The latest insights from the We Mean Business coalition

September 23, 2022

Net-zero transition – latest signals of change (23.09.22)

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

With Climate Week NYC, and the Clean Energy Action Forum in full swing, there’s been a flurry of net-zero news this week.

Australian mining giant Fortescue, part of the First Movers Coalition, announced a $6.2 billion net-zero push to be spent by 2030. The firm, considered one of the most vocal on the decarbonization of heavy industry, has already set up a separate unit — Fortescue Future Industries — to invest in renewable and hydrogen technologies.

Climate Week also saw the U.S. launch of the SME Climate Hub. Hosted by We Mean Business Coalition and launched in partnership with America is All in, the Hub empowers small and medium-sized businesses to take climate action and helps larger corporations to engage smaller suppliers to reduce their Scope 3 emissions.

Staying with supply chains, Jaguar Land Rover has invited its Tier 1 supplier network – comprising products, services and logistics – to align with the company’s science-based target of net-zero supply chain emissions by 2039. This requirement has been shared with the carmaker’s supply network of more than 5,000 companies around the world, who are asked to disclose their carbon reporting and collaborate with their own supply chain to deliver the reductions.

Carbon Tracker and Global Energy Monitor announced the first ever global registry of oil and gas reserves, covering 75% of worldwide production. The aim is to help investors understand which assets could be at risk of being uneconomic, or ‘stranded’, in the low-energy transition. The news comes in the same week that the Net Zero Asset Owner Alliance revealed that almost 2/3 of its investors have set 49% emissions reduction targets by 2030, commitments which cover $3.3 trillion in assets.

Norway’s $1.2 trillion wealth fund will push its portfolio to commit to net zero by 2050. 70% of the fund’s emissions come from 174 companies, and these biggest emitters will be the priority target. Meanwhile, HSBC Asset Management has launched a circular economy investment fund aimed at supporting around 60 firms involved in recycling, regenerating natural ecosystems and designing out waste and pollution. This is the fourth ESG-focused fund released by HSBC AM this year.

The US Senate has belatedly ratified the 2016 Kigali Amendment on limiting the production of hydrofluorocarbons (HFCs), joining 130 other nations including China, India and Russia in a collaboration that could avoid 0.5°C of warming.

Lastly, there are further positive signals from the EU, where a draft of the 27-country bloc’s negotiating mandate for COP27 said it intends to further update its NDC. Last year, the EU agreed a 55% emissions reduction by 2030 from 1990 levels and officials are hopeful to increase that target by a few percentage points.

Energy

First to the UK, where over 100 UK business leaders have signed an open letter to new Prime Minister Liz Truss organized by CLG Europe, urging her government to tackle the energy crisis by accelerating the clean energy transition. Amazon, Coca-Cola, IKEA, Siemens, Sky, Aviva, and Nestlé are among the 116 leading firms to have signed the letter, which calls for increasing energy efficiency in UK homes and restoring nature through a comprehensive environmental improvement plan.

In Germany, Mercedes-Benz has announced a new windfarm to be built in Lower Saxony, that will be able to produce 100 MW of electricity upon completion in 2025. An assessment is also being made on the possibility of using the remaining land for solar panels, which could further increase the farm’s output.

Next to Australia, where the state of South Australia has announced its intention to become the first grid of its size to run on 100% renewables. The grid regularly produces enough wind and solar power to meet more than 100% of state demand, averaging 64% over the past year. Increasing confidence in battery inverter technology means that the state could also remove its last fossil fuel-run back-up generator by 2026.

Meanwhile in India, Mahindra Group have agreed a partnership with Ontario Teachers’ Pension Plan, which sees the latter purchase a 30% equity stake in Mahindra Susten, the Group’s solar installation arm. Partnerships like this one and Tata’s deal with Blackrock earlier this year, have helped renewables power 60% of India’s energy capacity additions in the past six years.

And circling back round to Climate Week, Amazon has shared plans to further accelerate its renewables push, backing 71 new projects around the world that take the total generation from its renewable energy portfolio to 50,000 GWh of clean energy. The projects include solar farms in Brazil, India and Poland.

Transport

Climate Group launched EV100+ at Climate Week on Tuesday. Founding members IKEA, Unilever, JSW Steel, A.P. Moller – Maersk and GeoPost/DPDgroup have collectively committed to transition their medium and heavy-duty vehicles (MHDVs) to zero emissions in OECD markets, India and China by 2040. MHDVs – those weighing over 7.5 tonnes – account for over 40% of all road transport emissions.

Rental fleets too are making steps towards the EV transition. Hertz plans to order 175,000 EVs from General Motors by 2027, in a multi-billion deal that could be the first in a string of similar partnerships for GM. The auto manufacturer aims to produce one million EVs in North America by 2025, while Hertz plans to have ¼ of its fleet comprised of EVs by 2024. Meanwhile in Spain, Iberdrola hit a milestone of 2,500 public EV charging points, as it targets 150,000 public, home and business-based charging points by 2025.

India and the World Bank are also close to agreeing a financial mechanism to cut the risk for bank loans for EVs. A $1 billion fund will provide first-loss guarantees to lenders in case of loan defaults. The move should remove barriers to purchasing EVs and help decarbonize India’s transport sector, which currently causes 13.5% of the nation’s emissions.

Finally, following the news shared in Signals of Change earlier this month of the first hydrogen-powered train fleet in Germany, the U.S. has followed suit, with California signing an MOU for four hydrogen trains. The trains will make their first journeys in 2027, while the deal includes an option to add a further 25 engines. The state of California is planning to make all its passenger rail 100% emissions free by 2035. Most trainlines in the U.S. are not electrified, making hydrogen trains a potentially key factor in the sector’s decarbonization.

Land and Nature

First up, a Singapore-based insect protein firm trading as Nutrition Technologies, has received $20 million USD in funding from a group of investors including Sumitomo Corp., ING Sustainable Investments and Mandala Capital Ltd. The company, which produces animal feed from insects, aims to use the money to expand.

Next to Holland, where 50 km of the Border Meuse project has now been completed along the Meuse River. Aimed at restoring floodplains back to how they were 500 years ago, the €550 million initiative is funded mainly by companies who want to extract sand and gravel from the riverbed. With completion expected in 2027, this nature-based solution is already proving its utility, when during serious flooding in the Meuse basin in July 2021 all villages remained safe and dry.

On forests, investment and insurance giant Axa is teaming up with green groups in France, to study climate and biodiversity impacts on 600 hectares of AXA-owned forest. The aim of the three-year program is to develop fresh solutions for restoring damaged forests and boosting climate resilience.

Meanwhile, the government of the Republic of Congo has just announced the creation of the country’s first three marine protected areas: Loango and Mvassa bays, located in Loango and Pointe-Noire respectively and an extension to the maritime area of the Conkouati-Douli national park. The move is aimed at protecting biodiversity, guaranteeing the productivity of territorial waters and defending the interests of local communities.

Over to the Science Based Targets initiative (SBTi), which has launched a month-long consultation on its corporate technical guidance for science-based targets for nature. The guidance will provide companies with methodologies to assess their impacts on nature, alongside advice for setting targets for freshwater. The finalized targets are expected to be released in early 2023.

Lastly, Australia has signed up to a global pledge endorsed by more than 90 countries committing them to reversing biodiversity loss by 2030 known as the Leader’s Pledge for Nature. The announcement came at an event taking place on the sidelines of the UN General Assembly in New York.

Built Environment and Heavy Industry

New analysis from Cambridge Econometrics and Greenpeace has found that insulating homes in Britain and installing heat pumps could benefit the economy by £7 billion a year and create 140,000 new green jobs by 2030. To achieve this, in 2030 the government would need to spend £4.2 billion on supporting heat pumps and insulation, with households spending £9.3 billion. However, in that year households would also save £11 billion through lower heating costs.

Meanwhile, three major South Korean groups have announced that they want to build a green energy export hub in Australia’s Queensland state, aiming to produce a million tonnes of green ammonia annually for export by 2032. Green ammonia is considered a key alternative to coal in power generation and is seen as the best way to ship green hydrogen, which could be used as a transport fuel as well as in steelmaking down the line.

Next up, the European Commission has approved up to €5.2 billion in public funding for hydrogen projects, a move it said could unlock a further €7 billion of private sector investment. The program, known as IPCEI Hy2Use, will support the construction of large-scale electrolyzers and transport infrastructure, for the production, storage and transport of renewable and low-carbon hydrogen. The initiative is aimed at producing hydrogen to decarbonize hard to abate sectors such as glass, cement and steel.

Lastly back to Climate Week, where new Sector Transition Strategies (STS) from the Mission Possible Partnership have been endorsed by more than 200 industry leaders from 60 companies including ArcelorMittal, SAB, Rio Tinto, Tata Steel, thyssenkrupp, Ørsted and Iberdrola. The plans aim to help to decarbonize production of aluminum, ammonia and steel across aviation, shipping, and trucking industries.

Commitments

The Climate Pledge has now welcomed 375 signatory companies committed to net zero by 2040.

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

Cerba Healthcare – French healthcare company

Cosun Beet Company – Dutch food company

Eurocash S.A. – Polish food company

Matkahuolto – Finnish travel company

New Kinpo Group – Taiwanese electronics manufacturer

Primeo Holding AG – Swiss energy company

Trayton Furniture (Jiaxing) Co., Ltd – Chinese furniture manufacturer

20 companies joined the SBTi through the Net Zero Standard pathway:

Acuity Knowledge Services (India) Private Limited – UK-based professional services company