Climate Change News

Climate Change News

Corporate sustainability reporting
Climate Change News

Your guide to ​​corporate sustainability reporting in the EU

Everything you need to know about corporate sustainability reporting in the EU: from the Non-Financial Reporting Directive to the Sustainable Finance Package and Europe’s Green Taxonomy. Since 2018, certain companies in the European Union have had to disclose information on their environmental and social impact in a yearly report often called the Sustainability Report. The Non-Financial Reporting Directive (NFRD) was adapted into national law in all 28 member states, including in Spain with the Law 11/2018 on Non-Financial Information. But this directive is about to change, with a proposal for a Corporate Sustainability Reporting Directive (CSRD) currently in discussions in the European Parliament. So who has to comply with these directives, and what specific information is required?  The Non-Financial Reporting Directive The Non-Financial Reporting Directive (NFRD), published in 2014, required EU member countries to create national legislation to require companies with certain characteristics to publish information beyond their income statements. In particular, these companies are asked to report on social and environmental matters, with the aim of improving sustainability performance. Who has to comply with NFRD NFRD applied to all public interest companies with more than 500 employees, a balance sheet that exceeds €20 million or a turnover that exceeds €40 million. In the EU, this represents about 11,700 large companies and groups, including listed companies, banks, insurance companies and other companies designated by national authorities as public-interest entities. What information should be disclosed The NFRD requires these companies to disclose information about their business model, policies, outcomes, risks, risk management and key performance, as well as key performance indicators around four key sustainability issues: environment, social and employee issues, human rights, and bribery and corruption. Companies must also disclose how sustainability issues may affect the company, and how the company itself affects its community and the environment, this is what the EU calls “double materiality”. The main goal of the NFRD and the sustainability report is to help companies manage the transition towards a sustainable world economy with social justice and environmental protection. In addition, it helps to increase the confidence of investors, consumers and society in general in these companies. The Corporate Sustainability Reporting Directive Last year, the European Commission adopted a proposal for a Corporate Sustainability Reporting Directive (CSRD), which would amend the NFRD. The proposal extends the scope of compliance to more companies, requires the information to be audited and introduces more detailed reporting requirements in line with the EU Green Deal and Green Taxonomy. The proposal sets common European reporting rules to increase transparency, requiring companies to report sustainability information in a consistent and comparable manner. According to the Commission, the new reporting requirements would apply to all large and all listed companies, including listed small and medium-sized enterprises (SMEs), though proportionate standards will be developed for SMEs.  Sustainable Finance Package and Green Taxonomy The CSDR is part of the Sustainable Finance Package, which aims to help direct private investment towards the transition to a climate-neutral economy. One important part of the package is the EU Green Taxonomy, which aims to clarify which economic activities contribute most to meeting the EU’s environmental targets. Last February, the European Commission caused controversy by revealing the latest draft of the taxonomy, which includes gas and nuclear as “sustainable” energy sources. This inclusion makes sense for the taxonomy’s mitigation and adaptation objectives, but may be counterproductive for the other four stated goals: water, circular economy, pollution and biodiversity. Now, the Commission is inviting recommendations on how to achieve the remaining four objectives. When will CSRD come into force The first report in line with the CSRD will have to be submitted by companies on January 1, 2024, for the 2023 financial year. This means that there is no time to waste in preparing for this new legislation. ClimateTrade offers a team of experts in non-financial reporting, as well as proprietary digital tools to support companies in this exercise. We can advise and guide your company through the process: get in touch.

April 6, 2022
carbon-neutral urban mobility
Carbon Markets

On the road to carbon-neutral urban mobility

Carbon-neutral urban mobility is fast becoming an expectation for consumers. What strategies can ridesharing apps use to achieve it? Most popular ridesharing apps have begun offering carbon-neutral rides, but what are the differences between them? And how can the operators that lag behind catch up as carbon offsetting becomes a basic expectation for users?  Assessing the carbon impact of ridesharing On the surface, it would appear that the rise of ride-hailing apps would lower the carbon footprint of urban mobility, since people don’t need to use their own car (or even own one at all) to move around anymore. But the reality is not so clear-cut: because of their low price and practicality, these services often end up being the preferred alternative to public transportation, therefore raising the emissions associated with single trips. This trend accelerated during the Covid-19 pandemic, as more people avoided crowded public transport. Additionally, a recent study found that on a per-trip basis, the greenhouse gas emissions associated with a ride from Uber, Lyft or other such apps are actually about 20% higher than if the user drove their own car. That’s the result of what the authors call “deadheading”: the driving around that drivers do while waiting for requests, as well as going to pick up passengers. More on this topic: Corporations are demanding carbon-neutral transportation From carbon offsetting to electric rides For this reason, it is crucial that ridesharing operators take steps towards reducing their carbon footprint. Luckily, most of them seem aware of it. Most of their fleets were hybrid almost from the start, but in recent years, they started going further in their commitment to cut emissions.  Lyft began offsetting the CO2 of its rides in 2018, and in the first year of this program, purchased 2,062,500 metric tons of carbon offsets. But in 2020, the company decided to give up this strategy and focus instead on switching to 100% electric vehicles by 2030. While this is good news for the climate in the long term, it may mean an increase in the company’s carbon footprint in the short term, which Lyft has chosen not to offset. In the midst of the pandemic, Uber announced a target to become a zero-emission car service by 2040 by switching to zero-emission vehicles, public transportation or micro-mobility options like bikes or scooters for all of its rides. Rather than paying drivers to make the switch, the company will apply an extra fee to rides in electric vehicles, making it more lucrative for them. In Europe, FREE NOW committed to carbon neutrality in 2020, and targets at least 50% fully electric vehicle rides by 2025 and 100% zero emission rides by 2030 in all key European markets. Meanwhile, Estonian ride-hailing app Bolt announced in 2019 that all its rides were carbon-neutral, with a plan to invest €10 million in five years in carbon reduction measures and carbon offsetting projects.   In the UK, Canada and Russia, cab-hailer app Gett allows customers to request an electric ride. It also committed to offsetting 7,500 tons of CO2 over the course of 2019 to make its rides carbon neutral. To go further in its commitment, it gives customers an option to pay a little more for their ride as a voluntary contribution to a climate-positive project. CO2 in micro-mobility Shared electric scooters and bike operators generally start from a better position than car operators, since they do not need to use fossil fuels. And yet, apps like TIER in Europe and Bird in the US have also made carbon neutrality pledges. For them, carbon neutrality involves offsetting the carbon footprint of the electricity needed to charge vehicles, as well as the transportation footprint of delivering them. Some even go as far as promising to be carbon-negative: That’s the case of Bolt, which promised to make its e-scooter operations climate-positive by the end of 2020, meaning that it would remove more carbon from the environment than what is produced by the maintenance of its scooters. What carbon neutrality entails for ridesharing While switching to electric vehicles is a long-term solution to the carbon problem of ridesharing apps, the transition is likely to take time. Additionally, as seen in the above paragraph on micro-mobility, electric vehicles don’t mean zero emissions, since they still have to be charged. For these reasons, carbon offsetting is and will remain necessary to achieve carbon neutrality. But what does carbon neutrality entail for urban mobility? First, it requires calculating the carbon footprint of every ride by assessing distance and fuel usage. ClimateTrade offers a carbon footprint calculator for the mobility sector that does that automatically. Get in touch to try it out. Once a ride’s carbon footprint has been calculated, it can be offset by contributing to climate mitigation projects around the world. The ClimateTrade Marketplace is a great place to find certified carbon offsets for this purpose. It uses blockchain technology for all transactions, making them fully traceable and giving our customers the confidence of knowing that their carbon offsetting activities are generating real impact. Additionally, the ClimateTrade API can be integrated into ridesharing apps, automatically calculating and offsetting the CO2 of every ride, and informing customers in real time about their carbon footprint and the projects used to offset it. Best practice: Cabify Spain-headquartered multi-mobility company Cabify has been carbon neutral in Europe and Latin America since 2018, offsetting 100% of the emissions generated by its corporate activity and resulting from user and company journeys through the app. In three years, Cabify had already offset more than 310,000 tons of CO2 through environmental protection projects, equivalent to the protection of 12 million trees in the Amazon rainforest.  In 2020, Cabify announced its alliance with ClimateTrade to leverage blockchain technology for carbon offset traceability. This was a step further in the company’s sustainability commitment, digitizing and tracing footprint calculation and offsetting, and demonstrating a clear commitment to transparency. Read the Cabify case study

March 23, 2022
SEC climate disclosures
Carbon Markets

SEC proposes landmark climate risk disclosures for US companies

Today’s climate disclosure announcement by the Securities and Exchange Commission (SEC) is the first step towards comprehensive climate regulation for US public companies.  In a landmark announcement on March 21, the US financial market regulator unveiled a plan for climate-related risk and greenhouse gas disclosure requirements for listed companies in the country. It includes the mandatory reporting of Scope 1, 2 and 3 emissions, as well as any material impacts climate-related risks can have on the company’s business, strategy and outlook, such as physical and regulatory exposures. “I am pleased to support today’s proposal because, if adopted, it would provide investors with consistent, comparable, and decision-useful information for making their investment decisions, and it would provide consistent and clear reporting obligations for issuers,” said SEC Chair Gary Gensler. GHG emissions and decarbonization initiatives According to the proposed rules, listed companies would be required to disclose information about: their governance of climate-related risks and relevant risk management processes; how any climate-related risks they have identified have had or are likely to have a material impact on their business and consolidated financial statements over the short-, medium-, or long-term; how any identified climate-related risks have affected or are likely to affect their strategy, business model, and outlook; the impact of climate-related events (severe weather events and other natural conditions) and transition activities on the line items of their consolidated financial statements, as well as on the financial estimates and assumptions used in the financial statements. Additionally, all companies subjected to these requirements would have to disclose information about their direct greenhouse gas (GHG) emissions (Scope 1) and indirect emissions from purchased electricity (Scope 2), while the largest companies and those with an established GHG reduction target that includes Scope 3 emissions would also have to disclose those emissions from upstream and downstream activities in its value chain. In a sample letter sent to companies last September about the proposed changes, the SEC mentioned that companies should align their financial filings with their corporate social responsibility (CSR) or environmental social and governance (ESG) reporting, including the disclosure of any significant greenhouse gas reduction initiatives and their cost. Additionally, the letter said companies may be required to disclose “material effects of transition risks related to climate change” that may affect their business, financial condition, and results of operations, including policy and regulatory changes, market trends, credit risks and technological changes. “The proposed disclosures are similar to those that many companies already provide based on broadly accepted disclosure frameworks, such as the Task Force on Climate-Related Financial Disclosures and the Greenhouse Gas Protocol,” said the SEC in a press release about the new rules. The purpose of the new rulebook is to harmonize the data companies give their investors around the risks that climate change represents for their business. What this could mean for corporate decarbonization in the US Gregory Kasin, Commercial Manager, US, at ClimateTrade, notes: “Unfortunately, in the past 30 years the US has taken a backseat in regards to addressing the externality associated with GHG emissions on a global scale. There have been many regional efforts in regards to establishing emissions trading, such as in California. However, on a national or international level the US has fallen behind other countries (especially in Europe) in establishing effective legislation to combat climate change.”  He adds: “The SEC’s recommendation for requiring the disclosures of corporations’ GHG emissions is a major step forward in getting the US once again engaged in the fight against climate change. As more people begin to understand the impact of this crisis, requiring public disclosures of emissions will provide transparency and hold companies accountable to do their part. It will reward conscientious companies since customers will choose to do business with them and raise the bar for others to do more.” Investors’ ESG pressure This move is part of President Biden’s focus on climate change, but was also largely driven by investor pressure. The SEC published its initial guidance in 2010 on how companies should disclose their climate change risks in their financial filings, but it has not historically taken significant enforcement action with respect to these disclosures.  This guidance remains in effect today, and it involves the disclosure of certain material direct and indirect risks presented by the physical impacts of climate change, increased climate change regulation, business trends, and other matters. Since its publication, investors have been asking for additional disclosure requirements, as they require an increasing amount of clear and comparable environmental data to comply with their own ESG criteria. Disclosing climate-related risk exposure has been a requirement for listed companies of more than 500 employees in the European Union since 2018, but there had been no sign of such a legislative measure in the United States until today. More on this topic: Financial institutions must do more against climate change New IPCC report urges inclusive and holistic action Next steps The new SEC rulebook will now go through a period of public feedback, with plans to finalize the document by the end of 2022. It is likely to encounter a lot of resistance, as many corporate representatives have expressed fears about the added regulatory burden it would place on US companies.  If you would like to know more about how your company can prepare for upcoming changes in SEC climate disclosures requirements, please contact us.

March 21, 2022
Financial institutions climate
Climate Change News

Financial institutions must do more against climate change

The vast majority of European financial institutions fail to properly disclose climate risk exposure, according to the European Central Bank.  A new damning report published by the European Central Bank (ECB) this March has revealed that most banks in the eurozone do not properly disclose their climate-related risk exposures. Half of banks have told the ECB they are exposed to such risks, but three out of four have not disclosed whether or not climate and environmental factors had a material impact on their risk profile. “This shows that these institutions are either unaware of the potential impact of the risks on their balance sheets or are aware of the impact but do not transparently disclose it,” says the report. Even for those that do disclose the materiality of these risks, the ECB notes disclosures are at high level and “do not show the full breadth of the underlying analysis”. None of the 109 banks under the ECB’s purview has met its climate disclosure expectations. ‘Banks can and must do much better’ The ECB believes there is no real justification for this lack of transparency, especially because of the growing standardization of climate risk measurement thanks to initiatives like the Task force on Climate-Related Financial Disclosures (TCFD). “The sheer speed at which regulation and metrics are developing in this field should leave no room for any doubt: addressing climate-related and environmental risks, and publishing good-quality disclosures, is not optional. Banks can and must do much better to improve the quality of their disclosures, and they need to do it quickly,” said Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB. The ECB has since threatened to use “the full array of regulatory tools” at its disposal to ensure banks fall in line. Scope 3 emissions According to the report, almost 60% of banks do not disclose how transition or physical risks could affect their strategy, and only half of them publish key performance or risk indicators around climate and environmental risks. Additionally, though most banks have committed to align their strategy to the goals of the Paris Agreement, only one has explained in detail how it plans to do so. Scope 3 financed emissions (coming from the customer operations banks finance through loans and other financial tools) are by far the largest share of banks’ carbon footprint, representing as much as 93% of their total Scope 1, 2 and 3 emissions. And yet, only 15% of banks disclose those, ignoring the ECB’s Guide on climate-related and environmental risks and the Greenhouse Gas Protocol. The report does point to some improvements in banks’ disclosures compared to the previous assessment dating from 2020, but it is clear that much more needs to be done for the financial sector to play its part in fighting climate change. ESG in real estate asset management Certain market trends are set to improve banks’ environmental performance in the coming years. It is now becoming easier to calculate the carbon emissions of buildings: for instance, ClimateTrade offers a carbon footprint calculator for the real estate sector. As a result, a ‘brown discount’ is being applied to buildings that fail to become more sustainable. This pressure is currently felt particularly in Europe and in the United Kingdom. For instance, a real estate representative cited a UK building valued at a certain price in 2020 suffered a price decrease of 30% in 2021, when the costs associated with the transition to net zero carbon were taken into account. This is much higher than  the value increase generated by the added value of already being net zero, the so-called ‘sustainable premium’, which stands between 5% and 12%. In time, this trend is set to reduce the amount of real estate loans and investment for buildings that show poor environmental performance, reducing financial institutions’ scope 3 financed emissions. Banks that are taking climate action Despite the findings of the report, some financial institutions have begun to take action to offset their operational emissions: in Spain, ClimateTrade has helped Banco Santander, Banco Sabadell and other financial institutions calculate and offset their emissions by contributing to climate mitigation projects that also work towards the Sustainable Development Goals. Since our platform is based on blockchain technology, all transactions and carbon credits are fully traceable, making disclosures and reporting easier and more transparent. We also have an alliance with risk consultancy N World Azentua to advise financial institutions on environmental action. To learn more about how ClimateTrade can do for the financial sector, contact us. 

March 17, 2022
IPCC climate report
Climate Change News

New IPCC climate report urges inclusive and holistic action

The Climate Change 2022: Impacts, Adaptation and Vulnerability report by the Intergovernmental Panel on Climate Change (IPCC) stresses the need for urgent action to mitigate and adapt to the effects of global warming. Failed climate leadership The conclusions of the report released on February 28 are clear: not enough is being done to mitigate and adapt to climate change, and this could lead to disastrous consequences. Reacting to the findings, Secretary-General of the United Nations Antonio Guterres did not mince his words: “Today’s IPCC report is a damning indictment of failed climate leadership(…). This abdication of leadership is criminal.” Back in 2015, the international community agreed to do everything in their power to limit global warming to 1.5°C, a commitment sealed by the Paris Agreement. This level of warming will already lead to climate hazards and biodiversity losses. Now, the report has revealed that even temporarily exceeding this warming level would result in severe impacts, some of which will be irreversible. For instance, if global warming increases from 1.5°C to 3°C, the risk of biodiversity loss will increase tenfold. At 2°C of warming, regions dependent on snowmelt could experience a 20% decline in water availability for agriculture, leading to knock-on repercussions for food security and health. More on this topic: The decade of climate action: Where are we after two years? Paris Agreement: Top 3 Article 6 questions that were answered at COP26 Climate injustice One of the main conclusions of this latest IPCC report is that people and ecosystems least able to cope with the effects of global warming are being hardest hit by the dangerous and widespread disruption in nature caused by human-induced climate change. Low-income communities most affected by climate risks Geographically, between 3.3 and 3.6 billion people live in hotspots of high vulnerability to climate change, mostly in Africa, Asia, Central and South America, small islands and the Arctic. In cities, the effects of global warming are magnified, aggravating pollution events and limiting the functioning of key infrastructure. These impacts are concentrated amongst economically and socially marginalized urban residents, particularly in informal settlements. Commenting on adaptation efforts, the report’s authors pointed to examples of maladaptation, such as poorly built walls to protect coastal populations from the sea rise, and noted that these are most common in low-income and vulnerable communities that don’t have access to the resources needed to implement effective adaptation methods. Inclusive adaptation must include indigenous and local knowledge In order to accelerate adaptation to climate change, the IPCC recommends implementing inclusive governance that prioritizes equity and justice. “Maladaptation especially affects marginalized and vulnerable groups adversely (e.g., Indigenous Peoples, ethnic minorities, low-income households, informal settlements), reinforcing and entrenching existing inequities. Adaptation planning and implementation that do not consider adverse outcomes for different groups can lead to maladaptation, increasing exposure to risks, marginalizing people from certain socio-economic or livelihood groups, and exacerbating inequity. Inclusive planning initiatives informed by cultural values, Indigenous knowledge, local knowledge, and scientific knowledge can help prevent maladaptation.” In other words, there can be no resilience to climate change without climate justice. Nature-based solutions To avoid mounting loss of life, biodiversity and infrastructure, the report notes that ambitious, accelerated action is required to adapt to climate change, at the same time as making rapid, deep cuts in greenhouse gas emissions. These cuts will require the phase-out of all fossil fuels, with more ambition than has been shown so far on the global stage: just last year at COP26, global leaders shied away from agreeing to “phase out” coal, choosing instead the vaguer expression “phase down”. “Coal and other fossil fuels are choking humanity. You cannot claim to be green while your plans and projects undermine the 2050 net zero targets. People see through the smokescreen. The present global energy mix is broken. Now is the time to accelerate the energy transition to a renewable energy future,” added Guterres at the press conference. More on this topic: Net Zero: From aspiration to auditable strategy Agroforestry and forest protection The report also places particular emphasis on the untapped potential of nature to fight climate change and improve livelihoods. In particular, agroforestry stands out as a climate-resilient way of growing food while also creating wildlife habitat. “Food security can be enhanced by making the food system resilient,” said IPCC Working Group II Co-Chair Debra Roberts at the press conference. At the same time, conservation, protection and restoration efforts are needed to help natural forests adapt to a changing climate. More on this topic: Nature-based solutions for people and the planet “Healthy ecosystems are more resilient to climate change and provide life-critical services such as food and clean water”, said IPCC Working Group II Co-Chair Hans-Otto Pörtner. “By restoring degraded ecosystems and effectively and equitably conserving 30 to 50% of Earth’s land, freshwater and ocean habitats, society can benefit from nature’s capacity to absorb and store carbon, and we can accelerate progress towards sustainable development, but adequate finance and political support are essential.” But the report’s authors made it clear that certain natural solutions, particularly in agroforestry, would no longer work above 1.5°C of warming, since this level of temperature rise would reduce farming possibilities. Urgent action needed to deal with interconnected risks For the first time, this IPCC report also emphasizes the interconnectedness of climate risks, and the need for a holistic approach to avoid snowball effects. Scientists point out that climate change interacts with global trends such as unsustainable use of natural resources, growing urbanization, social inequalities, losses and damages from extreme events and a pandemic, jeopardizing future development. “This report recognizes the interdependence of climate, biodiversity and people and integrates natural, social and economic sciences more strongly than earlier IPCC assessments,” said Hoesung Lee. “It emphasizes the urgency of immediate and more ambitious action to address climate risks. Half measures are no longer an option.” To tackle all these different challenges, everyone should be involved: governments, the private sector and civil society, and risk reduction, equity and justice should be prioritized in

March 3, 2022
Digital carbon footprint
Climate Change News

Your digital carbon footprint – yes, it’s real

Originally posted on Porch.com The phrase ‘digital carbon footprint’ might sound like an attempt to add one more thing to your growing plate of environmental concerns, but don’t worry – it’s real, but it’s also easy to mitigate. A digital carbon footprint is the sum of energy required from all of your online activities. This number includes things that are very tangible to us, like the power necessary to keep all of our online electronics charged and running. It also has some more far-reaching factors, like the energy required by the servers hosting our favorite TV shows, movies, videos, and games. The energy needed for the manufacturing process of consumer electronics is another element to consider, as is the fossil fuel consumption for shipping these products. Yet another piece of our digital carbon footprint is our devices’ lifespan and disposal methods. All of these things combined create our digital carbon footprint. It’s looking a little more real now, right? Your normal, everyday carbon footprint is something you probably hear about and factor into your choices. Choice of vehicle, packaging of consumer products, recycling habits, choosing local produce, all of those things would not have crossed the mind of the average person daily. That’s where we’re at with digital carbon footprints. The impacts of our online activities are mounting, so it’s time to consider how to mitigate those effects. More on this topic: Sustainability and remote work What are carbon-neutral products and services? Ways you can help Avoid streaming, auto-play, and playing videos while you are out of the room. This is the modern equivalent of your parents drilling into you not to leave the lights on when you walk out of a room. It adds up! Download instead of stream. If you have a favorite Netflix show that you can download, do that instead of repeatedly streaming it. When you download a show, you’re only using your device’s energy to watch it, not that of all of the technology required by a streaming service. Adjust your online shopping habits. If you, like many of us, have some pretty robust online shopping habits, you can make a difference by making sure your tabs are closed and you aren’t leaving items in your online carts that you have no intention of returning to. Remember – these actions all mean that somewhere, energy is being consumed! Do “clear” searches and reuse your searches. Regularly clearing your cookies and search history means that cookies are not being triggered to track your online behavior when you run a new search. Good for your privacy and energy consumption. Reusing searches means that your browser is reloading a search that the results are already cached for, not using energy to run a novel search. Adjust power settings. This one should be pretty obvious – like the analogy of your parents hounding you about turning off the light as a kid, turn your power consumption settings down! Brightness, sleep time, etc.—it all matters. Adjust brightness. Speaking of brightness, you’ll notice a pleasant boost in your device’s battery life if you get used to a lower brightness setting. Not to mention that you’ll be using less power overall and reducing your digital carbon footprint. Recycle, upcycle and dispose of your electronics properly. Give away, upgrade, or responsibly dispose of your old devices. Tossing a ten-year-old cell phone in the trash? Not so environmentally responsible. Source an electronics disposal facility in your area and ensure you’re doing your part! Don’t upgrade devices until you actually need to. Despite what your service provider might have you believe, you won’t perish if you don’t have the latest release of your device. Waiting longer to upgrade reduces the amount of demand for consumer electronics and has a downstream waterfall effect positively on your digital carbon footprint. Power. Down. Many of us have gotten into the habit of letting our devices go into ‘Sleep’ mode instead of shutting them down at the end of our days. Don’t do this. There is still a draw on energy when they are in Sleep mode. Powering them off is good for your devices, your electricity bill, and the environment. Eliminate superfluous use of technology. Where you can, go old school. This is the modern version of eating local. We always used to ‘eat local’ because shipping in food from across the world daily was a luxury most could not conceive of. Today, go tech-free. See how your life changes (likely for the better) with less tech! Change your light bulbs to eco-friendly, LED ones. They might be more expensive in the short term, but they’ll save both you and the environment in the long term. Find the best spot to place your lamps in order to have the best lighting. Optimize! Just because you put a lamp in that one place when you moved in doesn’t mean it has to stay there for eternity. Move things around and see how you can optimize the light use in your home. Clean out your cloud space. Go through your cloud service periodically and delete the files you no longer need. Be aware that even now that they are safer, cloud storage still experiences data breaches, so mind the information you have there. Periodically review and keep it secure. Consider transferring archived files to an external hard drive. This is safer and uses less energy. Email more mindfully. Delete old emails, declutter your inbox, unsubscribe from mailing lists you don´t need. You’ll feel more accomplished while reducing your digital footprint. Find the smart app that works for you. There are numerous smart apps on the market that are created to connect to and monitor your home’s carbon footprint. Do some research and find out what one works the best for you based on your type of home, technology, and devices. Moving to sustainable and renewable energy sources Analyze your home’s electric use. Move to greener resources when possible, from solar panels to LED bulbs—everything helps! As technology moves forward

February 24, 2022

Other Categories

G7 Climate Club
Carbon Markets

What the G7 Climate Club means for carbon markets

What exactly is a climate club, and how can the one recently announced by the G7 influence the world’s decarbonization? At the end of the G7 meeting in Germany last week, Canada, France, Germany, Italy, Japan, the UK and the US announced the formation of a climate club aiming to “advance ambitious and transparent climate change mitigation policies towards climate neutrality”. But what exactly does a climate club consist of, and how will it influence global decarbonization?  What is a climate club? Though this is a relatively new concept, a climate club generally consists of a group of countries committed to climate action, who take measures together to fight carbon leakage from countries outside the club. As a reminder, carbon leakage is when production is moved from a country with a strict carbon policy to a country where it is cheaper to pollute, and therefore no emissions reduction is achieved. The idea is to create a low-carbon market big enough to incentivize companies to reduce their emissions and improve their climate performance. Who is in the G7 Climate Club? The G7 Climate Club is formed of all the countries included in the Group of 7: Canada, France, Germany, Italy, Japan, the UK and the US. In 2020, these countries accounted for over 50% of global net wealth (US$418 trillion), 32 to 46% of global GDP, about 25% of global emissions, and approximately 770 million people or 10% of the world’s population. Needless to say, the G7 Climate Club is big enough and economically powerful enough to make a difference in the global fight against climate change.  Three of these countries (France, Germany and Italy) are part of the European Union, which has a mandatory carbon market (the EU ETS) in place and is already planning to implement a Carbon Border Adjustment Mechanism – effectively a carbon tax for products entering the EU – to fight carbon leakage. Of the other four, Canada has a carbon tax set at C$50 per ton of CO2-equivalent and due to increase to C$170 by 2030; Japan has a carbon tax of around US$2.80 per ton, but is looking at implementing a US$56/ton tax on the shipping industry starting from 2025; the UK has an emissions trading system similar to that of the EU; and the US currently has no federal carbon tax. However, the G7 Climate Club is not closed: instead, founding members are inviting other countries with strong climate ambitions to join by the end of the year, when the G7 expects the club to be fully established. More on this topic: EU ETS reform: What’s to come for the mandatory carbon market? SEC proposes landmark climate disclosures for US companies What will the G7 Climate Club do? According to a G7 statement on the Climate Club, it is built on three pillars:  1) Advancing ambitious and transparent climate mitigation policies to reduce emissions intensities of participating economies on the pathway towards climate neutrality, by making policies and outcomes consistent with the club’s ambition, strengthening emissions measurement and reporting mechanisms, and countering carbon leakage at the international level.  2) Transforming industries jointly to accelerate decarbonization, including through taking into account the Industrial Decarbonisation Agenda, the Hydrogen Action Pact, and expanding markets for green industrial products.  3) Boosting international ambition through partnerships and cooperation to encourage and facilitate climate action and unlock socio-economic benefits of climate cooperation and to promote just energy transition. Members of the Climate Club would share best practices and work together to compare the effectiveness and economic impacts of each of their mitigation policies, such as explicit carbon pricing, other carbon mitigation approaches and carbon intensities. They would also use their influence to incentivize developing countries to increase climate transparency and decarbonize their energy and industrial sectors, including through financial, technical capacity support and technology transfer development and deployment. How will the Climate Club shape carbon markets? The biggest impact the Climate Club is expected to have on global carbon markets is by setting a minimum carbon price, below products imported by club members will be submitted to an adjustment tax. This will allow climate leaders to move ahead on policy and accelerate global decarbonization, even if no consensus can be found amongst all Paris Agreement signatories – as was observed at COP26 on the topic of coal. In fact, the Climate Club is intended to com­pensate for the lack of enforcement mech­anisms in the Paris Agreement: “We note with concern that currently neither global climate ambition nor implementation are sufficient to achieve the goals of the Paris Agreement by reducing greenhouse gas emissions. We aim to establish a Climate Club to support the effective implementation of the Paris Agreement by accelerating climate action and increasing ambition,” says the G7 statement on the topic. What are the challenges? In pushing for the global implementation of the Paris Agreement, and considering the G7’s economic power on the global stage, the Climate Club must ensure it takes the basic principles of climate justice into consideration. While all countries must take action to combat the climate crisis, differences in levels of economic development and historical carbon emissions must be recognized, and “punitive” mechanisms like carbon taxes and carbon border adjustment mechanisms must come with financial and other forms of support for developing countries’s net zero transition. Let’s remember that developed economies’ 2009 pledge to provide US$100 billion of climate finance to developing countries every year by 2020 was never fulfilled. The best way for the Climate Club to address climate justice would be to dedicate revenue from the Carbon Border Adjustment Mechanism to climate finance, both for developing countries and for communities within its own countries that are most vulnerable to the effects of climate change.

July 5, 2022