Net Zero

1. Shutdown fallout
2. Freeing up funds
3. 🟡 The data pipeline
4. A new renewables power?
5. 🟡 ‘Just the beginning’
6. Buoyant green job market
7. 🟡 Oil price fallout
8. 🟡 Methane progress

The fallout from the shutdown

The U.S. appeared headed for a shutdown of its federal government. Among the consequences — in addition to a temporary loss of economic growth and a potential hit to the country’s credit rating — could be U.S. foreign aid funding, including to programs helping implement the 2015 Paris Agreement, according to Devex. The Environmental Protection Agency would also be prevented from carrying out many of its enforcement duties. As Tim previously noted, though, the huge investments made in the past year as a result of the Inflation Reduction Act suggest the clean-energy industry is unlikely to be slowed.

Loosening the purse strings

The Asian Development Bank unveiled reforms that it said would help unlock $100 billion in new funding capacity over the next decade while preserving its prized AAA credit rating. The announcement is the latest in a series of moves by multilateral development banks to free up much-needed funds — which developing countries have long called for to help finance climate mitigation and adaptation efforts — without risking the increased borrowing costs that would come with a ratings downgrade. Critics, however, argue that lower ratings would not incur as high borrowing costs as the ADB and other such institutions fear, and may be as low as 10 to 15 basis points. As Chloé noted in the last Net Zero, both scale and speed are required.

The firms betting on climate data

THE NEWS

The newest opportunity for selling to climate-conscious businesses is data.

Once the purview of scientists projecting the impact of climate change, data — and especially ever-more granular climate-related data — is now a growing investment target of businesses keen to cater to information-hungry customers.

The professional services firm Deloitte has assigned a team within its sustainability and climate practice who were hired from financial data firms or data-focused startups to scout for data. Schneider Electric, an energy and automation-focused firm, sees data as a growing business, one of its executives said. And for more consumer-oriented companies, the U.K.-based energy company Octopus is gathering vast quantities of data to optimize how it operates both electricity distribution and transmission infrastructure.

“On top of decarbonization, one of the top needs that our customers come back with is data,” Mike Kazmierczak, a vice president in Schneider Electric’s decarbonization division, told me. “That’s what I’ve been working on, actually, heavily right now is data as a business opportunity. … Providing data as a service is really where I think the market is going to continue to grow.”

PRASHANT’S VIEW

Data offers companies a major business opportunity. An ever-growing number of businesses and governments have public net-zero commitments, but actually achieving — and verifying — reductions in carbon emissions requires a degree of granularity that is sorely lacking.

Tabulating the emissions attributed to erecting a building, for example, is based largely on aggregate and average data: Steel tends to emit a certain amount of carbon in its development, cement another generalized amount, and so on. These figures vary, however, depending on factors including where the raw materials are sourced from, how they are transported, whether suppliers are more or less efficient than the industry average, and by how much. As a result, few property developers are able to say with genuine precision how much carbon their projects emitted in construction.

Similar issues are present in other parts of the economy: Utilities or grid operators are only able to see aggregate data across a large geographic area, often with a lag, while companies with multiple factories can mostly just identify the climate-related risks to those facilities in general terms.

Several consultants and advisers I spoke to said that companies seeking to reduce their carbon emissions are increasingly demanding hyper-specific data from suppliers on their carbon emissions and those of their products, as well as information on the carbon resulting from operating existing facilities such as factories or offices. They also want more precise information on the physical risk to their facilities of climate change and related extreme weather events, as well as details on how their suppliers perform on ESG-related metrics.

That’s expanding the customer base for data significantly.

“We’re spending a significant amount of money” on data, said John Mennel, a managing director in Deloitte’s sustainability practice. (He declined to offer specifics on the sums being spent, pointing only to Deloitte’s announcement in April 2022 that it would invest $1 billion in its then-newly founded global efforts on climate and sustainability.) “There are a proliferation of sustainability data firms, and I would say that their market even a couple years ago was really the financial sector,” he continued. “It’s expanded much beyond that, where all kinds of companies have different sustainability data needs.”

Brazil’s big renewables bet

Brazil wants to become a global leader in renewable energy even as it ramps up oil production, the country’s energy minister told the Financial Times. At the heart of that effort is a controversial oilfield in the mouth of the Amazon that could contain as much as 30 billion barrels of oil, but which the country’s environmental regulator has so far prevented from being exploited. Petrobras is appealing the decision. “I don’t see any contradiction between the exploration of oil and gas and the clear, objective, safe and firm decision . . . to carry out the energy transition in a just and inclusive way,” Silveira said. “The reality of the world is that we still need fossil fuels.”

One Good Text

Kelly Sporn is Special Counsel and Head of Strategic Delivery — Sustainability & ESG at the law firm DLA Piper, which this week published a report outlining the growing pressure facing corporate boards over climate- and nature-related issues from investors, regulators, and markets.

Bumper green jobs growth

Overall employment in renewable energy has nearly doubled in the past decade, according to a new report. A total of 13.7 million people worked in the sector last year, up by a million from 2021 and 7.3 million in 2012, data from the International Renewable Energy Agency and the International Labour Organization showed. Most of the jobs were, however, in a small number of countries: China accounted for 40% of the total employment, with the European Union, Brazil, the United States, and India all holding 7% to 11% of jobs. The biggest single industry was solar PV, with nearly 5 million jobs worldwide — the vast majority of them in China.

What higher oil prices mean

Oil prices surged this week to their highest level in a year, largely on expectations of tighter supplies and OPEC+ cuts. Brent prices approached $94 on Friday, up from $71 as recently as June. Economists are bracing for the price to reach $100, as additional voluntary cuts by Saudi Arabia and Russia of around 1.3 million barrels a day — more than 1% of global demand — for the rest of the year could keep prices high in the foreseeable future.

• Production cuts have paid off handsomely for Riyadh and Moscow. Both countries have raked in billions in recent months as higher prices have more than made up for the shortfall. Those returns have helped fuel Russia’s full-scale invasion of Ukraine and replenished Saudi coffers after investments in pricey infrastructure projects. “If we just look at oil prices, their future’s looking brighter,” an economist told The Wall Street Journal. “It might not be an economic game-changer, but it does let them keep spending.”
• Higher prices have sparked a boost in oil drilling in the United States, signaling a change in sentiment among producers. According to a poll of 147 oil and gas executives conducted by the Dallas Federal Reserve, higher oil prices should offset cost inflation, in turn encouraging more drilling. More than half of the executives polled predicted oil consumption in 2050 would remain at least slightly higher than it is today, contravening a raft of forecasts.
• Ironically, more oil drilling in the U.S. could drive renewable energy development in the country. The White House’s decision to offer the fewest-ever new leases for offshore drilling in the Gulf of Mexico and off the coast of Alaska is in part driven by a requirement to hold fossil-fuel lease auctions before the Biden administration can award offshore wind leases. The provision, part of the Inflation Reduction Act, was engineered by Sen. Joe Manchin, a fossil-fuel advocate. “The conundrum reflects how the horse-trading that produced the [IRA] will continue to linger over the administration’s environmental decisions,” The Washington Post reported.

Making progress on methane

Cutting methane emissions from fossil-fuel operations is a low-hanging fruit in addressing climate change. Repairing leaks isn’t complex or expensive. The International Energy Agency estimates that around 70% of methane emissions from fossil fuel operations could be reduced with existing technology. The real challenge is to find where the leaks are.

That’s now becoming a lot easier as scientists are using a combination of new-generation satellites to identify “methane super-emitters” from space. The European Space Agency’s Tropomi sensor produces a global map of methane concentrations every day, measuring methane anywhere on Earth with high precision.

But there’s a catch: The satellite, known as Sentinel-5P, has a relatively coarse, city-scale resolution, which isn’t sufficient to pinpoint the source of a methane leak. To zoom in, researchers from the Netherlands Institute for Space Research (SRON) discovered that they could use other satellites, which were not designed to measure methane, but provide higher resolution images of the Earth’s surface. 

The ESA’s Sentinel-3 satellite, for example, provides a daily scan of the world with a pixel resolution of 500 meters and gives indications of the duration of a leak. Sentinel-2 satellites, which go around the world in five to six days, offer a 20-meter resolution which help identify the precise location of a leak.

This system allowed SRON researchers to detect a six-day methane leak from the Hassi Messaoud field in Algeria. For the first time, methane emissions from landfills can also be seen from space. The team’s algorithm now automatically detects dozens of methane plumes every week from Tropomi observations. In 2021 alone, nearly 3,000 plumes, 45% of which came from oil and gas facilities, amounted to emissions larger than the Netherlands’ total annual greenhouse gas emissions. “For the first time, we see methane super-emitters from space and we had no idea there were so many,” said Ilse Aben, a senior scientist at SRON.