Climate Week

1. US’s greenwashing standards
2. Electric lag
3. 🟡 ‘Rapidly losing confidence’
4. Carbon cuts payout
5. 🟡 Arrests at the Fed
6. An ‘ambitious’ transformation
7. 🟡 Saudi vs. IEA
8. 🟡 Delta’s SAF dreams

U.S. greenwashing standards

U.S. Treasury Secretary Janet Yellen will lay out voluntary anti-greenwashing standards for financial institutions in a Climate Week speech in New York today, Treasury officials told reporters. The standards don’t break much new ground beyond what industry groups like the Glasgow Financial Alliance for Net Zero have already rolled out, including a call for banks and asset managers to question whether companies in their portfolios have net zero goals aligned with the Paris Agreement. Although Yellen has warned of the economic risks of climate change, critics say her department is moving too slowly to roll out guidance companies need to tap the vast resources of the Inflation Reduction Act. In her speech, she will also announce a commitment by 50 U.S. firms that haven’t done so already to set a net zero target within the coming year.

Electric lag

The number of people in the world without access to electricity rose last year for the first time in decades, as Russia’s full-scale invasion of Ukraine and the aftermath of the COVID-19 pandemic sent energy prices soaring. Sub-Saharan Africa — where lack of access seemed to have peaked in 2013 — now accounts for roughly 80% of the 760 million people without access to electricity. Although progress is expected this year, less than a fifth of African countries have set targets to reach universal electricity access by 2030. If no policies are changed, some 560 million people in sub-Saharan Africa could remain without access by 2030, IEA figures showed.

How the UAE plans to rescue Paris

THE NEWS

The global economy doesn’t need to ditch fossil fuels to get back on track with the goals of the Paris Agreement, Majid Al-Suwaidi, Director-General of the upcoming COP28 summit in Dubai, said in an interview Monday on the sidelines of the U.N. General Assembly meeting in New York.

Al-Suwaidi was a former geologist for the state-owned oil company ADNOC and a longtime lead climate negotiator for the United Arab Emirates, and helped draft the Paris Agreement in 2015. In the years since, he said, countries and companies have faltered in meeting its objectives, in large part because finance is not moving quickly enough, or at sufficient scale, into clean energy and climate adaptation. “We’re rapidly losing confidence in the process,” he said. But he maintains that limiting global warming to 1.5 C above pre-industrial levels is still possible.

TIM’S VIEW

The Emirati leadership of COP28 — Al-Suwaidi and summit President Sultan Al-Jaber, who directs ADNOC — are trying to pull off a difficult balancing act, demonstrating concrete progress on decarbonization without alienating the industry that has enriched the country. They take the reins of global climate diplomacy at a time when the gap between existing policies and the 1.5 C target remains enormous: The U.N.’s first official report card of progress on the Paris goals, published this month, identified an excess of 24 billion tons of CO2 in the projected 2030 global carbon footprint compared to a 1.5 C pathway, equal to about four years of total U.S. emissions.

The UAE will push countries to commit to tripling global renewable energy capacity by 2030 and ramp up spending on adaptation, Al-Suwaidi told me. But far more contentious at COP28 will be the role of fossil fuels. The EU and other delegations plan to push for an agreement to phase out fossil fuel use by 2050, but the UAE and many other countries may only be willing to accept that with an exemption for “abated” fossil fuels — projects equipped with carbon capture technology. Al-Suwaidi repeated that argument, saying that the focus should be on emissions reduction, not on targeting specific industries.

Carbon cuts pay off

The amount of extra profit earned by Fortune Global 500 companies which reduced their reported emissions year-on-year compared to the index average. Climate Impact Partners, a consulting firm, assessed the climate commitments of the world’s largest public firms, which in 2022 earned a combined $41 trillion in revenue. In a report published this morning, it found that companies that reduced their emissions recorded on average $6.7 billion in annual profit, above the group’s $5.8 billion average. CIP CEO Sheri Hickok said this showed that “environmental action does not have to come at the expense of profit.”

One Good Text

Giselle Herzfeld, one of 149 climate protesters arrested outside the Federal Reserve in New York on Monday.

An ‘ambitious’ transformation

Brazil will create an emissions trading system as part of “an ambitious and comprehensive plan for ecological transformation,” the country’s finance minister announced. Writing in the Financial Times, Fernando Haddad said the plan will address the country’s economic and social challenges by delivering greener infrastructure, sustainable agriculture, reforestation, and a circular economy. Revenues from the ETS will be allocated to research and development with innovation earmarked as a key pillar for cutting emissions, driving investments, and creating jobs. President Luiz Inácio Lula da Silva is expected to tell the U.N. General Assembly today that the government has reversed Bolsonaro-era cuts in climate ambition and is working on an improved 2030 emissions-reduction goal.

Saudi vs. IEA

THE NEWS

Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, hit out at the International Energy Agency, accusing it of moving “from being a forecaster” to “creating political advocacy,” after the Paris-based body criticized the OPEC+ grouping for oil supply cuts.

INSIGHTS

• Major oil producers, including Saudi Arabia, disagree with the IEA on more than its short-term oil demand forecast. Last week, the agency’s head Fatih Birol said fossil fuel demand is on course to peak before 2030. OPEC rejected the projections, decrying them as not fact-based and “dangerous” because of the risk it could stifle new oil and gas investments. Saudi Aramco and ExxonMobil have pushed back against the peak oil forecast, as well.
• The IEA used to draw the ire of clean-energy producers and companies involved in the energy transition for what were seen as dour projections on trends such as the takeup of electric vehicles. But the agency has latterly been championed by them, thanks in large part to a 2021 call for new investments in extraction of oil, gas, and coal to stop immediately for the world to meet its 2050 climate targets.
• Rising oil prices have increased pressure on U.S. President Joe Biden, who has vowed to cut prices at the pump before next year’s election. High gasoline prices will be unpopular in parts of the country where voters are dependent on long driving times to go to work. Studies show they are more likely to hold the president directly accountable for the hike.

Person of Interest

Delta Air Lines is giving up on carbon offsets and switching to an ambitious — quite possibly unachievable — plan to massively ramp up its consumption of non-fossil liquid fuels. In an interview at Climate Week, Chief Sustainability Officer Amelia DeLuca, who took up the position in July, said the company believes it can meet its 2050 net-zero targets without raising ticket prices for most passengers, despite the fact that the strategy hinges on shifting to fuels that today are at least twice the price of conventional jet fuel.

When Delta first set a 2050 net-zero target, in 2020, its strategy hinged on carbon offset purchases, and the company quickly became one of the world’s top buyers of offsets. That backfired this year, when it got hit with a class-action lawsuit alleging its carbon-neutrality claims were overstated and over-reliant on low-quality carbon offsets.

The company “is not buying any offsets right now,” DeLuca said. Its new decarbonization strategy has three elements. The first is to cut 10 million gallons of fuel consumption — about 0.25% of its total — every year by shedding weight, adopting different flight patterns, and other low-hanging fruit. The second is to invest in cutting-edge aviation technologies like battery electric and hydrogen planes, although DeLuca said those won’t have much of an impact before 2050.

The third is all about “sustainable aviation fuel” (SAF), which is mostly derived from waste cooking oil and other plant-based feedstocks. Airlines today “are using every drop of SAF that exists,” DeLuca said, and this year the company came only halfway to its target of buying 10 million gallons. That makes the company’s 2030 SAF purchasing target — 400 million gallons — seem a bit daunting, she admitted.

Delta is scrambling to sign future offtake agreements with prospective SAF producers. And they’re selling a limited number of SAF-fueled flights at a premium to corporate and cargo customers willing to pay more to cut their own carbon footprints. Although the company’s research clearly indicates that regular airline customers are increasingly concerned about aviation’s emissions, DeLuca said, it’s not clear they’d be willing to stomach the real ticket price for SAF.

“The cost curves from SAF are supposed to pretty steadily walk down,” she said. “So actually, the other side of this is incredibly consumer-friendly. It’s just a matter of moving through that curve as quickly and collaboratively as possible.”