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The measures global leaders announced on Wednesday are ‘like trying to put out an inferno with a lea͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
 
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September 21, 2023
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Climate Week

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Tim McDonnell
Tim McDonnell

Hi everyone, welcome back to a special Climate Week edition of the newsletter.

I had a feeling that I might need to lower my expectations from the moment I went into the U.N. headquarters in Manhattan yesterday. From past experience, I was prepared for epic lines, shouting police, and general chaos. But there was no line at the security checkpoint, the atmosphere of the media tent was subdued, and the sole press conference of the day sparsely attended. Because the U.S. was barred from speaking during the Climate Ambition Summit, it seemed, the spotlight moved on. And with a number of prominent world leaders ditching the General Assembly meeting altogether, the quiet halls of the U.N. building felt like a manifestation of the prevailing geopolitical vibe. That’s our story for today. We also survey a new crackdown on greenwashing and a strategic pivot by the world’s biggest concrete producer.

Local climate: Barbados Prime Minister Mia Mottley dropped by a showcase of climate tech companies on Manhattan’s High Line park, and told me she was intrigued by one that manufactures jet fuel from captured carbon. Her take on the morning’s summit: “It’s a work in progress.” … Actress Jane Fonda gave a press conference in the U.N. alongside island nation diplomats and said she “applauds the Secretary General for thrusting fossil fuels into the limelight.” … Prashant traded climate podcast recommendations with Deloitte Principal Marlene Motyka. Her favorite: Renewable Energy SmartPod. Prashant’s: Energy Unplugged.

Heard anything fun or bizarre at Climate Week? Let us know! And if you’re free tonight, join us for happy hour — RSVP here.

Happening today at Climate Week:

Hotspots
  1. Unlocking trillions
  2. Gassed up
  3. 🟡 An unambitious summit
  4. $2 gas?
  5. 🟡 ‘A major letdown’
  6. Africa’s first DAC plant?
  7. 🟡 Greenwashing crackdown
  8. 🟡 Value over volume
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1

Unlocking trillions

The Net-Zero Asset Owner Alliance, an influential group of investors whose members oversee $11 trillion of assets, urged governments to remove policy barriers to unleash an estimated $275 trillion in climate investments by 2050. Global GDP could fall by $4 trillion to $6 trillion over the next three decades if countries fail to transition, the group warned in a report published this morning. The alliance said government support, in the form of subsidies, grants, and tax credits for clean technologies was essential for the transition to net zero. They also wanted governments to reduce financial support to fossil fuels and introduce new carbon pricing tools.

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2

Gassed up

The capacity of new oil and gas-fired power plants under development globally increased by 13% last year, reaching 783 GW, according to Global Energy Monitor. If built, they would grow the existing oil and gas fleet by a third. Nearly two-thirds of this new capacity is in Asia, where 514 GW of new plants costing an estimated $385 billion have been announced or are under construction. China alone is host to a fifth of the pipeline. The oil and gas build-out comes despite the region experiencing volatile gas prices and some of the lowest cost of green electricity.

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3

The UN’s climate summit was a bust

REUTERS/Mike Segar

THE NEWS

At the U.N.’s Climate Ambition Summit yesterday, ambition was in short supply.

Brazil reinstated a stricter emissions target that had been scrapped under former President Jair Bolsonaro. A few European countries tossed out relatively meager new contributions to the Green Climate Fund. But apart from that, the succession of speeches by world leaders throughout the morning mostly retrod well-worn ground.

“The small steps countries offered are welcome, but they’re like trying to put out an inferno with a leaking hose,” David Waskow, director of the International Climate Initiative at the World Resources Institute, said. “There is simply a huge mismatch between the depth of actions governments and businesses are taking and the transformative shifts that are needed to address the climate crisis.”

TIM’S VIEW

The lackluster outcome raises the stakes for COP28 to produce more meaningful policy changes, but also underscores both how unlikely that is and the severe limitations of the U.N. itself in driving the necessary shift. The 2015 Paris Agreement was a high point for climate diplomacy, but since then, countries have found it much easier to agree on what needs to be done than to actually do it.

In his opening statement, U.N. Secretary-General Antonio Guterres complained that “shady pledges have betrayed the public trust,” and blamed “foot-dragging, arm-twisting, and the naked greed of entrenched interests raking in billions from fossil fuels” for the lack of decisive action.

In organizing the summit, Guterres chose a novel tactic, handing the microphone only to leaders his office deemed to have taken sufficient domestic action. That left out many of the world’s top emitters, including the U.S., China, India, and COP28 host the United Arab Emirates. The move was designed to create a kind of coalition of the willing and more clearly delineate leaders from laggards. But it risks splintering the delicate multilateral coalitions that typically drive the biggest COP outcomes, said Tom Evans, policy adviser at the think tank E3G. And in any case even the countries that were allowed to speak have for the most part not done nearly enough, as the U.N.’s global stocktake report this month made clear.

There was also no progress Wednesday on the issue that will be most contentious at COP28: A commitment to phase out the use of fossil fuels. The UAE is against such a goal, the COP28 director-general told me this week.

“They’re saying lots of good things about the agenda but not showcasing their own leadership or putting their money where their mouth is,” Evans said.

QUOTABLE

“If you don’t take corrective action, you’ll have to tell us where you’re keeping your scientific research that will allow you to take you and your families to the planet Mars.” — Barbados Prime Minister Mia Mottley in her address to the U.N., speaking of oil and gas company executives.

 

Read why loss and damage negotiations could break down as rich countries disagree on where the funding should go. →

 

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4

Pipe dreams

Price for a gallon of gasoline targeted by Florida Governor and Republican presidential candidate Ron DeSantis in a new energy plan he released Wednesday. The plan calls for moving full-steam ahead on domestic oil and gas production with the aim of making the U.S. “the dominant energy producer in the entire world” (although U.S. oil and gas exports are already at record highs). The gas price target won’t be easy to achieve, since oil prices are dictated by global markets and influenced by refinery capacity as well as production — both areas that most investors are shying away from.

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5

One Good Text

Amitabh Behar, Oxfam International interim executive director.

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6

Africa’s first DAC plant

The African continent may soon get its first carbon removal plant, under a deal announced this morning by Swiss engineering firm Climeworks and a Kenyan developer of climate-focused industrial parks. Climeworks is quickly becoming one of the world’s top carbon removal firms, after its technology — big fans that suck CO2 out of the atmosphere — was awarded a major federal grant last month, two years after it opened what remains the world’s biggest direct air capture facility in Iceland. In a statement, the companies said they aim to switch on a DAC plant in Kenya’s Great Rift Valley by 2028, citing both the availability of favorable geology for underground storage of captured CO2 and Kenya’s abundant renewable energy resources to power the plant.

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7

The SEC cracks down on greenwashing

 
Jeronimo Gonzalez
Jeronimo Gonzalez
 
REUTERS/Evelyn Hockstein

The U.S. Securities and Exchange Commission, the country’s top financial regulator, adopted a new rule to crack down on investment fund “greenwashing.” Funds will be required to ensure that 80% of their portfolio match the asset advertised by the fund’s name. Since 2021, the SEC has prosecuted funds that bill themselves as investing exclusively in securities that rank highly in environmental, social, and governance measurements but which rather cast a much wider net with their investments. “It is truth in advertising,” Gary Gensler, the SEC chair, said.

  • The move was largely welcomed by activists and environmentalists, including some who had long considered the lax restrictions deceptive or even predatory of retail investors. “These rules will help cut down on greenwashing and misleading marketing so that millions of U.S. investors ensure … their money is being invested in line with their interests and their values,” a strategist at the Sierra Club, an environmental advocacy organization, said. “The SEC’s action today is a vital step,” the Environmental Defense Fund wrote.
  • Despite a market downturn in 2022 — during which traditional funds suffered billions of dollars in outflows — investors continued to flock to ESG funds, pushing their assets under management to a record $2.8 trillion last year. Demand has been driven largely by Europe, which accounted for 89% of sustainable funds’ assets. After years of out-performing traditional funds, however, sustainable funds’ returns fell below those of traditional ones last year, according to Morgan Stanley research.
  • The EU is also cracking down on greenwashing. From 2026, companies that can’t back up the accuracy of products marketed as being “climate neutral,” “eco,” or other sweeping environmental claims will be banned. The new rule, which climate NGOs have long agitated for, will make the EU the toughest region in the world in terms of green claims made to the public, the Financial Times reported. “Carbon neutral claims are greenwashing ,” the head of a European consumer association said. “The truth is that these claims are scientifically incorrect and should never be used.”
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8

Green Shoots

 
Tim McDonnell
Tim McDonnell
 
Courtesy Holcim

The world’s biggest cement producer is reinventing its core business model to meet its long-term climate targets.

In an interview this week, Nollaig Forrest, chief sustainability officer of the Swiss multinational building materials company Holcim, said the company was “shifting from volume to value,” as it focused on new modular concrete products designed to be reused after a building is demolished.

Concrete recycling is a critical innovation for reaching net zero, she said, because the manufacture of cement (the glue that holds concrete together) and concrete itself are highly carbon-intensive processes that globally produce more emissions than aviation. But it challenges the company’s long-standing business model: selling as much concrete as possible. Instead, Forrest said, the firm is now devoting more internal resources to design and work directly with architects and developers to build bespoke, reusable products, deriving a new profit margin from its green intellectual property rather than its raw materials per

At the same time, Holcim is ramping up sales of low-carbon concrete made with cement dust recycled from demolition sites. In 2020, that product line accounted for about 2% of the company’s concrete sales, Forrest said. This year, it will pass 18%, and generate more than $1 billion in revenue

One obstacle to further growth, she said, is that many municipalities, especially in the U.S., have zoning regulations that restrict the amount of recycled content that can be used in concrete. So Holcim is also engaged in a tedious lobbying campaign: “We have to do it market by market, city by city,” she said. The process might get a little easier after this week, when the Biden administration rolled out a $400 million grant program to help cities adopt greener building codes.

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