sustainability Ratings – Low, Below Average, Average, Above Average, and High. Low equals one globe and High equals five globes.

 

 

 

 

 

Funds can receive any of five Sustainability Ratings – Low, Below Average, Average, Above Average, and High. Ratings are indicated by globe icons. Low equals one globe and High equals five globes.

Of the 20,000 funds with Morningstar Sustainability Ratings, 10 percent received five globes, 22.5 percent received four globes, 35 percent received three globes, 22.5 percent received two globes, and 10 percent received just one globe.

“Some firms say that they invest according to sustainability principles, but it’s been hard to verify,” Hale explained. “Now investors can draw their own conclusions, using an independent, robust check of that claim that’s based on comprehensive analysis of a fund’s holdings.”

Morningstar will update Portfolio Sustainability Scores when it receives new fund holdings data and will base them on the latest company scores from Sustainalytics.

Morningstar will update the Sustainability Rating each month using the most recent Portfolio Sustainability Scores.

Morningstar’s first analysis of the ratings shows that funds with explicit sustainable or responsible mandates are generally practicing what they preach. But Morningstar notes that such funds make up only about two percent of the fund universe.

Two out of three funds with explicit sustainable or responsible mandates received the highest ratings, more than double the percentage of all funds with Sustainability Ratings.

Morningstar Chairman and CEO Joe Mansueto said, “Sustainability research is the next big initiative at Morningstar. We’re incredibly excited about it. … We believe our new sustainability research will be good, not just for investors, but also for society.”


Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

China Plans World’s Largest Carbon Market to Curb Climate Change

ChinaUSPressConf

By Sunny Lewis

BEIJING, China, October 7, 2015 (Maximpact News) – Within two years China will open a national market-based cap-and-trade system to limit greenhouse gas emissions from some of its largest industrial sectors, President Xi Jinping announced late last month during his visit to the United States.

Carbon emission levels will be capped and companies will have to pay for the right to emit carbon dioxide, the most abundant climate-warming greenhouse gas.

China is the world’s top emitter of greenhouse gases, is the top oil importer after the United States and is struggling with a public health crisis caused by severe air pollution in its largest cities.

China’s new carbon emissions trading system will cover key industry sectors such as iron and steel, power generation, chemicals, building materials, paper-making and nonferrous metals.

The carbon market – similar to the European Union’s and also similar to two regional markets in the United States – is part of an effort to help China meet its climate targets and move toward energy supplies based on nuclear power plants and renewables.

President Xi said China will implement a “green dispatch” system to favor low-carbon sources in the electric grid.

ChinaSolar

In a U.S.-China Joint Presidential Statement on Climate Change issued on September 25, the two nations describe a common vision for a new global climate agreement to be concluded in Paris this December. It is scheduled to take effect from 2020.

President Xi said, “We have decided to continue to work together to tackle global challenges and provide more public good for the international community. We, again, issued a joint announcement on climate change. We have agreed to expand bilateral practical cooperation, strengthen coordination in multilateral negotiation, and work together to push the Paris climate change conference to produce important progress.”

President Obama said, “When the world’s two largest economies, energy consumers and carbon emitters come together like this, then there’s no reason for other countries – whether developed or developing – to not do so as well. And so this is another major step towards the global agreement the world needs to reach in two months’ time.”

The Joint Statement builds on last November’s historic announcement by President Obama and President Xi of ambitious post-2020 climate targets.

In their Joint Statement, the two leaders expressed a concrete set of shared understandings for the Paris agreement. On mitigating the impact of climate change, they agreed on three elements of a package to strengthen the ambition of the Paris outcome.

First, they recognized that the emissions targets and policies that nations have put forward are crucial steps in a longer-range effort to transition to low-carbon economies. They agreed that those policies should ramp up over time in the direction of greater ambition.

Second, the two presidents underscored the importance of countries developing and making available mid-century strategies for the transition to low-carbon economies, mindful of the goal that world leaders agreed at the UN’s 2009 climate conference in Copenhagen to keep the global temperature rise below 2 degrees Celsius as compared to pre-industrial levels.

ChinaNuclear

Third, they emphasized the need for the low-carbon transformation of the global economy this century.

These announcements complement the recent finalization of the U.S. Clean Power Plan, which will reduce emissions in the U.S. power sector by 32 percent by 2030.

Both countries are developing new heavy-duty vehicle fuel efficiency standards, to be finalized in 2016 and implemented in 2019.

Both countries are also stepping up their work to phase down super-polluting hydrofluorocarbons (HFCs) used as refrigerants. Besides destroying the stratospheric ozone layer, HCFCs are greenhouse gases many times more powerful than carbon dioxide.

China’s government has been planning to implement a carbon trading market for years.

The cap-and-trade system will expand on seven regional pilot carbon trade programs that China began in 2011.

Rachel Kyte, World Bank Group Vice President and special envoy for climate change, has been working closely with China in providing technical support to the pilots.

“As China began to pilot through different ways of creating emissions trading systems or emissions reductions systems, we have, through what is called a partnership for market readiness, provided a mutual platform for techno-crafts from different economies in the world to share their experiences of introducing emissions trading systems so that we can all learn from each other,” she said in an interview with China’s state news agency Xinhua on September 30.

“An emissions trading system has existed in Europe for some time. Now we have an auction in California. We have pilots in China. We have a trading system in Korea. Some countries are putting carbon taxes in place,” Kyte said. “We provide a mutual technical platform to let these experiences be exchanged.”

“China is ready to learn from those pilots and move to a national system,” Kyte said, “This will immediately create the largest carbon market in the world. Other carbon markets in the world will want to link with China. This does put China in a leadership position in helping the global economy move to low-carbon growth.”

To ensure a successful carbon trading system, Kyte emphasized the importance of setting the right prices.

“The prices must be set in such a way that the prices reflect the ambition, that the emissions are reduced, that the poor people are treated fairly, that they are transparent and that they can be understood by the consumer,” she said.

China says it will set an absolute cap on its carbon dioxide emissions when its next five-year plan comes into force in 2016.


 

Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Featured image: China’s President Xi Jinping and U.S. President Barack Obama at the White House, September 25, 2015 (Photo by Huang Jingwen courtesy Xinhua)
Image 01:Chinese President Xi Jinping (L) and U.S. President Barack Obama meet with the press after their talks in Washington, DC, September 25, 2015. (Photo by Huang Jingwen courtesy Xinhua)
Image 02: This parabolic solar-thermal power plant is adjacent to a large-scale wind farms in China’s north central Shanxi Province. It came online in 2011. (Photo courtesy Shanxi International Electricity Group Co Ltd.)
Image 03: The Fangchenggang nuclear power plant is under construction in China’s Guangxi Province. Operated by China General Nuclear Power Group Co Ltd., it is expected to come online in 2016. (Photo courtesy China General Nuclear Power Group Co Ltd.)