The latest insights from the We Mean Business coalition

November 25, 2022

Net-zero transition – latest signals of change (25.11.22)

We Mean Business Coalition

Now that COP27 is at an end, you can find a round-up of key announcements and stories here, and read the We Mean Business Coalition statement on the COP27 outcome.

Here are the latest Signals of Change, demonstrating the transition to a resilient and inclusive net zero economy.

Net Zero Economy

The announcement of an historic ‘loss and damage’ fund to finance climate action and disaster relief in developing countries stands out as the greatest achievement of the COP27 climate summit. The mechanism was lauded by Pakistan’s climate change minister as “a down payment on investment in our futures and in climate justice.” Countries maintained 1.5°C in the final cover decision – just – but the overall outcome was ‘double-edged’.

Elsewhere at COP, the Science Based Targets initiative (SBTi) announced that 4,000 companies have now committed to science-based targets (you can see the latest additions at the end of this article). Meanwhile, Cemex, Holcim and Titan become the first cement companies to set 1.5°C-aligned science-based targets – an important milestone in what is one of the hardest to decarbonize sectors.

In a huge step forward for net zero economies and supply chains, the US government – the world’s largest purchaser – proposed that all federal contractors must set science-based targets and disclose their environmental impact through CDP, following in Norway’s recent footsteps.

Staying with supply chains, on the final day of COP27 a group of businesses including Unilever, BT and IKEA issued a declaration calling on other companies to join them in halving value chain emissions by 2030. The 1.5°C Supply Chain Leaders said in a statement that “climate targets and actions in line with science are expected to become the new business as usual.”

Lastly, in circular economies news, a new joint venture between Vodafone and WWF looks to further the network giant’s plan to reach net zero emissions by 2040 and tackle e-waste across the industry. ‘One Million Phones for the Planet’ boosts Vodafone’s circular economy strategy by significantly increasing the number of devices it refurbishes. According to Vodafone, buying a refurbished smartphone can save 50 kg of CO2 emissions and avoid the extraction of 76.9 kg of raw materials.

Energy

Also at COP27, the US, Japan and partners announced a new Just Energy Transition Partnership (JETP) to help Indonesia close coal power plants and bring forward the sector’s peak emissions date by seven years to 2030. Described as “probably the single largest climate finance transaction or partnership ever” by a US Treasury source, Indonesia is set to mobilize $20 billion in public and private finance.

Two cities – Aberdeen in Scotland and Kobe in Japan – have received a H2 Twin Cities Award from the US Department of Energy to collaborate on clean hydrogen project work for the benefit of businesses and residents in both cities. The agreement covers seven work packages related to public engagement, ports, heating, jobs, emissions reductions, supply chains and management and reporting.

There was still more good news for renewables in the US, where wind and solar energy are up 18% on this time last year and have grown by 58% compared to 2019. In total, the country has installed 11 GW of wind and solar energy in the past nine months. On top of this, the US government’s energy tracker predicts that by the end of the year renewables will make up 22% of the USA’s electricity mix – surging past coal at 20% and nuclear at 19%.

Next to France, where the country’s first commercial-scale offshore wind farm began operations on Wednesday. Adding 480 MW of capacity to the grid, the plant provides enough clean energy to power 400,000 homes annually. The project is co-owned by EDF Renewables, EIH Sarl and CPP Investments.

In the UK, Europe’s biggest battery storage facility has just come online near Hull. The facility, which is made up of Tesla Megapack batteries, can store 98 MW of energy. The storage potential is considered crucial to maximize the future efficiency of the 3.6 GW Dogger Bank offshore wind farm, which is set to be the world’s largest upon completion.

Finally, to Ireland where renewables firm Energia and Microsoft have inked a deal which will see Energia supply electricity from renewable wind and solar assets to cover the tech giant’s Irish operations. The agreement will add more than 900 MW of wind and solar energy to Ireland’s grid.

Transport

In Denmark, ferry company Molslinjen has ordered two new electric ferries to run on its Jutland to Zealand route from 2024 onwards. The ferries, which can carry 600 passengers and 188 cars, will be able to charge fully within just 20-25 minutes.

In Australia, electric vehicles (EVs) are about to become much cheaper thanks to a crossbench deal between the Greens, an independent and Labor to cut import tariffs and Fringe Benefits Tax on vehicles costing less than AUS $84,000. The move is expected to reduce the price of many EVs by up to AUS $9,000 for business vehicles and AUS $4,700 for individuals.

Staying in the Southern Hemisphere, the Filippino president has approved the removal of tariffs on electric vehicles this week in order to spur demand amid high fuel costs in the country. With EV import duties ranging from 5% to 30%, the move could deliver significant savings.

Meanwhile it’s back to the future in Scotland where a 40-year-old retired ScotRail electric train is being retrofitted as a green hydrogen-powered unit. Hydrogen technology is being earmarked for some of Scotland’s more remote railway routes. The project is a joint initiative between ScotRail, the University of St Andrews, Angel Trains and the Scottish Government, which has a target date of 2035 to decarbonize passenger rail transport.

Land and Nature

At COP27, the LEAF Coalition announced that financial commitments for the purchase of high-integrity emissions reduction credits have for the first time exceeded $1.5 billion – marking a 100% increase in financial commitments from the private sector since COP26. Volkswagen Group and H&M Group have become the latest global corporations to make financial commitments.

Meanwhile, the Egyptian Presidency announced a new initiative aimed at closing the financing gap for implementing nature-based solutions. Launched in partnership with the International Union for the Conservation of Nature (IUCN), the new project aims to ensure that sustainable management practices are implemented on two billion hectares of ecosystems this decade, while a further 45 million hectares will be restored. Also at the summit, the US announced a Nature-Based Solutions Roadmap, pledging over $25 billion in infrastructure and climate funding specifically for nature-based solutions – along with a companion resource guide.

Also at COP27, the Bill & Melinda Gates Foundation pledged $1.4 billion to help smallholder farmers in sub-Saharan Africa and South Asia cope with the impacts of climate change. According to the foundation, more than two billion people depend on smallholder farms for food and income, yet currently less than 2% of global climate-related finance is devoted to helping them adapt to climate change.

Meanwhile the IKEA Foundation has announced plans to deploy €600 million in climate funding by 2025. To determine the best allocation of resources, the organization commissioned a study with systems change consultants Systemiq to identify the most effective areas for development, finding that financing projects around alternative proteins and reducing methane emissions from agriculture would ensure the highest impact.

Built Environment and Heavy Industry

Announced on the sidelines of COP27, GM and Swedish power provider Vattenfall AB are the latest companies to join the ranks of the First Movers Coalition, which supports demand for low-carbon cement and steel. The initiative is now made up of 65 companies — from real estate to construction firms — with a collective market value of roughly $8 trillion.

Next to West Africa, where a group of architects are reviving old construction methods for buildings which will keep homes comfortable as temperatures rise. In Burkina Faso, the Morija Medical Clinic has been built with pressed adobe (compacted soil that included gravel, sand and clay) rather than concrete due to the breathable qualities of the material.

In the UK, supermarket giant Waitrose is ditching gas boilers in favor of heat pumps at 330 of its stores across the country. The move is part of its wider strategy to slash emissions and cut energy costs.

Meanwhile in the US, Google spinout Dandelion Energy has raised $70 million to grow its operations focused on geothermal heat pumps. By drilling into the earth’s crust in backyards, Dandelion taps into a secure reservoir of heat – even in winter – while in the summer the pump removes heat from the house to cool it. So far, the firm has installed 1,000 systems across New York, Connecticut and Massachusetts.

Lastly, new research commissioned by ESG consultant Deepki has found that the value of sustainably built property can be as much as 25% higher than unsustainably built property. After surveying 250 commercial real estate management firms across Europe, the study also found that these properties are unlet for shorter periods of time and that commercial tenants are more willing to pay higher rents on these properties to lower their utility bills.

Commitments

1 company joined EP100:

E Ink – Taiwanese manufacturer

3 companies joined RE100:

Applied Materials – US-based manufacturer

Samsung Biologics – South Korean biotech company

Samsung Electro-Mechanics – South Korean manufacturer

25 companies committed to set science-based emissions reduction targets:

AMC Natural Drinks – Spanish food and beverage company

Arjo AB – Swedish healthcare equipment company

Asia Air Survey Co.,Ltd. – Japanese professional services company

Boehringer Ingelheim – German pharmaceuticals company