What's Happening in Sustainability? (Week Recap 08.08 - 14.08) 🌎

This week’s read time: 7 minutes

Welcome to this edition of Green Digest, where you will get updated about everything happening in the sustainability & ESG space in less than 10 minutes 🌎We go through tons of articles and data from the most reliable sources, filter & simplify them and serve them to you in bite-sized chunks every week. 🍀

⭐️ The week’s top news:

🇪🇺 Europe's environmental agenda faces a growing green backlash amid a cost of living crisis, with parties tapping into worries ahead of upcoming EU, national, and regional elections. While most of Europe's main CO2-cutting policies are fixed into law, new green policies face a tougher time getting passed as citizens struggle with the cost. Analysts say politicians are increasingly tapping into worries about the expense of green policies, and officials say it is getting harder to pass green laws, with some EU governments resisting new emissions limits for cars and seeking to weaken pollution controls for livestock farms. The impact of the 'greenlash' on Europe's diplomatic standing and investor confidence could be significant. The US is offering multi-billion dollar green subsidies and tax breaks, while Europe risks falling behind India and China in establishing green industries and technologies. If Europe wavers, it could allow other countries to take advantage of international markets in EVs and other technologies. While according to TIME Magazine, the US Inflation Reduction Act (IRA) has rapidly accelerated the transition to clean technology and created new business opportunities, with companies investing more than $270 billion in US-based clean energy projects and over $130 billion in electric vehicle technology since the law became effective. The IRA offers tax breaks to companies that deploy clean technologies instead of introducing mandates, and its impact has convinced some longtime skeptics of the energy transition about the opportunity to make money with lower-carbon solutions.

🇺🇸 The US Department of Energy (DOE) has granted up to $1.2 billion to Occidental's 1PointFive and Climeworks to develop direct air capture (DAC) facilities capable of capturing and storing millions of tonnes of CO2 from the atmosphere. DAC technology is listed by the IEA as a key carbon removal option in the transition to a net-zero energy system. The selected projects would dramatically increase global DAC capacity, with a combined ability to remove more than 2 million metric tons of CO2 emissions annually, and each capable of removing more than 250 times more CO2 than the largest DAC facility currently operating, according to the DOE.

🌳 Eight Amazon nations agreed to a list of environmental policies and measures to bolster regional cooperation at a major rainforest summit in Brazil, but failed to agree on a common goal for ending deforestation. Brazilian President Luiz Inacio Lula da Silva had been pushing for the region to unite behind a common policy of ending deforestation by 2030, but instead, the joint declaration created an alliance for combating forest destruction, with countries left to pursue their own individual deforestation goals. The failure of the eight Amazon countries to agree on a pact to protect their own forests points to the larger global difficulties of forging an agreement to combat climate change.

🇮🇳 India has reduced its greenhouse emissions rate by 33% in 14 years, exceeding expectations, due to increased renewable energy generation and forest cover, according to a report submitted to the United Nations. The country is on track to meet its commitment to reduce emissions intensity by 45% from 2005 levels by 2030. The average rate of reduction in emissions increased to 3% annually from 2016-2019, the fastest reduction so far, largely due to the government's push towards renewables.

🇳🇿 New Zealand and BlackRock have launched a NZ$2 billion ($1.2 billion) fund aimed at investing in the country's climate infrastructure to support its goal of reaching 100% renewable energy. The fund will include investments from private sector funds, as well as New Zealand crown companies and superannuation funds, and will focus on areas such as battery storage, wind and solar generation, green hydrogen production, and electric vehicle chargers. The fund is BlackRock's largest single country decarbonization-focused project to date.

• A new report shows that US-based insurers have invested hundreds of billions of dollars in fossil fuel-related assets, which contribute to climate-related damage to the underwriting side of their businesses. A data sample comprising 77% of US insurers showed they held fossil fuel-related assets worth $536 billion in 2019, and patterns are unlikely to have changed dramatically since then, according to sustainability consultancy ERM, investor advocacy group Ceres and carbon accounting firm Persefoni. The report suggests that insurers are "uniquely exposed" as governments and shareholders put increasing pressure on financial firms to measure and curb the flows of capital to businesses that warm the climate. Climate catastrophes like wildfires are prompting some businesses to stop covering homes in high-risk areas, and decisions made on the investment side to put money into activities facing tougher regulation could squeeze their finances. 🔴

• Canada has released its proposed Clean Electricity Regulations, aiming to achieve a net zero electricity grid by 2035 and reduce emissions from the electricity generation sector by over 340 million tonnes by 2050. The regulations set stringent pollution standards for power generation but do not prescribe specific energy technologies to be used. The rules also permit fossil fuel-based power generation to remain in place for several years beyond the implementation of the regulations in 2035 in some circumstances, with requirements for emissions to remain under 30 tonnes of CO2 per GWh, mandating the use of carbon capture technology in most cases. 🇨🇦

• Despite a slowdown in inflows during H1 2023, ESG ETF assets continued to grow, with Europe dominating the market for passive solutions. While Europe accounts for only 16% of all ETF assets, 66% of all ESG funds are domiciled there. Morningstar reports that ETFs offer lower fees, transparency, ease of use, and access to different markets, with the industry always on the lookout to create products that meet existing trends. Product development by fund managers is being supported by innovation by index providers. 📈

• S&P Global Ratings will no longer include its ESG credit indicators in its reports on rated entities. The alphanumeric indicators were introduced in September 2021 to summarize the relevance of ESG factors on credit analysis. S&P stated that it will instead rely on analytical narrative paragraphs to provide detail and transparency on ESG credit factors. The move will not affect S&P's ESG principles criteria or its commentary on ESG-related topics. 📈

• Solar power played a major role in preventing energy shortages during recent heatwaves in Europe, with solar output setting records in southern Europe. Spain and Greece have installed more solar panels to meet energy demand for cooling, and solar energy output in Spain in July was higher than any month to date. Solar helped satisfy nearly half of excess power demand in Sicily and covered 3.5GW of Greece's peak power demand. Analysts also attribute the energy system's resilience to relatively low power demand since last year's energy crisis, but warn that climate change will increase the frequency and severity of heatwaves, putting more strain on energy infrastructure. 💡

🧐 What are companies doing?

• Blackstone has raised $7.1 billion for its energy transition credit fund, the largest of its kind ever raised. The fund is managed by Blackstone Credit's Sustainable Resources Platform, which invests and lends to renewable energy companies and those supporting the energy transition. Blackstone aims to invest an estimated $100 billion in energy transition and climate change projects over the next decade. 💡

• Mitsubishi, Suntory, and ENEOS have agreed to build a supply chain for the production of sustainable PET plastic bottles made from biomass. The companies will produce bio-paraxylene equivalent to approximately 35 million PET bottles, using bio-based feedstock derived from 100% renewable sources like used cooking oil, replacing fossil-based naphtha. This will be the first time sustainable PET bottles have been produced using bio-PX derived from bio-naphtha on a commercial scale, contributing to the reduction of CO2 emissions and reducing dependency on fossil resources. 🟢

• Goldman Sachs Asset Management’s Infrastructure Business has invested in Synthica Energy, a renewable natural gas (RNG) platform, and will partner to scale its RNG production operations across US hubs. RNG, produced from organic waste, is chemically identical to fossil-based natural gas and can decarbonize hard-to-abate sectors such as road transport and heavy industry. Synthica produces RNG from pre-consumer food and beverage waste and other organic manufacturing byproducts through anaerobic digestion, avoiding the challenges of post-consumer waste-based RNG production methods. 📈

• Iberdrola has launched Carbon2Nature (C2N), a new company aimed at developing nature-based solutions to eliminate carbon emissions and improve biodiversity. The company plans to capture and store over 61 million tonnes of CO2 through ecosystem conservation and restoration projects, generating high-quality carbon credits for customers. C2N will focus on Latin America and northern hemisphere countries, including Spain, the UK, and Portugal, where Iberdrola is present. 🍀

• Mining group Rio Tinto has partnered with H2 Green Steel to supply high-grade direct-reduction iron ore pellets for H2 Green Steel's low-carbon steel production plant in Sweden. H2 Green Steel aims to produce 5 million tonnes of nearly fossil-free steel by 2030 using green hydrogen and electricity from 100% renewable sources. The partnership is part of Rio Tinto's efforts to reduce GHG emissions and decarbonize the steel industry. 🟢

Recent funding rounds:

🔋 Cornish Lithium has secured £53.6 million ($68m) of investment, led by the UK Infrastructure Bank, to open Britain's first lithium mine in Cornwall. The funding package is expected to speed up progress towards British mining of battery-grade lithium compounds, which are key to the production of batteries for electric vehicles and renewable energy storage.

🟢 Persefoni has announced a $50 million Series C-1 funding round and the launch of PersefoniGPT, an AI co-pilot product for carbon accounting and management. Persefoni's software simplifies the calculation of carbon footprints, identifies decarbonization strategies, and performs climate trajectory modeling.

🌡️ German startup Kraftblock has raised €20 million in a Series B funding round led by Shell Ventures to expand its thermal storage technology, which can store energy for up to two weeks and withstand temperatures up to 1,300°C. Kraftblock's technology can harness thermal energy from manufacturing processes, reducing reliance on fossil fuels and overcoming the intermittency challenge posed by other renewable energy sources.

⭐️ UK-based cleantech startup Matter has raised $10 million to develop its sustainable laundry-focused solutions to keep microplastics out of water systems for commercial and industrial applications. Matter provides technology solutions for capturing and recycling microplastics, with the goal of ending microplastic pollution at its source.

That’s it for this week, thanks for making it to the end! If you enjoyed reading this newsletter, don’t forget to subscribe and share it 🍀