Carbon Offset Transactions Continue to Increase

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Carbon Offset Transactions Continue to Increase

Companies across the globe are racing to meet climate change targets. Their solution? Carbon credits, which have topped $748 million this year. If demand continues, carbon credits may even reach $1 billion by the year’s end.

If you aren’t familiar with the carbon credit industry, here’s how it works:

Credits are purchased through the carbon marketplace. One credit equals one ton of carbon offset through an environmental project.

The most active offset buyers are within the energy, consumer goods, finance, and insurance. Investors have increased speculative buying from those looking to profit from trading offsets as well.

Right now, offsets from forestry and land use are the most popular. Renewable energy is at a close second.

Carbon credits are a win for companies, and individuals, who can use these credits to offset their emissions. They also benefit those completing these projects, such as farmers in underdeveloped regions.

Some skeptics feel the carbon market doesn’t deliver what it promises. They are concerned about the lack of regulation and oversight. The former Governor of the Bank of England, Mark Carney, recognizes this and is working on designing new rules that can improve the system.

Other critics say that some offset projects, such as those focused on renewable energy, are unnecessary. Governments and companies worldwide are switching to cleaner forms of power even without the credit industry, which is why two market programs have stopped offering them.

While it is fair to say that some reforms to the system are necessary, renewable energy is still an integral part. The more investments being made into it, the better. Plus, the verification process is not a free-for-all. Procedures are in place to ensure that the market is accurate. And, with interest booming, operations will only get better.

The call to meet ESG demands is loud and clear. With the world seeking to reach carbon neutrality and net-zero emissions, it’s no wonder that interest in carbon offsets continues to grow.

UBC Trust Commits $120M to Reduce Carbon

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UBC Trust Commits $120M to Reduce Carbon

The University of British Columbia’s (UBC) Endowment Fund, the UBC Investment Management Trust (IMANT) has committed $120M to seed a Paris Aligned Reduced Carbon Global Equity fund.

This is in addition to their $110M funding of the Sustainable Global Opportunities Strategy that was announced in March.

UBC IMANT has partnered with Arrowstreet Capital to select MSCI’s Paris Aligned Index as the benchmark for their portfolio construction. Their seed in this investment accounts for about five percent of UBC’s Endowment. Their ‘Responsible Investing Strategy’ is committed to a low carbon, sustainable future, to reduce their carbon portfolio by 45% in 10 years.

As other companies follow UBC’s lead, many hope to achieve net-zero emissions by 2050. Some are finding ways to do so through carbon offsets. This is especially true as regulations from the Paris Agreement get closer – with many just a few short years away. Countless nations have even recommitted their efforts to reduce carbon since they recognize they aren’t where they should be.

“This significant investment demonstrates UBC IMANT’s targeted and ongoing approach to addressing the impacts of climate change,” says Yasir Mallick, Senior Portfolio Manager at UBC IMANT. “We are thankful to our investment partner for working with us to incorporate a carbon risk budget aligned with the 2015 Paris Climate agreement in their portfolio construction and optimization process.”

Dawn Jia, UBC IMANT’s President, and CEO said that “We seek out partners – both our peers and investment managers – that share this mindset and are willing to be innovative in tackling complex problems.”

When describing climate change, “complex” may be an understatement. Combating climate change is quite complex and challenging, to say the least!

The latest Groundswell report from the World Bank shows that mass migration due to climate change could start as early as 2030. And a recent announcement from the UN said that increases in the earth’s temperature would be “catastrophic.” Even top religious leaders have joined together to ask the world to take action.

Announcements, such as UBC’s, are what the world needs. To make an impact, all countries, companies, and individuals have to do their part. Slowly but surely, we are getting there.

Is the U.S. on Track to Decarbonize Economy?

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Is the U.S. on Track to Decarbonize Economy?

The recent budget bill passed by the House Ways and Means Committee provides unprecedented funding to do so, but those funds aren’t a guarantee. Once brought to Congress, the funds could very well be cut in half – or more. Even so, the amount would still be the highest level of support thus far by the U.S. government towards the support of an energy transition.

The Democrats believe this energy plan to be one of the most important pieces of climate legislation that Congress has the chance to pass, and they are focused on ensuring that it goes through. With Republicans, and some Democrats, opposed to additional spending, as well as a large American voter base opposed to climate initiatives at large, there may be a long path ahead.

Still – this is a lucrative step and a positive one at that.

If the House and Senate can work out their differences and determine what would drive clean emissions, we may very well see some progress take place.  Among other things, as part of the bill, the Ways and Means Committee would like to extend the current renewable energy tax credits and expand them to new technologies. This can offer a direct-pay option for several tax breaks and provide higher payments to projects completed by union workers.

There is interest in including carbon pricing by the Senate Finance Committee – though not all are on board.

With U.S. President Joe Biden expressing the need for the U.S. to take more drastic action against climate change, and the countries across the globe recommitting to the Paris Agreement, it will be interesting to see what happens next.

Hopefully, Congress can look back on their vote with pride instead of regret.

Ontario Teacher Pension Plans Pathway to Net-Zero by 2050

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Ontario Teacher Pension Plans Pathway to Net-Zero by 2050

Ontario Teachers’ have taken their decade-long support for the environment a step further.

Their Pension Plan Board has put 2025 and 2030 targets in place to reduce greenhouse gas emissions. The goal? To achieve net-zero investment activity by 2050.

Here are some of the ways they plan on getting there:

  • Increase investments in clean energy companies that reduce demand for fossil fuels and build a sustainable economy.
  • Pivoting towards green investment asset classes
  • Investing in transition assets to secure reductions in carbon emissions
  • Set their portfolio companies on a clear path to implement net-zero plans & reduce emissions
  • Issuing green bonds & invest proceeds into climate solutions and sustainable companies
  • Set clear climate policies and partner with other industry leaders to effect global change
  • Reporting annually on progress against 2025, 2030, and 2050 targets.

President and CEO Jo Taylor said, “As an active, global investor, we play a critical role in helping accelerate the transition to a net-zero economy. Given the scale and complexity of our investment portfolio, we believe this is an ambitious plan that will meaningfully lower emissions and contribute to the plan’s long-term sustainability.”

As of June, Ontario Teachers’ portfolio included more than C$30B in green investments, such as renewable energy, energy storage, electrification, electricity transmission, energy efficiency, and green real estate. They also have C$5B allocated towards climate and transition solutions.

To think that even more funds will be invested in ESG initiatives is a reason for Canadians and the world to celebrate. Maybe other pension plans in Canada and the United States will follow the Ontario Teachers’ lead. If they do, the world may reach its Paris Agreement targets and begin to see the environment improve.

Ontario Teachers’ currently have C$227.7 billion in net assets (as of June), with 80% managed in-house. The annual total fund net return has been 9.6% since the plan started in 1990.

“Climate change permeates the entire investing landscape. Tackling it requires substantial effort and massive amounts of capital,” said Ziad Hindo, Chief Investment Officer. “By significantly growing our portfolio of green investments and working collaboratively with our portfolio companies to transform their businesses, we can make a positive impact by encouraging an inclusive transition that benefits our people, communities and portfolio companies.”

Opportunities and interest in environmental programs are rising, with global carbon markets expected to hit $22T by 2050. If more pension plans choose to set the same ambitious goals, the world will see real progress.

Ontario Teachers’ have not only set an example for their students about supporting causes you care about, but for the world at large.

Shell Sets Sights on Sustainable Aviation Fuel

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Shell Sets Sights on Sustainable Aviation Fuel

Royal Dutch Shell will start producing low-carbon jet fuel by 2025. Currently, aviation accounts for 3% of greenhouse gas emissions across the globe.

Though the aviation industry has wanted to reduce its carbon emissions, it has been a real challenge. There are not many fuel alternatives available that can power jet engines. And, the sustainable aviation fuel (SAF) that is accessible costs about 8x more than standard fuel does. Because of the price and availability, SAF accounts for less than .1% of the fuel being used for planes today.

Regardless, Shell is focused on producing 2 million tons of SAF, which could cut up to 80% of aviation emissions. SAF is made of waste from cooking oil, plants, and animal fats. Shell is working on a synthetic aviation fuel that is made from hydrogen and recycled carbon.

Shell’s announcement couldn’t come soon enough. Just last week, the US announced that their goal is to cut greenhouse-gas emissions from aircraft by 20%.  Since Shell – one of the largest oil traders globally – has committed to SAF, it’s safe to say other producers will follow. The US goal could be a reality.

Anna Mascolo, Head of Shell Aviation, said that “Sustainable aviation fuel, whether bio SAF or synthetic SAF, remains the single biggest solution [to meeting emission reduction goals].” Shell’s refinery expects to produce 820,000 tons of fuel, with SAF making up half of that.

With news of warming temperatures and the need for immediate action, this is a step in the right direction. Interest in carbon markets is increasing, offsets are taking the lead, and technological advances (like SAF) are being pushed ahead. Plus, numerous countries have re-committed themselves to the Paris Agreement – an act of solidarity and action.

It seems that change is happening for the better.

Cue cautious optimism.

The World is on a ‘Catastrophic’ Path

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The World is on a ‘Catastrophic’ Path

The earth’s temperature is on track to increase heat by 2.7 degrees Celsius (or 36.8 degrees Fahrenheit). UN Chief Antonio Guterres warned that such an increase in temperature would be “catastrophic” and called on the world to act.

If the earth were to increase 2.7 degrees Celsius, Paris climate agreement figures aimed for warming below 2C would be destroyed. Guterres went on to say that “Failure to meet [climate goals] will be measured in the massive loss of lives and livelihoods.”

Unfortunately, many nations have been slow in responding to the Paris agreement, failing to slash emissions or aid climate-vulnerable countries. With temperatures rising, the opportunity to make a difference is starting to close.

In response to these findings, US President Joe Biden said that “We have to act, all of us, we have to act now.” He urged the world to bring its highest ambition to the UN Climate Conference taking place in November.

As of now, the earth’s average temperature will be 1.5C higher around 2030, which is a decade earlier than projected just three years ago. The Organization for Economic Co-operation and Development said they were disappointed in the progress made. UN Climate Chief Patricia Espinosa said that “Overall greenhouse gas emission numbers are moving in the wrong direction.”

If you think about it, the world is already seeing extreme weather patterns that have resulted in the loss of life and property. No country or person is unaffected by climate change. All can see the impact climate change has on their own lives and lives worldwide each day. What more do people need to get on board? Without action, these disasters will only continue to increase.

As discouraging as this news is, hope is not lost. 113 countries – including the US and those within the European Union have updated their pledges, expressing their commitment to carbon neutrality and net-zero emissions.

The carbon market is also expanding, which can reduce emissions and support socio-economic issues – providing companies and individuals alike the opportunity to grow.

As interest in the carbon market increases and more offset projects take place, these figures can improve. However, the fight against climate change can no longer be conducted by a brave few. The world needs to get on board by combating climate change together.

Carbon Markets Propel Forward Expected to Reach $1B in 2021

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Carbon Markets Propel Forward Expected to Reach $1B in 2021

According to a new report from Ecosystem Marketplace, carbon markets are on track to reach $1B before the end of the year.

This is a 60% increase from last year, driven by companies focused on achieving net-zero emissions.

To meet the Paris Agreement’s 1.5° target, the world will have to cut pollution levels in half by 2030. The goal is to reach net-zero emissions by 2050.

Stephen Donofrio, the report’s lead author, said, “We’re seeing record market volume and value in 2021. The markets are on track to hit $1 billion in transactions this year if current activity levels and growth continue. It’s not just companies buying carbon credits as a small piece of their net-zero corporate strategy.

There’s an increase in speculators purchasing credits. The combined value of those deals is becoming a serious source of finance for green projects around the world.”

To help ensure carbon credit quality and standardization, the Taskforce on Scaling Voluntary Carbon Markets (TSVCM), led by Mark Carney, UN special envoy for climate action and former Governor of the Bank of England, is forming an independent Governance Body.

Annette Nazareth, the Taskforce’s Operation Lead and former SEC commissioner, said, “The new Governance Body being established by TSVCM will play a key role in ensuring the large volume of carbon credits traded are of high quality and integrity.”

Since the supply of environmental projects is tightening, credit prices have gone up. Patrick Maguire, one of the report’s lead authors and Senior Manager of Ecosystem Marketplace, says that “Whether the higher prices will entice new supply to enter the market quickly enough to meet rising demand is still an open question. Most carbon projects typically take years to develop.”

Regardless, the higher prices are great news for project developers, many in Asia, Latin America, and Africa. These projects are sparking development in regions that need it most.

Michael Jenkins, CEO of the nonprofit group Forest Trends, a parent organization of Ecosystem Marketplace, says that the challenge for the voluntary carbon markets is no longer about finding credit buyers. “Now, we all need to guide the markets to deliver the highest quality possible, with the greatest benefit possible for the planet and communities.”

Some studies have indicated that by 2050, the global carbon market could top $22 trillion. With benefits spanning the environment and socio-economic development, is it any surprise? The carbon market has the potential to combat climate change and support sustainability around the world.

Cannabis Company HEXO Achieves Carbon Neutrality

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Cannabis Company HEXO Achieves Carbon Neutrality

Canadian-based HEXO Corp. (TSX: HEXO; NASDAQ: HEXO) announced they have reached carbon neutrality, offsetting 100% of their 2020 operational emissions, plus the emissions of their 1,200 employees.

To achieve their carbon-neutrality goal, HEXO partnered with Offsetters. This Vancouver-based organization supports renewable energy and forest carbon projects across the globe.

“At the start of the summer, we pledged that HEXO would not only become carbon neutral, but that we would also offset the personal carbon emissions generated by every one of our employees. Today we are proud to say we have achieved our goal, setting a new standard in sustainability for our industry,” said HEXO Corp. CEO and Co-founder, Sébastien St-Louis. “Consumers and investors demand greater environmental and social integrity from companies. We are proud to share our commitment to sustainability and support our consumers’ ability to purchase products that align with their values.”

HEXO is a leading cannabis producer in Canada and one of the top three in the world. They wanted to focus on offset projects that would support environmental initiatives taking place in Canada and globally.

In Canada, HEXO is supporting the Create Bear Forest Carbon Project. This is the first carbon project in North America on traditional territory, with unextinguished Aboriginal rights and titles. Globally, HEXO is supporting a large-scale solar energy project in Asia and a forest conservation project in South Africa.

In addition to offsetting carbon emissions, HEXO has partnered with Dymapak and Plastic Bank® to offset 63,000 kilograms of plastic. They are also working towards collecting 8,000 kg of ocean-bound plastic, preventing 3.55 million plastic bottles from entering the world’s oceans.

HEXO set this goal for themselves in June and achieved it by September through carbon offsets. They have offset a total of 25,965 tons of carbon. If other companies across Canada and the world followed suit, it is safe to say many more can achieve carbon neutrality.

The carbon market is expected to reach $22T by 2050. Success stories such as HEXO will only increase interest and growth. And, after seeing these results, there is no doubt that offsetting carbon is, and will continue to be, integral in the fight against climate change.

Carbon Capture Companies are sucking up CO2 and Investor Interest

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Carbon Capture Companies are sucking up CO2 and Investor Interest

Climeworks, a Swiss-based company that currently owns the world’s largest Direct Air Capture plant, are seeing a boost in interest from governments and investors alike. The reason? We are in a “code-red” climate crisis, and these organizations know it.

In early September, Climeworks opened their new plant, Orca, the largest in the world. It is expected to remove 4,000 tons of carbon from the air annually, using giant fans equipped with filters. Once captured, the carbon is then pumped deep underground, where it is turned to stone.

Last month, Climeworks won a $10 million deal to sell carbon credits to Swiss Re to help the reinsurance giant reach net-zero emissions. Other clients include Microsoft, Stripe, and Audi.

According to Co-Founder and Co-CEO Christoph Gebald, “When we started in 2009, many people were against, or recommended not to proceed with direct air capture. It’s a stark contrast with now.”

With interest in direct capture so high, Climeworks plans to build a second, larger plant in Iceland.

Backers of these technologies say that they need governments to support them through subsidies and fast. The price tag for carbon removal projects is high. Demand is only expected to increase after the U.N. Intergovernmental Panel on Climate change (IPCC) constituted a “code-red for humanity.”

U.S. President Joe Biden has proposed spending $3.5 billion on four different direct-air capture hubs. And, in July, Kansas-based engineering firm Black & Veatch won $2.5 million from the U.S. Department of energy for the research and development of a project using Global Thermostat’s technology to capture 100,000 tons of carbon each year.

Canadian-based company Carbon Engineering is working on a facility to capture up to a million tons of carbon annually in the U.S. They are also working alongside British firm Storegga on a plant in Scotland that could capture between 500,000 and one million tons each year as well.

Between direct air capture and carbon offsets – which are expected to hit $22T by 2050, a net-zero future feels within reach.

Millions May Move Due to Climate Change

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Millions May Move Due to Climate Change

The World Bank’s latest Groundswell report found that over 216 million people could move within their countries by 2050, as they seek refuge due to climate change.

If you are wondering why climate change would cause people to move, you are not alone. Many are confused about how climate change and mass migration relate.

Though they hear about climate change daily, they don’t fully understand how it can impact their lives. So, this report and a previous report by Groundswell are important.

You see, climate change doesn’t just affect wildlife and nature. It affects people who live within the environment, too. So, when these changes take place, it upsets the dynamics between populations and their economic development.

Just think, as water becomes less available or crops cannot be produced, people flee. People do not have water for basic needs; farmers do not have water to grow crops. Food becomes scarce, and economic opportunity is limited. Same when an area has rising sea levels or extreme weather – people cannot live where their safety is at risk.

If climate change continues, can you blame people for leaving areas most impacted? Most would have to find somewhere better to live – for the sake of themselves and their families. The trouble is, where will they all go?

According to Groundswell, mass migration patterns will emerge in 2030 and increase in intensity by 2050. Unfortunately, many areas may not have the infrastructure or resources to support these booming populations. This can place existing residents at risk, especially the most vulnerable.

Both Groundswell reports provide policy recommendations that can help regions slow and prepare for migration. However, quick, and targeted action across the globe to combat climate change could reduce these patterns by 80%. And let’s face it – reducing these patterns is really the best option. At the end of the day, people do not want to leave their homes – they just want to have the best lives possible within them.

The report’s lead authors, Kanta Rigaud and Viviane Clement believe there is hope. “Cutting emissions and ensuring that development is green, resilient, and inclusive is at the heart of curbing the human cost of climate change. At the same time, countries can also anticipate and prepare for the drivers of migration…by supporting communities to adapt in place by diversifying livelihoods or by facilitating mobility when needed.”

Carbon offsets may be the best solution. They help reduce carbon within the atmosphere and can boost socio-economic opportunities in areas most at risk.

Based on Groundswell’s latest report, it will be interesting to see how various regions react and prepare. The data is there: climate change is a significant threat to civilization as we know it. We can no longer idly sit by.

The time to act against climate change is now.

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