UK and Canada launched the Powering Past Coal Alliance (Reuters, 16 Nov): a “global alliance of nations and states committed to moving the world from burning coal to cleaner power sources was launched”. The UK was one of the first countries to commit to ending unabated coal power generation by 2025. 25 partners have already joined the initiative and the plans are to grow to 50 or more members by next year (Declaration here). Claire Perry, Minister for Climate Change and Industry, said “the Powering Past Coal Alliance will signal to the world that the time of coal has passed. The UK is committed to completely phasing out unabated coal-fire power generation no later than 2025 and we hope to inspire others to follow suit”. Catherine McKenna, Canada’s Minister of Environment and Climate Change, added: “coal is literally choking our cities, with close to a million people dying every year from coal pollution. I’m thrilled to see so much global momentum for the transition to clean energy – and this is only the beginning”. (Press release, 16 Nov).
GFC and EIB set to strengthen international Green Bond market: the European Investment Bank (EIB) and the Green Finance Committee (GFC) of the China Society for Finance and Banking published a joint white paper that looks at a potential harmonisation of taxonomies for environmental projects in the green bonds market. “Development of green finance is a priority for China and China is now the world’s largest green bond market. However, the lack of clear definitions in some markets and the lack of comparability of different definitions in different markets are barriers to future growth of the green finance market and green capital flows” said Ma Jun, Special Advisor to PBoC Governor and Chairman of China’s Green Finance Committee. “Strengthening investment in green finance is essential to support sustainable growth, improve environmental protection, and implement the Paris Agreement”, added Jonathan Taylor, European Investment Bank Vice President. (White paper here).
News from the UK
The Environmental Audit Committee launched a Green Finance inquiry to scrutinise the Government’s strategy to develop ‘world leading Green Finance capabilities’: the Committee is interested in how investment in longer-term sustainable development can be incentivised across the economy and is inviting written submissions. It will examine, among other things, how the UK’s Green Finance Taskforce should concentrate its efforts, given the work being carried out by the EU’s High Level Expert Group on Sustainable Finance HLEG; how effective the TCFD recommendations are likely to be at moving investment into ‘clean’ sectors; how TCFD recommendations can be adopted by companies and whether a voluntary approach is sufficient.
News from Europe
The European Commission launched a public consultation on fiduciary duty and sustainability, which will run until January 2018: as part of the HLEG’s work on sustainable finance, the consultation aims “to collect the views and opinions of interested parties on this issue in order to inform the impact assessment process”. (Consultation here).
News from around the world
Global energy demand will be 30% higher by 2040: according to the World Energy Outlook 2017, four large-scale shifts will define the global energy system. 1) The rapid deployment and falling costs of clean energy technologies. The boom years for coal are over and renewables will account for 40% of total power generation by 2040. 2) The growing electrification of energy, which will make up 40% of the rise in final consumption to 2040. 3) China’s new and cleaner economic strategy will have implications for global energy markets. 4) the United States will be the world's largest exporter of LNG natural gas by the mid-2020s. The report also featured a new scenario, the sustainability scenario (based on the Sustainable Development Goals (SDGs), which “provides a benchmark for measuring progress towards a more sustainable energy future”. (Press release, 14 Nov).
The UN and World Bank published a sustainability roadmap (RI, 14Nov): the objective of the road map is “to propose an integrated approach that can be used by all financial sector stakeholders—both public and private—to accelerate the transformation toward a sustainable financial system”, through market-based, national and international initiatives. The roadmap proposes a fossil fuel subsidy review and green tagging. On disclosure, the capacity of financial sector stakeholders to use sustainability information needs to be enhanced and that “efforts across asset classes and jurisdictions are uneven”. The roadmap highlights how “the guidance from the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) is providing further impetus to both the real sector and FIs to develop a coherent and consistent approach to incorporate climate-related risks into their decision-making process”. (Roadmap here).
Syria joined the Paris agreement: the accord will enter into force on the 13th December, leaving only the United States opposing the deal. Syria and Nicaragua, that signed last month, were the only two countries not backing the accord in 2015. (Reuters, 14 Nov).
La Caisse de dépôt et placement du Québec (CDPQ) announced investment strategy to address climate change:“from now on, climate change will factor in each and every investment decision we make across the breadth of our portfolio” said Michael Sabia, President and Chief Executive Officer. The investor set a short-term target to increase low carbon investment by over $8 billion, and a medium-term target to reduce their carbon footprint by 25% per dollar invested. As part of this strategy, they will reduce exposure to the assets with the highest carbon intensity in our portfolio (News release, 18 Oct).