The latest insights from the We Mean Business coalition

October 21, 2022

Net-zero transition – latest signals of change (21.10.22)

We Mean Business Coalition

Here are just some of the signals of change from the past week, demonstrating the transition to a resilient and inclusive net-zero economy.

Net Zero Economy

New analysis from the International Energy Agency (IEA) this week showed that CO2 emissions for 2022 are likely to be lower than initially feared. Although global emissions are set to rise by 1% – or 300 million tonnes – this is lower than the rise of 2 billion tonnes logged the previous year following the post-pandemic economic recovery. This is due in part to the largest annual rise in renewable energy on record and snowballing electric vehicle (EV) adoption, which are counterbalancing the energy crisis caused by Russia’s invasion of Ukraine.

To the Pacific, where Australia and Singapore have signed a ‘green economy’ pact to boost cooperation on climate investment, financing and technology. Early initiatives under the deal will include implementing a list of environmental goods and services to be given preferential trade treatment. The recently elected Australian Prime Minister Anthony Albanese cited the planned $18 billion Sun Cable project that will export solar power from his country to Singapore as an example of further collaboration to come.

In Europe, the UK’s biggest domestic bank Lloyds became the country’s first major bank to end direct financing to develop new oil and gas fields. The policy change means Lloyds will no longer support project financing or reserve-based lending to greenfield oil and gas projects, although it could still provide general lending to companies in the industry. The bank provided about £1 billion to commercial oil and gas customers last year.

Lastly to circular economy news, as supermarket giant Walmart has kicked off its partnership with Loop, under which customers will be offered an assortment of products in reusable packaging. The company’s home state of Arkansas in the US is the first to participate in the pilot initiative – Walmart InHome – which will deliver up to 30 products from leading brands to consumers’ homes in returnable containers.

Energy

A report out this week reveals that wind and solar made up a record 24% of the electricity mix across the European Union since March. The research by E3G and Ember also showed that the bloc avoided €99 billion in imported gas since Russia’s illegal invasion of Ukraine began. Poland and Spain are among the countries seeing the fastest increases in wind and solar, with the EU aiming for 45% renewables in its energy mix by 2030.

The gas crisis has also seen countries around the world ramp up investments in green hydrogen – demonstrated by a new study from Carbon Tracker revealing that over $70 billion has been invested in such projects since the conflict in Ukraine began. Notably, French utility Engie has backed up its expansion plans in Asia with a claim that green hydrogen will be price competitive with liquified natural gas within a decade. The company has already confirmed a plant in Australia, and is now looking to Malaysia and the Philippines.

Elsewhere in Australia, Iberdrola has launched its first wind-solar hybrid project, which will be the largest in the Southern hemisphere to date. Comprising 50 wind turbines and 250,000 solar panels, the plant will prevent the emission of 400,000 tonnes of CO2 per year.

Finally to the US, where five companies have been selected by Walmart, Ørsted and Schneider Electric to participate their renewable energy supply chain program. The five suppliers have collaborated to execute an aggregated purchase of renewable energy from Ørsted’s Sunflower Wind Farm in Kansas. The power purchase agreement initiative – developed jointly between Schneider Electric and Walmart – will contribute to Walmart’s Project Gigaton goal, which aims to avoid one gigaton of greenhouse gas (GHG) emissions from its global value chain by 2030.

Transport

First to Kenya, where the nation’s first-ever electric bus operation has launched in Nairobi. Roam Motors is to begin operating its 77-person buses, which run for 360 km on one charge, on some of the capital’s busiest routes. The roll out of EVs is expected to reduce the incidence of respiratory diseases in the city, as well as decreasing operator costs.

Meanwhile, Indonesia’s government has set a deadline of 2025 for all state-owned companies to use only EVs as part of its goal of reaching net zero emissions by 2060. Operators of state-owned bus companies are also being pushed to electrify. Transportation contributes a quarter of Indonesia’s energy-related emissions, second only to the power sector according to a government study.

In the US, BMW has announced it will spend $1 billion to begin EV production at its South Carolina factory, as well as constructing a nearby battery plant. In addition, the German automaker confirmed it has signed a deal to source new battery cells from Envision AESC of Japan, who will also build a factory in South Carolina. The project is the latest of several to be announced since the US Inflation Reduction Act incentivized manufacturers with tax breaks for cars made with US-built batteries.

Sustainable aviation fuel (SAF) also received a boost as Breakthrough Energy followed Mitsui, Suncor and British Airways by investing in LanzaJet. LanzaJet’s technology converts ethanol into SAF – the emissions from which could be as much as 85% lower than conventional fuels and at a similar price. The company is building its first commercial plant in the US state of Georgia and expects to begin production next year.

Land and Nature

Nike has kicked off its Community Climate Resilience Program with a $2 million grant to Trust for Public Land. The grant will fund projects that advance climate resilience in communities disproportionally impacted by climate threats by creating and cultivating public green spaces. Parks are cooler than surrounding cityscapes, and can help disperse groundwater, lessening the impact of natural disasters and improving water quality. However, parks in communities of color in the US are often half the size, lower quality and, in many cases, more prone to flooding.

To the UK, where Barclays has partnered with Oxford University’s Sustainable Finance Group to establish agricultural decarbonization pathways and methodologies for measuring farm-level GHG emissions. The aim is to enable Barclays and other financial institutions to support clients in the UK agriculture sector to lower emissions and transition to more sustainable practices.

Financial group Palladium has also annnounced a £70 million private finance deal to fund the restoration of degraded Scottish peatland by selling carbon credits to corporations. Peatlands are among the most carbon-rich ecosystems on the planet, acting as carbon stores as their waterlogged conditions prevent plant material from fully decomposing. Yet more than 75% of UK peatlands are degraded, causing them to emit about 23 million tonnes of CO2 each year, about 4% of UK carbon emissions.

Built Environment and Heavy Industry

In Finland’s capital Helsinki, power company Helen is joining forces with YIT and Acciona on a novel initiative to heat the city’s homes. By processing cold water extracted from the Baltic Sea through underground heat pumps, the proposed system could generate enough heat to serve as much as 40% of the local population. €400 million is being spent on a two-year development phase, with the planned infrastructure seen as a key step in meeting Helsinki’s goal of achieving carbon neutrality by 2030.

To South Africa, where two of the country’s biggest industrial operators Sasol and ArcelorMittal have teamed up on a research initiative on greening the country’s industry. The partnership includes a study on green hydrogen’s viability in the country’s steel industry, and converting captured carbon into sustainable fuels and chemicals. Both companies have set a target to reach net zero by 2050.

Another industry partnership was announced in India, as founding EV100+ member JSW Group signed a memorandum of understanding with Smartex on steel sector decarbonization in the country. Smartex launched the Financing Steel Decarbonization initiative during Climate Week NYC, and is creating a $1 billion Steel Decarbonization Fund.

Finally, Japanese company Lixil has developed a new material – called Revia – made from recycled plastic and wood chips to be used as a substitute for concrete or wood. Revia can be made from a mix of plastics, tackling the challenge that most recycling processes to date have required the separation and segregation of different materials. The material could be used to replace bricks or paving stones in the building industry, and is itself recyclable.

Commitments

1 company joined RE100:

GlobalWafers Co., Ltd. – Taiwanese semiconductor manufacturer

1 company joined EV100:

Naver – South Korean tech company

5 companies joined EV100+:

A.P. Moller-Maersk A/S – Danish shipping company

Geopost/DPDgroup – French delivery company

IKEA – Swedish furniture company

JSW Steel Ltd. – Indian steel company

Unilever – UK-based consumer goods company

8 companies joined the SBTi through the science-based target pathway: