Volatile quarter yields clean energy winners, plus Bill Gross' carbon capture timeline
Welcome to Callaway Climate Insights. Announcing our next conference, The Dublin Climate Summit. In Ireland - in person - on Thursday, May 12. Details below.
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Few market watchers I know think the volatility in global stocks, bonds and commodities in the first quarter is over. The Ukraine invasion grows worse every day. Interest rates are rising. And the chaos in oil and gas markets has flipped the climate change story on its head, for now.
But for what many are calling the busiest news cycle ever, markets proved remarkably resilient to what could still be the end of the world. Clean energy stocks in particular had a strong quarter, as investors were reminded once again (after Covid) that the world needs to move to renewables, and fast.
The optimism was on plain display this week in Silicon Valley, where the @Techonomy Climate conference was held — the first Techonomy event in person in more than two years. David Kirkpatrick and Josh Kampel are two old hands at tech publishing and events, and they put on rousing summit, featuring Bill Gross of Idealab, Katherine Hayhoe of The Nature Conservancy, Microsoft Chief Environmental Officer Lucas Joppa, Mia Diawara of Lowercarbon Capital, and many others, including me, serving as a moderator on the climate investing and entrepreneurship panel (click here for recap).
I asked Bill Gross, who is investing big in carbon capture, when he thought capture prices (currently about $600 per ton) would get to the point where they would cross with carbon market prices (currently about $90 a ton, meaning companies would find it cheaper to employ capture technology than to buy carbon credits on markets.
“I think we will beat $100 by the end of the decade,” he said of carbon capture. “That’s when it will scale.” Optimistic for sure. But as Gross reminded the audience of about 200 in Mountain View. Calif., the one constant about tech production prices is that they keep falling.
Which brings me to a big announcement! Callaway Climate Insights is hosting our second annual Dublin Climate Summit on May 12. This time it’s a hybrid conference, with the in-person part in Dublin, Ireland. Blackstone’s Jean Rogers, Prelude Ventures’ Gabriel Kra, Cervest’s Iggy Bassi and a host of others join Irish Taoiseach Micheal Martin, the EU’s Paschal Donohoe to discuss climate solutions, intelligence, and the new pace of energy transition. More details, and registration info next week.
More insights below . . . .
Don’t forget to contact me directly if you have suggestions or ideas at email@example.com.
Eureka! This chart shows that divestment of oil stocks really works
. . . . Climate advocates have long argued that big banks and funds divesting from oil and gas companies actually would force the companies to lower their carbon outputs, but now a study from the University of Augsburg confirms this in scientific terms, writes Mark Hulbert. Like many divestment skeptics, Hulbert always contended that any big group selling its oil shares would simply sell them to another buyer and nothing would really happen. But one simple chart in this fascinating study of divestment targets study changed his mind. Somewhat. . . .
EU notebook: French corporate giants under fire for staying in Russia
. . . . French oil giant Total Energies (renamed last year to reflect its climate chops) is under fire during election season for its refusal to pull out of Russia, writes Alisha Houlihan in Dublin. Total is the largest of several French companies who together make the country the largest foreign employer in Russia, but who so far have been reluctant to pull out of Russia as many of their Western counterparts have. The issue, in the middle of French election season, is making for some uncomfortable pressure by green politicians. . . .
Thursday’s subscriber insights: America’s oldest ballpark wants to go carbon neutral
. . . . The Boston Red Sox and their historic Fenway Park became the latest sports team/venue to say they will go carbon neutral this week, in a deal with Aspiration, the green bank with investors such as Robert Downey Jr. and Leonardo DiCaprio. The new wrinkle on this deal is that they’re going after Scope 3 emissions, which in the sports world means the fans. That’s a lot of hot dogs. But like all sports hype, these deals may not be everything they seem to be, read more here. . . .
. . . . Vladimir Putin’s plan to cut off Western gas customers Friday if they don’t pay in roubles was always seen as a last gasp gambit, one that threatens Russia’s war financing as much as it does Europe’s energy reserves. Now that he’s put it in motion, the Ukraine crisis enters a new stage this weekend, though it is unlikely to last long. Read more here. . . .
. . . . Must-read from British politician and former Liberal Democrats leader Vince Cable this week in The Independent about how the folks who brought us Brexit will soon be coming for the zero-carbon transition. As we’ve said before, the deniers have moved to defense, and now offense. . . .
. . . . Kudos for CBS, a former business partner from my CBS MarketWatch days, ranking first among the big three U.S. broadcast networks in climate coverage last year, according to the annual breakdown from Media Matters. In total, climate coverage tripled at CBS, NBC and ABC. . . .
. . . . Asian banks, among the first in the region to use the word “sustainable” in their marketing, and the fastest in hiring talent to sell green financing products, are woefully lagging in adopting their own lending policies — or any policies — to reduce carbon footprints, according to a new study by Asia Research and Engagement. None of the 32 regional banks in the study have coal policies aligned with the Paris Agreement and of them all, the worst three are from China, according to this story from Eco-Business. A similar study in India found banks equally unprepared. Sadly, Asia is not alone in this embarrassment. . . .
. . . . The new International Sustainability Standards Board released its first proposed standards for climate disclosure, following the Securities and Exchange Commission in the U.S. by a week. The main difference is that the ISSB goes a step further than the SEC in mandating disclosure of Scope 3 emissions, or emissions by customers and vendors. While the SEC requires disclosure if they are “material” to climate risks, the ISSB wants all companies to provide them anyway. . . .
. . . . And finally, President Biden couldn’t resist tapping the strategic oil reserves this week, saying he’d release a million barrels a day for up to six months, which could be 180 million of the reserve’s 560 million barrels, about a third. As with all the past times this has been tried, oil prices dropped, then recovered. Oil was still above $100 a barrel last we checked.
To read all our insights, news and in-depth interviews, please subscribe and support our great climate finance journalism.
Editor’s picks: Early warning systems could save lives and billions of dollars
WMO issues report on value of early warning systems
The World Meteorological Organization has published a new bulletin titled Early Warning and Early Action, that seeks to inform discussion ahead of this May’s Global Platform for Disaster Risk Reduction event in Bali, Indonesia. The bulletin focuses on early warning and anticipatory action, with articles on harnessing technology and services, risks to resilience, the Global Multi-hazard Alert System, the WMO-UNDRR Centre of Excellence and on gender equality in the context of disaster risk reduction. WMO Secretary General Petteri Taalas writes in the foreword, “Over the past 50 years (1970-2019), a weather, climate or water-related disaster has occurred on average almost every day — taking the lives of 115 people and causing $202 million in losses daily. The number of recorded disasters increased by a factor of five over that 50-year period, driven by human-induced climate change, more extreme weather events and improved reporting. Thanks to better warnings, the number of lives lost decreased almost three-fold over the same period because of better weather forecasts and proactive and coordinated disaster management. Spending on early warning systems, Taalas says, would avoid losses of $3 billion to $16 billion per year.
Bitcoin energy battle heats up
Climate activist organizations including Greenpeace and crypto billionaire Chris Larsen are launching a “Change the Code, Not the Climate” campaign, designed to pressure the bitcoin community to change how it orders transactions to reduce the amount of energy used in the process. According to a report by Olga Kahrif for Bloomberg Green, the process already consumes as much power as Sweden and, citing an interview with Larsen in an interview, says in five years Bitcoin may consume as much power as Japan. The Bloomberg report notes the marketing campaign intends to buy ads in major publications, while activist teams will do grassroots work with members.
Latest findings: New research, studies and projects
Corporate net-zero pledges: No good, just the bad and the ugly
Achieving the Paris Accord goal of limiting global warming to no more than 1.5°C. relative to the industrial era (1880-1900) will require a transformation of global energy systems, with the active participation and contribution of all actors in the economy. Many companies have pledged to reach net zero direct and indirect greenhouse gas emissions by 2050. The authors of Corporate Net-Zero Pledges: The Bad and the Ugly analyze such pledges by 35 companies across seven industries — oil and gas, mining, chemicals, utilities, cement, steel, and food processing — that jointly represent 64% of global GHG emissions on a direct emissions (scope 1) basis. The authors write in the abstract: To examine how industry giants incorporate climate considerations into their business plans, this analysis considers companies that are ranked within the top 10 of their sectors based on market capitalization. In addition, the analysis focused on companies that have publicly available net-zero pledges or other climate targets that provide insights into their future decarbonization plans. “As this research emphasizes, companies are doing too little across the board. From lacking short-term emissions reduction targets to actively lobbying against policies that would catalyze decarbonization, company pledges fall short of what is unequivocally needed to accelerate toward a decarbonized future.” Authors: Jack Arnold, Columbia University, Columbia Center on Sustainable Investment; Perrine Toledano, Columbia University, Vale Columbia Center on Sustainable International Investment.
More of the latest research:
Climate risk exposure and financing decisions for publicly traded U.S. firms
Words to live by . . . .
“Addiction to fossil fuels is mutually assured destruction. We need to fix the broken global energy mix. Instead of hitting the brakes on the decarbonization of the global economy, now is the time to race towards a renewable energy future.” — António Guterres, Secretary General of the UN.