Busting the intermittency myth, a $27trillion opportunity and financing mass market green buildings
In this issue:
Busting the intermittency myth
An interesting study by scientists at Trinity College, Dublin, has found that power grids supplied largely by renewables experience lower intensity blackouts caused by weather events than those dominated by fossil fuel generation. The prevailing wisdom is that the inherent variability of wind and solar brings increased risk of disruption during severe weather but it seems not. The study looked at US blackout data between 2001 and 2020 and revealed power systems with higher renewable penetration did not exhibit more blackout vulnerability and when blackouts did occur, they were likely to have reduced intensity.
Listed companies slowing down
In its regular COP-linked edition, the MSCI Sustainability Institute Net-Zero Tracker reminds us of the supertanker-like nature of reducing emissions of large corporations. The world’s listed companies are heading towards emitting 11 gigatonnes of Scope 1 CO2 this year, around 20% of global emissions. Diminishing marginal returns seem to be kicking in as emission reductions for US listed companies are predicted to slow to 1.8% a year between now and 2030, down from an average 3.7% a year over the last six years, as quick wins have already been secured. Emissions from Chinese listed companies are still set to increase but at a much lower rate than the recent past, a 1.2% p.a. increase being predicted against a 6.9% increase over the last six years.
Only 40% of large companies have transition plans
That’s the finding of the latest EY Global Climate Action Barometer, its annual survey, this year covering 1,400 companies across 51 countries. Breaking down the data reveals an even poorer picture for some of the highest emitting countries. Only 32% of companies in the US have transition plans and only 8% in China. Interestingly, 67% say they have conducted climate related scenario analysis and yet only 36% have referenced climate-related financial impact in financial statements.
Climate action presents a $27 trillion opportunity
That’s the conclusion of CDP in a report looking at its database of reporting companies. Companies identified US$16trn (NZ$27trn) in potential climate-related opportunities—an amount roughly equivalent to the combined GDP of Germany, India and Japan. Yet, only 25% of CapEx is dedicated to supporting corporate climate transition plans. The report concludes sluggish government policies are holding back the realisation of the potential.
Climate disaster losses off the scale
Meanwhile, the International Chamber of Commerce reports an 83% increase in climate disasters across the twenty year periods of 1980-99 and 2000-19, attributing the increase to climate change. It monetises the loss from climate related disasters over the last decade at US2trn (NZ$3.4trn). Losses in the last two years come to US451bn (NZ$768bn).
1.5C nearer than we think
A study of ice cores by scientists from Lancaster University suggests we are closer to 1.5C than we think. Their analysis indicates warming is already 1.49 degrees above pre-industrial levels rather than the latest UN figure of 1.3. The difference arises because the Lancaster study sets an earlier baseline (pre 1700) than the more common 1850-1900. They argue the 1850-1900 period will already have experienced some impact from industrialisation and is, therefore, a less informative reference point.
OECD downbeat
The OECD’s latest Climate Action Monitor tells a familiar tale. Temperatures are up, extreme weather events are up and governments are not doing enough, either in word (NDCs) or deed. Using a metric of climate policy density, a means of measuring policy activity, the report states the gap between OECD countries and OECD partner countries grew by 2%, risking carbon leakage between the two groups. The report calls for very much more stringent NDCs and supporting actions.
Global efficiency improvements falling short of target
The IEA has just published its Energy Efficiency 2024 report along with a new Energy Efficiency Progress Tracker. It reports global improvements in energy efficiency are likely to be around 1% this year, well short of what’s needed for net zero and of last year’s commitments to double efficiency progress. Efficiency improvements are the biggest single contributor to net zero according to the IEA and can deliver 30% of the emissions savings we need. However, governments are not doing what’s necessary to capture these, most cost effective, savings. Energy intensity in New Zealand is cited as 4.1MJ/USD. For context, Australia sits at 4.3, the US at 4.4, the UK at 2.3, Germany at 2.9 and Denmark at 2.2.
Financing mass market Green Buildings
The Green Building Councils of the US, France, Australia and Singapore and the UK’s Building Research Establishment have just published a joint paper on financing green buildings. The target is to encourage the development of solutions for improvements in the mass market. That is, it’s not simply targeted at delivering flagship, high-rating new buildings but is looking at across the board improvements.
