AT&T Releases Plans to Curb Carbon Emissions

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AT&T Releases Plans to Curb Carbon Emissions

AT&T has created a Connect Climate Initiative to reduce its carbon emissions. This means bringing together researchers and business partners to look at ways of curbing carbon emissions. AT&T is looking to eventually reduce total emissions in the US by 1 gigaton, equivalent to 1 billion tons. Currently, a gigaton is around 15% of the U.S.’s total carbon output. As well, AT&T plans to be carbon neutral before 2035.

Right now, AT&T has announced companies such as Microsoft (MSFT) and Equinix (EQIX) as partners in this project. Universities such as Texas A&M and The University of Missouri are included in the research section of the initiative.

The initiative aims to encourage IT companies to rely on systems that produce fewer carbon emissions. As well, further cloud work is another major component. Reducing the number of computers and servers working will produce fewer emissions. Moving these systems to the cloud is a possible way to reduce carbon emissions.

Equinix is letting customers use AT&T services to connect directly to serves and datacentres. Therefore, less infrastructure is used and fewer carbon emissions are created. Equinix has mentioned that the 10,000 customers have been shifted to AT&T networks. The technology is there to upscale, it just requires further support and research.

Global Carbon Market Could Hit $22T by 2050

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Global Carbon Market Could Hit $22T by 2050

Governments across the globe are looking to expand carbon markets – with the potential value reaching $22 trillion by 2050. This means carbon markets could exceed the oil market’s value as early as 2025. Big energy trading houses have noticed, which is why they are switching focus from oil and natural gas to carbon-trading operations.

This summer, the EU unveiled plans to expand its market, and China has started its own limited trading system. The Biden administration is interested and supportive of pricing carbon, but it is still far behind the EU and China. Right now, in the U.S., the price of carbon is market-led.

Big traders, such as Vitol Group and Glencore PLC, aren’t waiting for the U.S. Neither are Trafigura Group Pte. Ltd, and Mercuria Energy Ltd. All are working to increase trading capabilities, prepping for a shift in the marketplace as new regulations are implemented. They have even built up teams in anticipation.

BP, recognizing that competition will be fierce, has reportedly increased the salaries of key staff. Currently, carbon makes up 5-10% of their activities, contributing $50-$100M to trading profits annually.

Shell is also interested. A representative stated that the company was looking to build their participation in the carbon market as they work towards being a net-zero-emissions energy business.

Although interest is hot, some banks have decided to proceed with caution without a global framework in place. Chris Leeds, Head of Carbon-Markets Development at Standard Chartered, said, “There is huge interest in participating in carbon markets from banks, but they are extremely concerned about the reputational risk… The problem is defining what are high-quality carbon credits.”

Their position is understandable.

Still, with carbon markets at the forefront of consumer, business, and government minds and a $22T global value in play, carbon markets may very well be the opportunity of a lifetime for many.

It will be interesting to see how the U.S. responds and how the markets react.

One thing is for sure: the carbon marketplace is here to stay. And, while it may not be perfect – yet – all eyes are on making it better. A positive for big traders and the environment alike.

Big Four Firms Rush to ESG

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Big Four Firms Rush to ESG

The sustainability boom has resulted in trillions of dollars through environmental, social, and governance funds. Now, the Big Four firms – PwC, Deloitte, EY, and KPMG – are hoping ESG is key to rebuilding consumer trust after numerous scandals and multi-million-dollar payouts.

Though some say the Big Four’s rush to reinvent their image through ESG is a survival ploy, their efforts are noteworthy.

ESG advice is central to PwC’s $12B investment plan, adding 100,000 employees that will work through their “trust institute” to train clients in ethics. The objective, according to PwC Global Chair Bob Moritz, is “to make sure we’re valuable for what our clients need and what the world needs.”

Deloitte announced their own “climate learning program” for 330,000 employees – their largest climate-related initiative to date. Upon announcing, Global Chief Executive Punit Renjen re-tweeted an article about “the links between trust and economic prosperity.”

KPMG’s most recent work includes helping Ikea analyze social and environmental risks associated with raw materials and advising on India’s first-ever green bond issues.

All three groups, alongside EY, are working to help build and implement international standards for measuring sustainability.

Doing so isn’t entirely selfless.

With the carbon offsetting and credit industry expanding, there is an opportunity to track non-financial metrics for clients, such as carbon emissions and footprints.

Critics feel these efforts could backfire.

If the Big Four fail to live up to the standards they promote, there could be negative backlash. In fact, much of the Big Four investments are not related to climate change or diversity but rather technology and international markets. Plus, if activists begin scrutinizing each firm’s records – they may start calling out clients not meeting environmental or diversity goals, which could be a PR nightmare.

PwC Chair and Senior Partner in the U.S. Tim Ryan is not concerned. “There’s always a risk in leading. We’re not perfect, but we’re massively investing to make sure everything we do is with improvement.”

Can a new carbon tax bring Europe, China, and the U.S. together?

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Can a new carbon tax bring Europe, China, and the U.S. together?

A potential new EU carbon tax may serve as a medium to bring the EU, U.S., and China together.

The EU’s Carbon Border Adjustment Mechanism (CBAM) proposal would force EU businesses to pay a carbon tax for goods imported from places with less stringent emissions rules.

Intending to cut carbon and greenhouse gas emissions by 55% by 2030, the EU is further along than most other countries regarding environmental initiatives.

Believe it or not, the U.S. and China are behind the EU. But, with more resources at their disposal and much support for the passage of this new CBAM within the EU, the U.S. and China will likely start taking aggressive measures themselves to get there.

Many nations, such as India, South Africa, and Brazil, feel discriminated against by this new tax. Their counties are not quite at the same level as the EU – though they are working on it.

The Institute for European Environmental Policy feels that this type of competition between countries to achieve solutions that will combat climate change is precisely what the world needs.

Any country that wants a place within the world economy will have to take the steps necessary to advance towards carbon neutrality.

Policies, such as CBAM, are simply providing the push needed to get there.

Environmental initiatives have increased over the past decade alone, with the carbon offsetting industry booming and numerous investment funds in place to further technological advances.

Regardless of concerns, The European Commission – which serves as the executive arm of the EU – seems to be set on pushing forward CBAM.

They feel that enforcing such a strict policy is crucial since it will prevent EU companies from moving overseas to locations with fewer environmental restrictions.

If companies were to move production operations abroad, it would undermine the aggressive policies the EU has put in place, resulting in more carbon emissions.

Once assessed by the 27 member EU states, it could take two years before this proposal is finally implemented and placed into law.

It will be interesting to see what impact this potential new tax will have within the global marketplace. Still, with the EU, U.S., and China working towards carbon neutrality, it’s safe to hope that positive change is in store.

Largest UN Climate Change Report to Date Released

Tony S
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Largest UN Climate Change Report to Date Released

The UN has released a report on the latest findings about climate change. The report was created by The Intergovernmental Panel on Climate Change, a UN body responsible for the science associated with climate change. The report drew from over 14,000 previous studies to come up with a detailed analysis.

Breaking the Carbon Budget

One major finding of the report is that humans will have a carbon budget to keep temperature levels 1.5 degrees Celsius below pre-industrial levels. The carbon budgest is the amount of carbon emissions that can be released before 1.5 degrees Celsius is not reachable. Currently, humans are on track to burn through that budget in 10 years.

Extreme Weather

The report also mentions a drastic increase of extreme weather. Heatwaves are becoming increasingly more common as are intense snow or rainfall. As well, forest fires are becoming greater and greater, especially as forest fire season grows longer and longer.

Placed Blame

In previous UN reports, humans were likely to blame for climate change and global warming. However, this report has placed the blame solely on humans by stating “It is unequivocal that human influence has warmed the atmosphere, ocean and land. Widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere have occurred.”

The Dawn of the Carbon Credits Age

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The Dawn of the Carbon Credits Age

carbon credits, carbon markets, carbon neutral, carbon news, carbon prices, carbon projects, climate change, renewable energy, net zero, nuclear energy, nuclear power, nuclear reactors, climate change, climate action, carbon capture, carbon emissions, voluntary carbon market, compliance carbon market, decarbonizationcarbon credits, carbon markets, carbon neutral, carbon news, carbon prices, carbon projects, climate change, renewable energy, net zero, nuclear energy, nuclear power, nuclear reactors, climate change, climate action, carbon capture, carbon emissions, voluntary carbon market, compliance carbon market, decarbonizatioFueled by climate change and the now unstoppable global trend of decarbonization, carbon credits are gaining a momentum that will carry them into every area of human life in the coming years.

If you’re looking at this market for the first time, let’s cover some basics. Every person has a carbon footprint. While the numbers vary dramatically from country to country, a person in Canada or the U.S. is responsible for around 15.5 tonnes of carbon dioxide emitted each yeari. That means, should you live to 90 years of age, you’ll have been responsible for generating around 1,395 tonnes of carbon dioxide, or the equivalent emissions from 300 passenger vehicles in one year.

Obviously not every activity emits an equal amount of carbon dioxide and some activities, like planting a tree, actually have the opposite effect by absorbing carbon dioxide from the atmosphere. And thus we enter the world of carbon taxes, carbon pricing and carbon credits.

Carbon credits (also known as carbon offsets), which have been around for over fifteen years, have a straightforward goal: penalize polluters and, by doing so, apply pressure for change. The approach is even more simple: make carbon emissions more expensive so that companies find ways to reduce or eliminate their emissions.

Of course, not every industry can move to a carbon neutral business model at the flick of a switch. Think, for example, of companies still reliant on fossil fuel for electricity. This is where the carbon markets step in by enabling companies to purchase carbon credits to offset those emissions that they cannot yet eliminate.

Reducing their carbon footprint in this way helps some companies avoid penalties or fines. Critically, it also appeases shareholders and consumers.

The Compliance and Voluntary Markets

There are two types of carbon markets: Compliance and Voluntary. In 2020, the Compliance carbon markets grew by 21%, with transactions totaling over US$260 billionii. The Voluntary carbon markets, estimated at US$320 million in 2019iii, need to grow by 15x by 2030 to support the investment required to meet the goals of the Paris Agreement.

Bar Graphs - Compliance Markets/Voluntary Markets

So how do they differ? The Compliance markets, like those operated by the European Union and the State of California are very much a government-created cap and trade scheme. While speculation is allowed, these are carbon markets for companies in industries where governments are actively trying to reduce emissions, such as power generation or transportation.

Pie Chart - Number of S&P 500 companies publishing sustainability reportsThe Voluntary markets are where you, as an individual, or a company can offset your carbon footprint without reserve pricing or fines waiting to punish non-compliance. These markets are for companies that want to voluntarily reduce their carbon footprint for a few critical reasons.

One: Shareholders are demanding it. Climate change is the #1 issue for ESG asset managers in the U.S., and large asset managers like BlackRock and Vanguard have pledged net-zero emissions across their portfolio holdings by 2050 and are holding companies accountable to climate goals. Recently, shareholders replaced three Exxon Mobil directors seen as insufficiently addressing climate change, while Chevron shareholders approved a proposal for the company to reduce emissions from customers use of its fuel.

Two: Consumers are demanding it. People have begun to think about how their personal consumption impacts climate change. A growing number of people are willing to pay a higher price for a carbon neutral product or service or pay directly at check-out to offset the carbon footprint of their purchase. In doing so, they are supporting the carbon markets as they demand climate action from the companies that they use.

Three: Regulators are requiring it. Legislation has already been introduced in a number of countries that require companies to disclose climate risk. Following a meeting earlier this month, the leaders of the G7 – a group of advanced economies, including the United States, the United Kingdom, Canada, France, Germany, Italy, and Japan – all agreed that “mandatory climate-related financial disclosures” should be implemented. Many companies will soon be faced with mandatory climate disclosures and will look to the voluntary carbon markets to purchase carbon credits to offset their emissions or face reputational risk.

Putting a price on carbon credits

Prices for carbon credits vary depending on several factors. For instance, while a tonne of carbon dioxide remains a tonne the world over, depending on where it originates, what the nature of the project is, and other factors, price can vary significantly. Many carbon credits also have co-benefits, such as preservation of biodiversity or job creation, which can attract premium pricing.

There are also different certification bodies that validate the quantity and quality of carbon credits. Vintage, which refers to the year the emission reduction occurred, also influences the price. Carbon credits are listed on a registry and can be held or sold more than once, however, once it is used to offset an emission, it is retired and cannot be resold.

Investing in carbon credits

Carbon Streaming Corporation (NETZ:Canada, OFSTF:OTC) aims to give investors exposure to both the voluntary and compliance carbon markets.

We are investing in high quality, high profile projects that will generate a strong flow of carbon credits over multiple decades. Our investments will deliver a “stream” of carbon credits that we will then be able to sell in the voluntary carbon markets or hold on to for long term price appreciation.

Deutsche Bank’s Asset Management Arm, DWS Group, Under Investigation

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Deutsche Bank’s Asset Management Arm, DWS Group, Under Investigation

Deutsche Bank’s asset management arm, DWS Group, is under investigation after the former Head of Sustainability, Desiree Fixler, claimed they overstated how much sustainable investing criteria was used to manage assets.

DWS Group has over $1 trillion in assets under management.

Once news broke, the DWS Group’s stock price fell 13% in 24 hours.

The investigation, launched by the U.S. Securities and Exchange Commission (SEC) and federal prosecutors in Brooklyn, New York, is still in its early stages.

With environmental, social, and governance (ESG) initiatives rising, the SEC has established a 22-person task force to investigate ESG investment disclosures – and other global regulators have joined in.

The goal is to prevent “greenwashing” – disclosure-related fraud involving ESG investments.

If you’re wondering why companies would want to “greenwash” their investments so that they appear more favorable, consider this:

  • ESG investments totaled $51B in the U.S. as of 2020.
  • Morningstar reports that assets in ESG funds have surpassed $2 trillion globally during the second quarter of 2021 alone, with investments on track to exceed $53 trillion by 2025 (according to Bloomberg).
  • According to Bank of America, ESG investing could rise by $15 trillion to $20 trillion over the next decade due to changing demographics. In other words, Millennials and Gen Z care about the environment and want to invest in its future.

Because of SEC oversight, investors can now feel confident as they invest in various ESG funds since they will no longer be green in title only.

For investors that still feel suspicious about ESG funds, the carbon offset industry can serve as an excellent alternative. It is projected to reach $100B in value by 2030, up from just $300 million in 2018.

Unfortunately for Deutsche Bank, the struggle to restore its brand may continue.

After several investigations concerning their long-term client, former President Donald Trump, and a $125 million penalty regarding foreign bribery schemes and manipulated precious metals markets, this new investigation may be more challenging to recover from.

As of now, no statement from DWS Group or Deutsche Bank has been released.

The ESG industry and investors alike are watching closely to see what happens.

BRIC Nations Take Stance Against EU’s Tax

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BRIC Nations Take Stance Against EU’s Tax

BRIC nations have called the EU’s Carbon Pricing Schemes “discriminatory”, aligning themselves with India who took a stand against the carbon tax. These nations – Brazil, Russia, China and South Africa – have released statements opposing the EU’s plans to stand with India.

The EU’s plan would tax foreign carbon imports as if they were made in the EU. As a result, this would massively restrict world trade, especially from nations with less carbon legislation.

BRIC nations have opposed the EU’s plan, but are working on the reduction of emissions jointly. As well as working on carbon emissions, BRIC nations are also looking at water and air pollution in urban areas.

The major climate change conference, COP26, is coming up in November. This conference provides a massive opportunity for BRIC nations to make their ideas heard and possibly affect future carbon legislation. As well, legislation could be introduced to reduce air and water pollution in addition to biodiversity loss.

BRIC nations realize that climate change is an urgent matter. India’s environment minster Bhupender Yadav outlined the impending danger of climate change saying the world faces a “now or never” situation. The recent IPCC report has provided the BRIC nations a reason to act. Collective global actions will need to be taken to stop climate change.

Maersk Orders Eight Zero-Carbon Tankers to Set Sail in 2024

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Maersk Orders Eight Zero-Carbon Tankers to Set Sail in 2024

Shipping giant Maersk has taken a big step to reduce carbon emissions by purchasing eight new tankers powered by carbon-neutral methanol.

Maersk’s goal?

To deliver net-zero emissions by 2050.

The purchase of eight new zero-carbon tankers is only the beginning.

Maersk is committed to launching an entire carbon-neutral fleet by 2030.

These eight new vessels, built by Hyundai Heavy Industries, will prevent 1 million metric tons of carbon from being pushed into the atmosphere – a reduction of nearly 3%.

Green methanol is a newer, carbon-neutral fuel produced using biomass or renewable hydrogen combined with carbon obtained from biomass or capture. Hyundai designed the ships to run on both green methanol and standard fuel since there is currently not enough carbon-neutral fuel available within the market. This should change over time.

Last year Maersk emitted 33 million tons of carbon into the atmosphere.

While some may feel eight ships isn’t enough effort, it is undoubtedly a solid and impressive start.

Maersk’s new ships are expected to launch in 2024 and will carry 16,000 containers each.

The vessels are 10-15% more expensive than the normal vessels Maersk has purchased in the past (costing $175M each ship). However, it is well worth the investment. Many of Maersk’s customers – such as Amazon, Disney, and Microsoft – are focused on cutting their emissions – and the supply chain process for their goods is a part of that.

Nearly 3% of all carbon emissions are a result of ocean transport. Since 90% of world trade happens by boat, you can expect many other shipping companies to follow Maersk’s lead.

As more and more consumers recognize the importance of reducing carbon emissions, demand for zero emissions, green methanol, and other environmentally friendly fuels will only increase.

The decarbonization of fleets, combined with innovative technology, and the carbon offsetting industry, will play a significant role in improving our atmosphere. With so many options at hand, there is a world of opportunity for companies, customers, farmers, and more.

EU Carbon Futures Hits an All-Time High

Tony S
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EU Carbon Futures Hits an All-Time High

EU carbon futures have shot up to above €59/mt, the highest price so far in the history of the future. EU carbon futures have been slowly approaching the €59/mt mark since early July, however, have not broken through. But futures shot up today due to the current strength of the energy sector.

Additionally, supply has been cut drastically from government auctions in primary supplies. As well, beginning August 30, only three auctions will occur due to holidays and closures, meaning a reduced supply.

The EU ETS has been slowly growing since the beginning of the year when it started at around €33/mt. It hit €40 in February and then €50 in May. Now it approaches the €60 mark, almost double what the futures started the year at.

The UKA prices continue to stay flat. The UK has yet to unveil its major plans towards carbon emissions. The KRBN ETF continues to rise as it rose just under 5% today. The carbon market has shown its strength this year. As more countries begin to roll out further carbon restrictions, we may see a shift in carbon ETF’s and futures. The race against climate change is heating up. Urgent action is required and that may include higher carbon prices.

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