The recent IPCC AR6 Synthesis Report states that the current mitigation policies and laws addressing mitigation "make it likely that warming will exceed 1.5°C during the 21st century and make it harder to limit warming below 2°C." As a strategy, bans should be considered much more along with the use of carbon pricing and other incentives, removing harmful subsidies, and promoting innovation and education. Bans should be a cornerstone of climate policies around the world.

Galit

Under India’s G20 Presidency, in the beginning of March, Think20 (T20), which is an official Engagement Group of the G20, organized an event where I was asked to suggest recommendations in the field of climate smart policies. Looking at all the possible policy instruments and climate strategies to achieve the Paris Agreement targets and limit global warming, I decided to focus my intervention on one specific suggestion and that is to utilize more the use of bans in our mitigation efforts to reduce GHG emissions. Yes, those bans that were popular decades ago in environmental policies under what is known as &quot;command-and-control&quot;. Such tools can set specific limits for pollution emissions, so the targets are fixed and known in advance.
Today, market-based instruments (MBIs) which focus on putting a price on externalities, such as taxes, charges, levies, tradable permit schemes, deposit refund systems and subsidies, have become the preferred choice in developed countries for environmental policy. This is because MBIs <a href="https://doi.org/10.1016/j.jclepro.2022.133947">are considered more cost-effective</a> than command-and-control approaches in addressing most environmental externalities. They give polluters the flexibility to respond to incentives by seeking the best sustainable technologies for reducing emissions. MBIs can also incentivize the market to reduce the pollution beyond the targets if possible.
As an economist myself and having been the person promoting MBIs in the environmental policy of Israel, I believe MBIs should be at the core of environmental policies around the world. However, when looking at the climate scenarios we are headed towards, with the international community way behind in reaching almost every target, humanity is running out of time. The recent <a href="https://www.ipcc.ch/report/ar6/syr/">IPCC AR6 Synthesis Report</a> states that the current mitigation policies and laws addressing mitigation &quot;make it likely that warming will exceed 1.5°C during the 21st century and make it harder to limit warming below 2°C.&quot; Therefore, what is done today is not enough to close the mitigation gap. The report also states that &quot;limiting human-caused global warming requires net zero CO2 emissions&quot; and &quot;the level of greenhouse gas emission reductions this decade largely determine whether warming can be limited to 1.5°C or 2°C.&quot;
In my view, MBIs, with the evolving and developing carbon markets are good and necessary but making them verifiably effective in actually reducing carbon emissions to the extent required will take years at best. This is time we don&#x27;t have, as the report reveals.
<img src="https://illuminem.b-cdn.net/articlebody/4c75146095cfbef0977b251641b81a0be0da5276.png" alt="Source: Figure SPM.5 of the AR6 Synthesis Report, IPCC, 2023.">
This is why the use of bans is needed more where there are alternatives to polluting activities and products. I am not saying we need to ban the use of fossil fuels all together; it&#x27;s not possible. However, as a strategy, bans should be considered much more along with the use of carbon pricing and other incentives, removing harmful subsidies, and promoting innovation and education. Bans should be a cornerstone of climate policies around the world.
There are many examples of the use of bans. In the past, when humanity recognized that the ozone layer was being depleted because of the use of certain chemicals, the <a href="https://www.unep.org/ozonaction/who-we-are/about-montreal-protocol">international community moved quickly</a> to ban ozone-depleting substances and mostly chlorofluorocarbons (CFCs), which were responsible for the deterioration of the ozone layer. When the direct adverse health effects caused by certain substances, such as with asbestos or polychlorinated biphenyls (PCBs) were identified, countries were quite decisive in banning their use.
With global warming, as a tragedy of the commons, where most of the effects to date have been global or regional in scope, it is much harder to connect the cause and effect into coherent policy actions. Nevertheless, there are many examples of the growing use of bans. In the context of climate change and air pollution, India has decided to ban the use of <a href="https://www.hindustantimes.com/cities/noida-news/diesel-autos-to-be-phased-out-from-ncr-by-2026-says-caqm-gb-nagar-ghaziabad-halfway-there-101669917575785.html">diesel autorickshaws</a> in and around New Delhi from 2027, with no new diesel auto-rickshaw registered in the National Capital Region (NCR) from the beginning of 2023. Some countries have also decided to end the sale of new petrol and diesel cars — the <a href="https://www.iea.org/policies/14787-petrol-and-diesel-car-phase-out">United Kingdom</a> by 2030 and the <a href="https://www.europarl.europa.eu/news/en/headlines/economy/20221019STO44572/eu-ban-on-sale-of-new-petrol-and-diesel-cars-from-2035-explained">European Union</a> by 2035.
When speaking about bans, one should address the slight difference between the use of the terms &quot;bans&quot; and &quot;phasing out&quot; as most people today use the latter rather than the former. Bans shouldn&#x27;t be abrupt; therefore, one can consider them as the &quot;phasing out&quot; of unwanted activities and products. Nevertheless, I find that there is a conceptual difference between the terms as bans suggest there is a clear and finite deadline while phasing out suggests the process is gradual, moderate and can be changed or modified over time. My suggestion would be to use the term &quot;bans&quot; as the default for such policy measures.
As with every policy, bans too should be adjusted to national circumstances as each country or sector has its own circumstances, alternatives, and options. A <a href="https://doi.org/10.1111/reel.12395">recent study</a>, for instance, has found that the adoption of product carbon requirements (PCRs) which would establish near-zero-emission limits for basic materials would require that low-carbon production processes or substitute materials have reached a certain level of technological maturity which is not likely to happen before the 2030s. Nevertheless, there are sectors where it is possible to ban carbon-intense activities or products. If there is one area where it will be crucial to see change, it is in the use of coal and in this regard, many countries have already accepted the fact that technologically speaking, coal power plants can be permanently closed as cleaner technologies are readily available. In fact, at COP26 over 40 countries have <a href="https://www.power-technology.com/news/industry-news/cop26-40-countries-agree-to-phase-out-coal-fired-power/">pledged to phase out</a> the use of coal power plants in the next decades, though the timeline is not consistent with the Paris Agreement.
It should be noted that when bans are not implemented properly, they may cause more harm than good. For instance, <a href="https://doi.org/10.1016/j.jth.2019.100589">a study</a> on the assessment of trucking bans in urban areas as a strategy to reduce air pollution found that banning the entrance of trucks during certain hours into the Medellin Metropolitan Area in Colombia did not significantly change the amount of pollutants (PM2.5). It was found that the emissions were more concentrated in the hours without restriction, causing a counterintuitive effect that could affect more human health.
A few last points on bans. Bans should also be accompanied by other measures to ensure the policy is just and fair, especially when the impacts of climate change and the policy changes do not equally affect the rich and poor, women and men, and older and younger generations or developed and developing countries. Bans are also not very useful in fostering innovation; therefore, governments should also combine them with other types of instruments as a policy mix which will eventually signal to everyone a clear direction. One other point addresses the IPCC AR6 Synthesis Report, which presented different opportunities for scaling up climate action. These included the need for switching fuels and reducing the emission of fluorinated gas. Such mitigation options and others should include bans where they are feasible.
Finally, to avoid reneging on climate commitments due to geopolitical events affecting the prices and sources of materials, energy products and destabilizing supply chains, governments along with the private sector should incorporate these scenarios and possible occurrences into their transition risk management strategies, allowing an orderly transition. This would limit the excuses of governments to delay or halt policy measures intended to remove completely the use of such far reaching and perhaps radical instruments such as bans.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
<h6>Photo by <a href="https://unsplash.com/@amir_arabshahi?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Amir Arabshahi</a> on <a href="https://unsplash.com/photos/C66RV2bRS3Y?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Unsplash</a>​ </h6>
<h6>​</h6>

To achieve our climate targets it's time to revive the use of bans

The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) takes decisions by voting where consensus cannot be found, which has been critical to bringing new shark species under its trade controls. Combined with many high-profile topics for discussion, voting makes CITES Conferences of the Parties (CoPs) highly dynamic events, where emotions can run high. Next to the African elephant debates, listings of commercially exploited marine species, in particular sharks and rays, have long been among the most emotionally charged discussions.

John

Daniel

The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) takes decisions by <a href="https://sdg.iisd.org/commentary/guest-articles/cites-voting-and-reservations-a-delicate-balance/">voting</a> where consensus cannot be found, which has been critical to bringing new shark species under its trade controls. Combined with many high-profile topics for discussion, voting makes CITES Conferences of the Parties (CoPs) highly dynamic events, where emotions can run high. Next to the <a href="https://sdg.iisd.org/commentary/guest-articles/elephant-in-the-room-cites-and-african-elephants/">African elephant</a> debates, listings of commercially exploited marine species, in particular sharks and rays, have long been among the most emotionally charged discussions.
The Convention text adopted in 1973 foresaw marine species listings. It included several provisions specifically for that purpose, while taking care not to upset the then-ongoing codification of the Convention on the Law of the Sea (<a href="https://www.un.org/depts/los/convention_agreements/convention_overview_convention.htm">UNCLOS</a>). One of these provisions is “Introduction from the Sea,” defined as the “transportation of specimens taken in areas beyond national jurisdiction into the territory of a State.” While this unique provision gave CITES a potentially broad mandate for regulating trade in species taken from the <a href="https://www.iddri.org/en/publications-and-events/blog-post/trading-experiences-what-can-global-ocean-treaty-learn-1970s">high seas</a>, the challenges in operationalizing this provision presented a major barrier for initial shark and ray listings.
After some initial successes in listing large charismatic sharks of limited commercial interest, the first major attempt to list commercially exploited sharks in Doha, Qatar, at CoP15 (2010) was <a href="https://cites.org/eng/cop/15/prop/results.php">rejected</a>. Not to be deterred, the proponents tried again at CITES CoP16 (2013) in Bangkok, Thailand. There was much nervousness about the fate of these proposals.
The first <a href="https://sdg.iisd.org/commentary/guest-articles/cites-voting-and-reservations-a-delicate-balance/">vote</a> in Committee I on adding three species of hammerhead sharks to CITES Appendix II was <a href="https://cites.org/sites/default/files/common/cop/16/sum/E-CoP16-Com-I-Rec-10.pdf">carried</a> by the narrowest of margins. In a secret ballot vote, 92 voted in favor, 42 against, and eight abstained. It was followed by cheers that could be heard across the conference hall. The oceanic whitetip and porbeagle shark were also successfully listed at CoP16. What had happened?
<h1>Lead up to CoP16: Lessons learned</h1>
While there were many factors contributing to this shift in the voting pattern, some stand out.
A Standing Committee working group led by Roddy Gabel (US) and Fabio Hazin (Brazil) proposed a <a href="https://cites.org/sites/default/files/eng/cop/16/doc/E-CoP16-32.pdf">solution</a> to operationalizing “Introduction from the Sea,” conceived by Hazin and run past the Secretariat over dinner in 2012, that found initial agreement with a majority of parties at the Standing Committee, and would later be adopted at CoP16.
Also between CoP15 and CoP16, parties, stakeholders, and the Secretariat started to work on implementation support for potential future listings, with the EU <a href="https://cites.org/sites/default/files/common/cop/16/sum/E-CoP16-Com-I-Rec-10.pdf">committing</a> funding to support implementation, and several other parties and stakeholders developing and circulating implementation support tools, in particular identification guides.
Last but not least, proponents of the listings agreed to an 18-month delayed entry into force to allow countries to resolve any technical implementation challenges. It was this overall package of measures that convinced enough parties to support the proposed listings.
<h1>CoP16: The breakthrough</h1>
The successful Appendix II listing of commercially harvested sharks at CoP16, despite narrow margins, was a major breakthrough. With dedicated funding for capacity building for marine species, and the establishment of a dedicated staff position for marine issues in the CITES Secretariat, the Secretariat was able to forge a closer <a href="https://cites.org/sites/default/files/eng/prog/shark/docs/Sharks_E_fsht04_partnerships.pdf">working relationship</a> with the Food and Agriculture Organization of the UN (FAO), and many other entities working on fisheries, focused on practical issues of joint interest. At the same time, parties and stakeholders also continued to invest in capacity building and implementation support tools, lowering the barrier for future listings significantly.
<h1>CoP17, CoP18, Cop19: Carrying forward the momentum</h1>
These efforts were well received by many parties, as demonstrated by the consecutive adoption of additional listing proposals for commercially exploited sharks, with ever growing voting margins, and the <a href="https://cites.org/sites/default/files/document/E-Res-12-06-R18.pdf">modernization</a> of CITES’ long-term guidance on the conservation of sharks at CITES CoP18 in Geneva, Switzerland. CITES CoP19 in Panama City, Panama, saw the most ambitious shark proposal yet, with the host country and 40 co-sponsors proposing listing the entire family of requiem sharks, including the most caught shark, the blue shark, in Appendix II. CoP19 also saw, for the first time in CITES history, a shark proposal <a href="https://enb.iisd.org/convention-international-trade-endangered-species-wild-fauna-flora-cites-cop19-daily-report-17nov2022">adopted by consensus</a>.
This long streak of shark listings being adopted brings the number of shark species listed under the Convention close to 200, which shows that parties have decided that CITES has an important role in the regulation of international trade in sharks.
<h1>Reviewing implementation</h1>
The decision to list a species within CITES Appendices is only the beginning. It is critical that CITES delivers real conservation outcomes for the listed shark species. Monitoring of the implementation of the listings has rested with the CITES Animals Committee, in particular its shark working group. The Secretariat’s reports to the working group and its deliberations show a mixed picture.
There has been significant investment in implementation, but concerns have been raised in <a href="https://www.traffic.org/publications/reports/missing-sharks-a-country-review-of-catch-trade-and-management-recommendations-for-cites-listed-shark-species/">reports</a> and <a href="https://cites.org/sites/default/files/eng/dec/valid19/E19-Dec.pdf">decisions</a> about an “apparent mismatch between the trade in products of CITES-listed sharks recorded in the CITES Trade Database and what would be expected against the information available on catches of listed species.” Similarly, a 2018 <a href="https://cites.org/sites/default/files/eng/com/sc/70/E-SC70-34.pdf">review</a> of the implementation of the Introduction from the Sea provisions also paints a mixed picture. We have yet to see a Review of Significant Trade for any of the newly listed sharks, which is CITES’ peer review of implementation and its “safety net.”
<h1>New partnership for implementing shark listings</h1>
It is also key that support for implementation does not ebb off. There remains a need for capacity building, targeted research, and <a href="https://www.bmuv.de/en/topics/nature-species-protection/species-protection/international-species-protection/improving-synergies-between-regional-fishery-bodies-and-cites-authorities">initiatives</a> that continue to build bridges between CITES and fisheries actors. Currently, it is largely individual parties and civil society that continue to fund and support this important work.
CITES has initiated, or joined, many important partnerships to enhance implementation, including the International Consortium on Combating Wildlife Crime (<a href="https://sdg.iisd.org/commentary/guest-articles/interagency-cooperation-at-its-best-iccwc-what-next/">ICCWC</a>) on enforcement in 2010, <a href="https://www.informea.org/en">InforMEA</a> on information in 2011, the <a href="https://www.fao.org/forestry/wildlife-partnership/93139/en/">Collaborative Partnership on Sustainable Wildlife Management</a> on sustainable use in 2013, the UN Conference on Trade and Development (UNCTAD) on <a href="https://unctad.org/news/cites-secretariat-and-unctad-join-forces-assist-customs-authorities-regulate-trade-wildlife">e-permitting in 2014</a> and <a href="https://unctad.org/project/blue-biotrade-promoting-sustainable-livelihoods-and-conservation-marine-biodiversity">Blue BioTrade in 2020</a>, and the International Tropical Timber Organization (<a href="https://www.itto.int/">ITTO</a>) on trees through the CITES <a href="https://cites.org/eng/news/pr/EU_contributes_8_million_Euro_support_CITES_tree_species_programme_protection_African_elephants_14072017">Trees Programme</a> in 2017.
The time has clearly arrived for a bold new partnership on implementing CITES shark listings. Such a partnership should be of the same scale as what CITES initiated through ICCWC and the tree species programme. Partners in a CITES sharks programme could include the Convention on the Conservation of Migratory Species of Wild Animals (CMS), FAO, and regional fisheries management organizations (RFMOs).
<h1>Looking ahead to the next 50 years</h1>
After getting off to a 40-year slow start, over the past decade, CITES’ 184 parties have shown an ever-growing appetite to entrust the Convention with regulating the international trade in sharks. Whether or not that trend continues, CITES already has its work cut out for it. It is now critically important to demonstrate that the listings are well implemented and translate into conservation benefits on the ground.
This will involve continuing to support parties in implementation, building bridges between CITES and fisheries actors at all levels, from national authorities to Secretariats of relevant international bodies, and establishing new partnerships.
If CITES can rise to the occasion, the future looks bright for the Convention’s role in regulating international trade in marine species.
This article is also published on <a href="https://sdg.iisd.org/commentary/guest-articles/cites-growing-role-in-international-shark-conservation/">SDG Knowledge Hub</a>. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.

CITES Growing Role in International Shark Conservation

The easiest way for climate-vulnerable Australia to meet its climate targets and give itself a shot at a safe future is to end approvals for new fossil fuel extraction projects. Why won't it?

David

The Prisoner's Dilemma – Why is Australia (Still) Backsliding on Climate Action?

Viewing 250 years of history through the lens of the industrial revolution, we find ourselves at a pivotal point in time. TES technology has the potential to allow industries to move away from their passive reliance on fossil fuels and embrace a modern, more efficient renewable energy mindset for any industrial thermal need. 


Massimiliano

<h1>From Flames to Electricity: the parabola of Heat in Industry</h1>
Our civilization has always been closely tied to fire. Since humans learned to harness fire around 40,000 years ago, heat has become one of our primary needs and a precondition for modernity.
We need heat to keep warm and to produce almost everything we consume.
Heat is the foundation of any manufacturing process—cooking, sterilizing, metal melting—and meets our daily requirements, from fertilizers to animal feed, steel and plastic for automobiles, and cement for buildings and structures.
Imagine traveling back in time to the middle of the 18th century, when the world was about to undergo a revolutionary change known in all textbooks as the Industrial Revolution. This period, powered by the non-human strength of fossil fuels, gave industries all around the world productivity and efficiency never seen before.
Coal was powering steam engines and machinery in textile mills, ironworks, and beyond. Thomas Newcomen&#x27;s atmospheric engine in 1712 laid the foundation, but it was James Watt&#x27;s 1769 steam engine that truly set the stage for coal&#x27;s reign (which also initiated the black foggy London impression).
Fast forward to the 20th century, and oil-fired boilers enter the scene, offering superior energy density, easy transportation, and storage. Then, along came natural gas boilers, boasting “cleaner-burning” properties and even greater efficiency.
Now, 250 years after Watt&#x27;s groundbreaking invention, it&#x27;s time for another revolutionary shift: embracing the power of renewable electricity as the ultimate fuel for steam. And here&#x27;s why...
<h1>Decarbonizing Industrial Heat: A Key to Unlocking Net-Zero Emissions</h1>
Energy-related emissions are a major concern, and 45% of them come from heat. Heating and cooling applications account for over 50% of global energy consumption in all sectors. Industrial heat demand, which makes up 40% of the total heat demand, includes uses ranging from low-grade heating to high-temperature applications over 1,500°C.
The industrial sector depends heavily on fossil fuels, with most industrial heat demands involving direct hot air or steam for processes like drying, calcination, or chemical reactions. Fossil fuels, including oil/diesel, coal, and gas-fired boilers, provide almost all industrial heat around the clock.
To achieve net-zero emissions, decarbonizing industrial heat is essential and it will contribute to around 20% of the effort. How can we address one-fifth of the net-zero target?
In November 2022, the Long Duration Energy Storage Council published a report on achieving <a href="https://www.ldescouncil.com/insights/">Net-Zero Heat (NZH)</a>, emphasizing the importance of Thermal Energy Storage technologies.
The key strategy is to interconnect different energy types. To decarbonize industrial heat, consider using renewable power (in the short, medium, and long term) and green hydrogen (in the long term).
Since green hydrogen comes from renewables, it&#x27;s more efficient to directly convert green power into heat through the joule effect, resulting in conversion efficiencies close to 100%.
Electro-technical engineers often argue for the superiority of electricity, noting that energy conversions can result in losses. However, industrial best practices based on the purity of conversion rates must evolve if we want to move beyond the anchor mindset of burning fossil fuels for heat production (i.e. accepting some auxiliary power needed for the conversion from power to heat).
The NZH study predicts that the overlap between power and heat will significantly increase in the next future, with TES reaching the efficiency peak after year 2030<a href="#_ftn1">[1]</a>:<a href="#_msocom_1">[1]</a>​ 
<img src="https://illuminem.b-cdn.net/articlebody/1fea13fa7daf179522bc1dedb96c86d670f093e6.png" alt="undefined">
<img src="https://illuminem.b-cdn.net/articlebody/13523a8af2409f805d6c78f2d7e6314291ed2300.png" alt="undefined">
From a different angle, collecting basic info on energy conversion rates and applying to normalized costs, while renewable energy sources have a clear advantage in terms of CO2 emissions, the cost of competing with gas remains a challenge:
<img src="https://illuminem.b-cdn.net/articlebody/69f22c02fb8c2ef4a81daa5592b8b9ad8585e689.png" alt="undefined">
As renewable energy sources continue to grow globally, electricity prices are likely to decrease significantly or even become negligible in certain areas or timeframes with frequent curtailments.
However, when renewable energy penetration in an energy system exceeds 50%, extensive storage capacity is required to maintain grid stability and flexibility:
<img src="https://illuminem.b-cdn.net/articlebody/1299f41ff7b31f62767b5f4c4fdc892c0b8116ea.png" alt="undefined">
The LDES 2021 report shows that the necessary storage duration will shift from hours to days or weeks when the 50% threshold is reached.
Although lithium-ion batteries are often seen as the ideal solution for addressing intermittency issues, they have inherent limitations and concerns:
<ol><li>Lithium-ion batteries rely on critical materials like lithium, cobalt, and nickel, which are subject to price fluctuations, supply disruptions, and geopolitical risks. Extraction and processing may lead to environmental and social issues, exacerbated by increasing demand.</li></ol>
<ol><li>Safety concerns persist with lithium-ion batteries due to the risk of thermal runaway, which might cause overheating, fires, or explosions. It is essential to ensure safety by properly operating, transporting, and disposing of equipment, which can be a complex and costly process.</li></ol>
<ol><li>Performance degradation over time affects lithium-ion batteries&#x27; capacity and efficiency, with factors such as temperature and charging rates impacting battery life. Energy density might be insufficient for certain applications.</li></ol>
<ol><li>End-of-life disposal and recycling challenges arise due to early-stage recycling technologies, high costs, and a lack of standardization. Sustainable solutions are essential as the number of spent batteries grows.</li></ol>
<ol><li>Lithium-ion batteries offer limited flexibility for grid-scale applications, being suitable for short-duration energy storage but less effective for long-duration or seasonal storage, as highlighted in the LDES NZP report.</li></ol>
Vis-a-vis heat decarbonization, Lithium-Ion batteries simply do not produce heat.
This highlights the need for an alternative energy storage technology that can either work independently or alongside battery energy storage systems (BESS) to address the mentioned challenges.
To decarbonize industrial heat processes, industrial players can follow these steps:
<ol><li>Use renewable energy to electrify the heat industrial process</li></ol>
<ol><li>Implement thermal storage to ensure 24/7 air/steam availability.</li></ol>
<ol><li>Close down fossil fuel-powered boilers.</li></ol>
Let’s see why the thermal storage technologies will play a big role.
<h1>Thermal Energy Storage (TES) is the missing linchpin towards 24/7 heat decarbonization</h1>
Thermal energy storage (TES) is a flexible technology with three main types: sensible, latent, and thermochemical heat storage. These types store thermal energy by raising the temperature of a solid or liquid, changing a material&#x27;s phase, or utilizing chemical reactions.
Various materials can be utilized within each category, resulting in diverse operating temperatures and durations. Consequently, the suitability of TES technologies varies depending on factors such as: temperature, scale, storage duration, heat form, footprint, and process integration.
The following charts from an IRENA study display a range of technologies, with solid-state TES being particularly promising:
<img src="https://illuminem.b-cdn.net/articlebody/b4b1e1351510ff25f8a14a7f0f6e73c467afc1f7.png" alt="undefined">
TES technologies are capable of addressing a wide range of temperature and duration requirements for heat needs. Materials like sands, rocks, water can cater to various temperature ranges and durations.
For instance, underground water systems can store heat from 0 to 100°C for months, while sand systems can store heat at up to 1,000°C. TES technologies are at different stages of development, with some being commercially tested, others in pilot setups, and some already deployed promising (i.e. at <a href="https://www.magaldigreenenergy.com/en/blog">Magaldi we are developing a TES</a> based on a multi-patented solid state fluidized sand bed, which is reaching commercial stage).
The chart below demonstrates a straightforward approach and trends for using Magaldi MGTES to replace heat generated by fossil fuels with renewable energy and thermal storage. The Levelized Cost of Heat (LCOH) break-even point is estimated to be around 60 USD/MWht:
<img src="https://illuminem.b-cdn.net/articlebody/adaafadc2c6988e2375fe2ebd30911638ac25c08.png" alt="undefined">
The LCOH is the primary benchmarking metric used to assess the competitiveness of different steam decarbonization alternatives. The MGTES cost (LCOS) is predicted to be reduced by at least 50% in the next 5-7 years thanks to industrialization and large scale manufacturing.
In the LDES Net Zero Heat study it was found that the LCOH for an electric boiler with TES can be around USD 5 to 10 per MWh lower than for a gas boiler. This is mainly driven where lower capital expenditure (incentives) and potential differences in energy prices exist (i.e. charge TES when electricity prices are at the lowest during the 24h).
Now, going back to the constraints and BESS challenges, we could add that:
<img src="https://illuminem.b-cdn.net/articlebody/c488b408a125ea8d37ec593baea6a6d89fddd93c.png" alt="undefined">
Thus, decarbonization using electrification and thermal energy storage (TES) is becoming financially viable. TES is more affordable than batteries and hydrogen options because of lower initial costs and higher efficiency throughout its lifespan, offering several strategic benefits.
But, what are the main obstacles TES must overcome to become a mainstream solution for the energy transition?
There is limited awareness and recognition among the industrial sector and energy managers about the potential of TES.
Additionally, TES technology providers need to address specific challenges:
<ol><li>Diverse heating requirements: TES adoption faces challenges due to the wide range of heating capacities and utilities needed for different industrial processes. Each process may require specific temperatures, storage durations, and heating forms, making it difficult to develop a one-size-fits-all solution.</li></ol>
<ol><li>Charging and discharging complexities: TES systems need to work with various charging methods, such as electric heaters, heat pumps, conventional fuels, and waste heat. These charging possibilities are often system-dependent and can be difficult to compare across different projects, adding complexity to the adoption of TES technologies.</li></ol>
<ol><li>Integration costs and site dependence: The integration of TES technologies into existing systems can be costly, as it requires site-specific adjustments and infrastructure investments. These costs can vary greatly between projects, making it harder to standardize and compare TES adoption across different applications.</li></ol>
<ol><li>Technical maturity and commercial availability: TES technologies are at different stages of development, ranging from research and development to commercial availability. The wide spectrum of technical maturity may hinder the adoption of TES, as industries may be hesitant to adopt technologies that have not yet been proven on a large scale or lack a track record of successful implementations.</li></ol>
Having said that, there are a number of ways stakeholders can support TES adoption:
Business leaders:
<ol><li>Implementing pilot projects: By deploying TES technologies in real-world settings, business leaders can identify critical factors for success and address potential challenges, ultimately promoting the technology&#x27;s scalability and commercial viability.</li></ol>
<ol><li>Fostering collaboration: By working closely with industry partners, government agencies, and academic institutions, business leaders can support the development and diversification of the TES supply chain, driving innovation and strengthening the technology&#x27;s market position.</li></ol>
Policymakers:
<ol><li>Creating market incentives: By establishing market mechanisms such as ancillary or balancing markets and supporting carbon pricing or taxation, policymakers can encourage businesses to invest in TES technologies.</li></ol>
<ol><li>Providing financial support: Offering investment guarantees, subsidies, or transition cost support can help businesses overcome the initial costs of implementing TES systems.</li></ol>
<ol><li>Updating regulatory frameworks: Incorporating TES into technical standards, heat-efficiency requirements, and decarbonization targets can foster a more favorable regulatory environment for TES adoption.</li></ol>
<ol><li>Developing decarbonization roadmaps: By including TES in long-term plans for reducing carbon emissions, policymakers can encourage businesses to consider TES as a viable option for achieving their sustainability goals.</li></ol>
<ol><li>Ensuring fair competition: By creating a level playing field for TES and other flexibility solutions, policymakers can promote competition and innovation in the market.</li></ol>
Investors:
<ol><li>Allocating capital: By directing funds toward TES investments and including TES in their portfolios.</li></ol>
<ol><li>Optimizing energy usage: By assessing TES-related opportunities in their existing portfolios, for instance combining BESS with TES.</li></ol>
<ol><li>Enhancing investment strategies: Investors can increase their risk-return ratios and make better choices regarding their investments in the energy sector by including TES opportunities in their business cases.</li></ol>
<h1>Conclusions</h1>
By broadly adopting Thermal Energy Storage (TES) technology, the grid can be more flexible, energy costs can be reduced, and renewable energy resources can be utilized more efficiently, reducing curtailments.
TES contributes to a more stable and reliable energy system by storing excess electricity generated during low-demand periods and releasing it when necessary in form of steam or hot air.
Furthermore, TES plays a crucial role in the decarbonization of industries and the global energy sector, as it facilitates the transition away from fossil fuels and towards a more sustainable, low-carbon future, up to 20% of the total current global footprint.
Having viewed 250 years of history through the lens of the industrial revolution, we find ourselves at a pivotal point in time. TES technology has the potential to allow industries to move away from their passive reliance on fossil fuels and embrace a modern, more efficient renewable energy mindset for any industrial thermal need.
<h3>Footnotes</h3>
<a href="#_ftnref1">[1]</a> Other Long Duration Energy Storage technologies (i.e. chemical, gravitational, electrochemical) will navigate between 55-60% roundtrip efficiency (power to power)
<a href="#_ftnref2">[2]</a> Source: <a href="https://ourworldindata.org/emissions-by-fuel">https://ourworldindata.org/emissions-by-fuel</a>, conversion rates, for commodities average values
<a href="#_ftnref3">[3]</a>Coal = 100 Kg*40 USD/Tonn; Diesel = 70 Kg*500 USD/Tonn; Gas = 70 m3*0.3 USD /m3; Renewable = 0.9 MWh*60 USD /MWh. Market data will change however, renewable energy cost is predicted to decrease
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.

Redefining Industrial Heat: The Crucial Role of Thermal Energy Storage in a Decarbonized Future

Existing climate “solutions” assume the continuation of the environmentally destructive lifestyles of the global rich, at the expense of the rest of the world. If we’re serious about addressing the crisis we have to put the costs on those who caused the problem.

We Can’t Have Climate Justice Without Ending Computational Colonialism

BP’s recent journey points to the need for instruments that influence profits specifically, and notably reconsideration of the controversial price control tool: a climate-driven price cap on oil.

Philippe

BP, the oil company that previously brought us “Beyond Petroleum” and more recently robust corporate climate goals, has announced a return in emphasis to its traditional business of producing oil. Drawn by the inescapable appeal of oil’s latest high profits, has BP rebranded itself as “Back to Petroleum?”
This type of shift highlights the importance of stronger market incentives for reducing emissions so that companies interested in decarbonizing see their financial interest align with that course. BP’s recent journey points to the need for instruments that influence profits specifically, and notably reconsideration of the controversial price control tool: a climate-driven price cap on oil.
BP has consistently been a forward-leaning company among its peers on climate. As early as 2002, then CEO Lord Browne <a href="https://www.forbes.com/sites/scottcarpenter/2020/08/04/bps-new-renewables-push-redolent-of-abandoned-beyond-petroleum-rebrand/?sh=4db8e9211ceb">rebranded BP as it sought “to reinvent the energy business: to go beyond petroleum</a>.” However, various financial pressures, including the <a href="https://www.britannica.com/event/Deepwater-Horizon-oil-spill">Deepwater Horizon</a> spill, subsequently <a href="https://www.forbes.com/sites/scottcarpenter/2020/08/04/bps-new-renewables-push-redolent-of-abandoned-beyond-petroleum-rebrand/?sh=4db8e9211ceb">moved the company away from its non-petroleum businesses</a>.
<blockquote>So long as there are big profits to be made from oil, these companies will continue to be drawn to their petroleum activities, notwithstanding any stated desire to shift to renewables.</blockquote>
But in August 2020, BP was back with a strengthened pivot to climate as the <a href="https://www.bp.com/en/global/corporate/news-and-insights/press-releases/from-international-oil-company-to-integrated-energy-company-bp-sets-out-strategy-for-decade-of-delivery-towards-net-zero-ambition.html">company announced a series of ambitious low-carbon targets</a>.” This included a 40% production decline and a 10-fold increase in low-carbon investment over the next decade. BP also announced<a href="https://www.bp.com/en/global/corporate/sustainability/getting-to-net-zero/five-aims-to-get-bp-to-net-zero.html"> a groundbreaking target for Scope 3 emissions</a> (namely, emissions from the consumption of its products by industry and other consumers).
Unfortunately, BP has now scaled back its climate ambition. Notably, rather than a 40% drop in production by 2030, <a href="https://www.ft.com/content/419f137c-3a83-4c9c-9957-34b6609bcdf7">BP now expects only a 25% decrease</a>. Significantly, this shift has been made at a time <a href="https://edition.cnn.com/2023/02/07/investing/bp-earnings-oil-intl-hnk/index.html">of $28 billion in record corporate profits for BP</a>, records also seen by other oil majors, such as <a href="https://www.pbs.org/newshour/economy/exxon-mobil-reached-record-profits-amid-high-gas-prices-war-in-ukraine">ExxonMobil</a> and <a href="https://www.cnbc.com/2023/02/02/shell-earnings-oil-giant-reports-record-annual-profits.html">Shell</a>.
These record profits — driven in part by high gas prices resulting from Russia’s invasion of Ukraine — also point to a major vulnerability for any market-driven climate effort. With the lure of these type of returns from the traditional petroleum business, it is difficult to see or sustain financial motivation to shift away.
Indeed, as BP made clear in announcing its ambitious 2022 climate targets: “<a href="https://www.bp.com/en/global/corporate/news-and-insights/press-releases/from-international-oil-company-to-integrated-energy-company-bp-sets-out-strategy-for-decade-of-delivery-towards-net-zero-ambition.html">bp is committed to delivering attractive returns to shareholders</a>” — and petroleum, with its upside, is uniquely placed to deliver the potential of a high return. So long as there are big profits to be made from oil, these companies will continue to be drawn to their petroleum activities, notwithstanding any stated desire to shift to renewables.
However, this also points to what needs to be a focus of an effective climate policy for oil: reducing its profitability. Over the years, think tanks, academics and others have put forward carbon pricing as the most efficient emissions reduction instrument, but this discourse has failed to deliver significant results in practice, especially when it comes to oil companies.
As emissions continue to rise and the carbon budget shrinks, the time has come to explore other solutions. One tool that merits consideration — more precisely, reconsideration — is a cap on oil prices.
This “climate oil price cap” would be designed to increase the relative profitability and so financial appeal of renewables by limiting the upside on oil activities specifically (something a <a href="https://edition.cnn.com/2022/11/17/economy/windfall-tax-nuclear-uk-budget/index.html">customary windfall profits tax set at the corporate level</a> wouldn’t accomplish). It would thereby support and encourage BP and other oil companies to transform themselves from a traditional petroleum company into an “integrated energy company” (<a href="https://www.bp.com/en/global/corporate/news-and-insights/press-releases/from-international-oil-company-to-integrated-energy-company-bp-sets-out-strategy-for-decade-of-delivery-towards-net-zero-ambition.html">BP’s own term</a>), one that can generate significant profits from renewables and other low-carbon products relative to its petroleum activities.
Oil price controls are, of course, not new and have a checkered history (e.g., <a href="https://www.nytimes.com/1973/08/11/archives/price-controls-are-kept-on-gas-and-oil-other-actions-listed-price.html">President Nixon’s effort in the US 50 years ago</a>). But the climate emergency presents a new threat that merits re-examining this instrument. Importantly, a price cap could also help <a href="https://www.cnbc.com/2022/10/26/iea-developing-nations-the-number-one-casualty-of-the-energy-crisis.html">energy-importing developing countries</a>, as well as vulnerable households there and <a href="https://www.theguardian.com/society/2022/aug/17/two-thirds-of-uk-families-could-be-in-fuel-poverty-by-january-research-finds">elsewhere</a>, avoid the harmful impact of the high oil prices experienced in 2022 (another potential advantage over a <a href="https://edition.cnn.com/2022/11/17/economy/windfall-tax-nuclear-uk-budget/index.html">windfall profits tax</a> ).
And there is now a precedent for this type of concerted purchaser action, namely <a href="https://www.ft.com/content/5b942b07-01cc-4e12-b803-7eb1507f6eec">the price cap on Russian oil</a> agreed by the EU and US. It is also a tool that has drawn renewed attention in other contexts, including <a href="https://www.washingtonpost.com/opinions/2022/03/23/protecting-americans-oil-price-spikes/">rethinking the framework governing gas prices</a> to <a href="https://www.nytimes.com/2022/01/13/business/economy/inflation-price-controls.html">insulate US consumers from the gasoline price surges</a> driven by Russia’s invasion of Ukraine.
Any effort needs to consider the lessons from the failed efforts of the past. For example, the cap should be set at a sufficient level to attract the desired supply – including to energy-importing developing countries — even as it precludes the type of record profits the oil industry saw last year. It should also build on the experience with the current Russian price cap.
While, admittedly today there isn’t sufficient support for aggressive climate policies, the prospect for strong action will likely increase over time as <a href="https://royalsociety.org/topics-policy/projects/climate-change-evidence-causes/question-13/">heat waves, flooding and other extreme weather events wreak havoc exacerbated by climate change</a>. This in turn can be expected to increase the willingness of politicians and policymakers to be more ambitious down the road in taking climate action.
In anticipation of this changing landscape, creative options beyond traditional carbon pricing mechanisms should be explored and put before these decision-makers by think tanks, academics and others.
In this regard, the combination of BP’s recent record profits and shift in corporate policy points to the appropriateness of considering a price cap on oil as a possible tool to fight climate change by improving the relative profitability of low-carbon investments.
This article is also published by the <a href="https://www.ipsnews.net/2023/03/bps-shift-back-petroleum-prods-consideration-climate-oil-price-cap/">Inter Press Service News Agency</a>. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.

BP’s Shift ‘Back to Petroleum’ Prods Consideration of a Climate Oil Price Cap

Up to 85% of ESG-related impacts, including greenhouse gas emissions, occur in the supply chain, requiring cooperation and collaboration to effect meaningful systems change at scale. With a shared sense of purpose, community prosperity and business performance can co-exist, but this requires disruption of the business-as-usual approach from design through operations across global supply chains.

Sheri R.

As outlined on August 9, 2021, in the Sixth Report of the Intergovernmental Panel on Climate Change (IPCC), the latest advances in science reveal the scale and intensity of climate-related disruptions and the disproportionate impact climate change has on marginalized communities in the world we share. In fact, over 80% of the underlying Sustainable Development Goals’ 169 targets are impacted by the climate emergency including gender equality, decent work conditions, arable land, and reducing inequities to ensure social, fiscal, and wage protection. 40% of the world’s population works in a supply chain. So supply chains represent perhaps the biggest opportunity to affect the 2030 sustainability agenda as businesses adjust to a post-COVID world.
<blockquote>Every system is perfectly designed to get the results it gets.</blockquote>
There are many lessons unearthed from the pandemic, including the inextricable link between operational performance and long-term value creation. Undoubtedly, two things stand out: the power of existential threats to impact our daily lives and the strength of collaboration when organizations around the world mobilize to solve complex problems. 
Moreover, up to 85% of ESG-related impacts, including greenhouse gas emissions, occur in the supply chain, requiring cooperation and collaboration to effect meaningful systems change at scale. Not all profit is equal. Profits involving a social purpose are a higher form of capitalism, one that will allow our society to advance. With a shared sense of purpose, community prosperity and business performance can co-exist, but this requires disruption of the business-as-usual approach from design through operations across global supply chains.
Sustainability is a complex and often misunderstood web of interconnected systems and decisions. We see social unrest and corruption due to systemic inequities and want to make a change, but often lack transparency, an auditable chain of custody, and the ground truth to ensure a fair living wage and ethical trade. We see raging fires on one side of the globe and once in a lifetime erratic flood events occurring more frequently on another, but struggle to connect the impact of carbon emissions across supply chains in a holistic interconnected view that quantifies the human impact of climate change in communities we serve.
Sustainability isn’t someone else’s problem. Supply chains have been designed to iterate to the lowest cost, creating far-reaching networks entrenched with a web of assumptions whereby risks tied to non-financial performance have been externalized, leaving communities and trading partners paying the price for unsustainable behavior. Moreover, sustainable benefits realized through optimization and lean levers have been largely consequential and incremental, not intentional and inclusive. This is rapidly changing as businesses redefine the total costs of ownership and the gate of responsibility creates a renewed lens of value and stewardship: how we quantify a quadruple bottom line that not only transforms sustainable economies but also the lives of people who stand up to our global supply chains.
As paradigms shift and regulatory environments adapt, frameworks like TCFD and Lieferkettengesetz will become fundamental expectations in global trade. One thing is clear: sustainable supply chains can bridge the gap between ambition and acting for global change. Building resilient communities means holistic steering is needed as supply chain leaders navigate climate restoration, network stewardship, and building responsible, equitable supply chains.
1. Meaningful and measurable change requires visibility.
Supply chain organizations have become foundational to delivering new value using the SDGs as a roadmap for creating benefits and equity that leave no one behind. 80–90% of the data needed for SDG and ESG steering exists in supply chains. You can’t fix a problem if you can’t see it. Some problems are so ubiquitous and ingrained that they are assumed to be an inherent risk of business. A significant share of human rights violations occurs beyond the tier-1 aggregator in raw material extraction and agriculture, making due diligence and traceability challenging. Managing a multi-enterprise supply chain through a new lens of value means designing out network risk, marrying disclosure and self-audit with a sense for ground truth, and incorporating new environmental impact factors in supply chain buffers that promote anti-fragility. Tri-sector partnerships, designing for process harmonization, and the use of cognitive interventions can help organizations create reliability and trust from the field to the factory to a customer’s front door.
2. Instead of constantly looking back, lean into leading indicators.
An organization’s purpose, sustainability, and ethics have become measurable performance indicators, whereby carbon can be a leading indicator for operational excellence and demonstrable environmental gains. Businesses with lower emissions show leadership in designing for the environment, deliberate product design and raw material selection for zero-waste, process and operational efficiencies, and scope collaboration toward network-based SBTs. Additionally, diversity, representation, and supplier experience can be leading indicators for innovation, inclusion, and well-being. 
To effectively use this data, cross-industry, multi-enterprise ecosystems, and platforms require shared visibility, interoperability, and a verified chain of custody for data aggregation. Agile operating models can help organizations realize near-instant insights for transparency across an entire organization and its ecosystem.
3. Going far together means technology must document proof of stewardship and be a companion in decision orchestration.
A company’s ability to realize business objectives is tied to others realizing theirs in the communities they serve. Bridging the gap in insights across global supply chains means technology must become a conduit to document proof of performance, influencing changed behavior in decision orchestration at scale. An alignment of purpose, ethical supplier model, touchless operations, and digital networks are powerful differentiators. The biggest impact is upstream by connecting the 1st mile and last mile for sustainability in supply chains for CPG companies. By connecting disparate systems, data, processes, behaviors, and partners in an ecosystem, technology can facilitate multi-stakeholder cooperation in AI, data, and analytics to influence stewardship for end-to-end ethical behavior and risk insights. The automation of slow points in due diligence across direct and indirect operations, together with financial insights that extend through the value chain, allows decision-making based on immutability and trust. Measuring and disclosing social impact has never been more important. Technology helps organizations move from footprints to handprints. 
Trust, transparency, visibility, and collaboration are key to transitioning from a linear way of working to a sustainable, climate-restorative, and responsible world that puts equity – for all - at its center.
<blockquote>“To make life a little better for people less fortunate than you. That’s what I think a meaningful life is. One lives not just for oneself, but for one’s community.” ~ Ruth Bader Ginsberg</blockquote>
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
<h6>Photo by <a href="https://unsplash.com/@_miltiadis_?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Miltiadis Fragkidis</a> on <a href="https://unsplash.com/photos/2zGTh-S5moM?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Unsplash</a>​ </h6>

Humanizing the Climate Emergency and Equity for All with Sustainable Supply Chains

Following the release on Monday, March 20 by the Intergovernmental Panel on Climate Change (IPCC) of the Synthesis Report of its Sixth Assessment Cycle, the focal point of media attention has been the ‘last warning’ to cut emissions in order to meet the 1.5˚C global warming stretch goal of the Paris Agreement. Anything short of mass mobilization to adapt to inevitable near- and middle-term climate impacts is tantamount to willful denial.

Andrew

When many people think about climate adaptation, their first reaction is something akin to, &quot;That&#x27;s a worthy goal, but let&#x27;s focus on mitigation. Adaptation and resilience are our back-up plan for 2050 if we come up a little bit short. But we&#x27;re resourceful and we&#x27;ll hit those UN climate targets. Now let&#x27;s focus on the urgent stuff.&quot;
Following the release on Monday, March 20 by the Intergovernmental Panel on Climate Change (IPCC) of <a href="https://www.ipcc.ch/report/ar6/syr/">the Synthesis Report of its Sixth Assessment Cycle</a>, the focal point of media attention has been the ‘last warning’ to cut emissions in order to meet the 1.5˚C global warming stretch goal of the Paris Agreement. This common reaction is understandable and true to form for policymakers and journalists but misses the main points.
<img src="https://illuminem.b-cdn.net/articlebody/2cd3a91dab814cf9bad251b1cea64085787e54d2.png" alt="Figure 1. “Adverse Impacts from Human-Caused Climate Change Will Continue to Intensify.” Source: https://report.ipcc.ch/ar6syr/pdf/IPCC_AR6_SYR_SPM.pdf.">
What are the main points? Many argue, including the <a href="https://www.ipcc.ch/report/ar6/syr/downloads/press/IPCC_AR6_SYR_PressRelease_en.pdf">IPCC’s own press release</a>, that we need to focus on the “narrowing window” for action to stay within 1.5˚C (2.7˚F) warming. We must keep hope alive and focus on cutting emissions steeply and fast. Of course, this is essential – but, in the clear-eyed <a href="https://www.newyorker.com/news/daily-comment/the-un-issues-a-final-warning-on-the-climate-and-a-plan">words of The New Yorker’s Elizabeth Kolbert</a>, “[T]o imagine at this point that the latest warning from the I.P.C.C. will spur action, when so many previous ones have failed to, requires not just hope but, it would seem, something close to delusion.”
The real main points, for those willing to swallow bitter pills, are as follows. First, the IPCC summary report’s first pages state bluntly, 
<blockquote>“Human-caused climate change is already affecting many weather and climate extremes in every region across the globe. This has led to widespread adverse impacts and related losses and damages to nature and people. Vulnerable communities who have historically contributed the least to current climate change are disproportionately affected.” </blockquote>
In short, the impacts are here, they are serious, and they are unrelenting, particularly for the world’s poor and disenfranchised.
Second, human society is not adequately adapting.
<blockquote>“Despite progress, adaptation gaps exist, and will continue to grow at current rates of implementation. Hard and soft limits to adaptation have been reached in some ecosystems and regions.”</blockquote>
Third, the warming is nowhere near stopping. 
<blockquote>“Continued greenhouse gas emissions will lead to increasing global warming, with the best estimate of reaching 1.5°C in the near term in considered scenarios and modelled pathways.” </blockquote>
By ‘near term’, the IPCC means within ten years, not the world of our great-grandchildren.
And yet, breathless media coverage still manages to downplay or ignore the need for urgent adaptation. Remarkably – but not out of step with coverage in <a href="https://www.nytimes.com/2023/03/20/climate/global-warming-ipcc.html">The New York Times</a> and <a href="https://www.wsj.com/articles/time-is-running-out-to-curb-global-warming-u-n-panel-report-says-83205040">The Wall Street Journal</a> – The Guardian’s article on the latest IPCC report, <a href="https://www.theguardian.com/environment/2023/mar/21/methane-to-food-waste-eight-ways-to-attempt-to-stay-within-15c">highlighting the eight most urgent actions to take on climate change</a>, includes none focused on adaptation. Instead, there is the suggestion that the 1.5˚C threshold could be preserved with urgent action. And The Washington Post, in the <a href="https://www.washingtonpost.com/climate-environment/2023/03/20/climate-change-ipcc-report-15/">first sentence of its article on the report</a>, falsely suggests that Earth might not cross the 1.5˚C threshold within 10 years if “nations drastically transform their economies and immediately transition away from fossil fuels.”
The flaws here are manifold. To start, we face rapid warming today, pushing us up to and past the 1.5˚C threshold in the coming years – regardless of what achievements in urgent decarbonization we achieve (the 1.5˚C accomplishment of urgent decarbonization would be achieved by the year 2100, after an “overshoot”). The inescapable result will be myriad devastating climate shocks, not to mention the unpredictable social, political, economic, and financial fallout thereof. Consequently, climate adaptation and resilience are about as urgent as it gets on the planetary scale – as urgent and existential as the mitigation challenge to rein in future emissions.
Anything short of mass mobilization to adapt to inevitable near- and middle-term climate impacts is tantamount to willful denial. <a href="https://phys.org/news/2023-02-degree-goal-plausible-social-important.html">A well-regarded study</a> released last month concluded that 1.5˚C is now out of reach. A new AI-driven <a href="https://news.stanford.edu/2023/01/30/ai-predicts-global-warming-will-exceed-1-5-degrees-2030s/">analysis published in January largely concurred</a>. We are already seeing practically unmanageable catastrophic impacts such as unprecedented heat waves and drought in Europe and the Pacific Northwest, epic floods in Pakistan and Germany, terrifyingly powerful storms in the Caribbean and Southeast Asia, and immense wildfires across the American West, Southern Europe, Siberia, and Australia.
These impacts are striking at today’s level of only about 1.2˚C of warming, which is, of course, merely a global average.
In many places, <a href="https://www.pbs.org/newshour/politics/the-arctic-is-warming-nearly-four-times-faster-than-the-rest-of-the-world#:~:text=A%20new%20study%20shows%20that,over%20the%20past%2043%20years.">such as the Arctic</a>, the warming is already substantially greater, and coming at us faster than ever: the IPCC indicates we are <a href="https://theconversation.com/ipcc-says-earth-will-reach-temperature-rise-of-about-1-5-in-around-a-decade-but-limiting-any-global-warming-is-what-matters-most-165397#:~:text=The%20latest%20IPCC%20findings%20confirm%20Earth,on%20the%20decisions%20we%20make%20today.&amp;text=The%20latest%20IPCC%20findings,decisions%20we%20make%20today.&amp;text=IPCC%20findings%20confirm%20Earth,on%20the%20decisions%20we">on a path to exceeding 1.5˚C by the early 2030s</a>. On top of that, we will likely exceed that threshold temporarily as early as this year <a href="https://www.huffingtonpost.co.uk/entry/el-nino-2023-heatwaves-climate-crisis_uk_63c696d4e4b0ae9de1cb1fed#:~:text=El%20Nino%20is%20set%20to%20return%20later%20in,Europe%20heatwaves%20and%20floods%20in%20Pakistan%20and%20Nigeria.">thanks to the warming cycle of the emerging El Niño</a>. The cyclical impacts are already here, and <a href="https://insideclimatenews.org/news/23032022/el-nino-hemispheres/#:~:text=One%20of%20the%20strongest%20El%20Ni%C3%B1os%20on%20record,Ni%C3%B1a%20cycle%20would%20become%20apparent%20after%20about%202050.">getting stronger and weirder than ever</a>. We are likewise at risk of <a href="https://www.pik-potsdam.de/en/output/infodesk/tipping-elements">triggering a series of irreversible tipping points in our natural systems</a>, such as glacier and permafrost melt, sea level rise, and ecosystem collapse, requiring adaptation and resilience at a much greater scale and more urgent pace than envisioned by many casual observers.
<img src="https://illuminem.b-cdn.net/articlebody/8231e07be36eb70930284fc0a4069df87756028c.png" alt="Figure 2. “There is a Rapidly Narrowing Window of Opportunity to Enable Climate-Resilient Development.” https://www.ipcc.ch/report/ar6/syr/downloads/figures/summary-for-policymakers/IPCC_AR6_SYR_SPM_Figure6.png.">
What can countries, communities, and organizations do to protect themselves? The first order of business is to take a comprehensive and sober look at the near-term climate threats and assess their risk exposures under a series of plausible scenarios, focused on the near term as well as the long term. These scenarios should consider not only chronic physical risks such as rising temperatures, precipitation change, and sea level rise on the time scales of 2050 and beyond, as is common in the climate policy discourse, but also potential near-term extreme weather events, ecological tipping points, and the impacts of complex interactions of social, political, and economic systems, which are <a href="https://media.licdn.com/dms/document/C4E1FAQFbByCRksCaMQ/feedshare-document-pdf-analyzed/0/1678986469208?e=1680134400&amp;v=beta&amp;t=df0gVorkzXVmMNTNexTzglDNJo5r6vfx7TX2dQmLdEA">often neglected in climate projections and models</a>. The IPCC AR6 Synthesis Report and <a href="https://www.ipcc.ch/working-group/wg2/">other associated reports</a> are a great place to begin to consider likely climate-driven adverse effects. There is <a href="https://www.sciencedirect.com/science/article/abs/pii/S0360132323002536">a robust literature</a> and <a href="https://www.un.org/en/climatechange/climate-adaptation">rapidly-expanding corpus of practice</a> for effective adaptation and resilience. However, <a href="https://www.unep.org/resources/adaptation-gap-report-2022">investment in adaptation and resilience is lagging badly</a>, while the <a href="https://climatepolicyinfohub.eu/climate-change-adaptation-needs-barriers-and-limits.html">capacity for adaptation is limited</a> and requires dramatic improvement. Similarly, risk management and preparedness for climate-related hazards <a href="https://illuminem.com/illuminemvoices/06312649-6eb1-41a2-a49e-069be7790727">remain inadequate</a>.
A major psychological and cultural barrier to climate adaptation is the misconception that accepting adaptation means giving in to pessimism or declaring defeat. This couldn’t be further from the truth: proactive adaptation is about optimizing for human thriving in the face of limited resources and environmental constraints, just as mankind has done with aplomb and ingenuity since time immemorial.
So what are we waiting for? We don’t need to give up on reducing emissions to pick up the gantlet for adaptation. We are long past the luxury of choosing one or the other. It’s time to get cracking.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
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Why the IPCC’s Latest Report Should Spur a Rush to Adapt

The need to change the way we move around in cities is more pressing than ever. The global climate crisis is worsening, and cities worldwide face issues such as air pollution, traffic congestion, and inadequate public space. The IPCC's "Synthesis Report of the Sixth Assessment Report" released earlier this week underscores the urgent need to transition towards sustainable forms of urban mobility, reducing emissions, and mitigating the devastating impacts of climate change.

Johannes

Ah, <a href="https://www.britannica.com/biography/Robert-Moses">Robert Moses</a>. Have you heard of him? A larger-than-life urban planner infamous for his top-down approach to city planning, his ruthless treatment of minorities and his love affair with cars. Moses, who wielded immense power in mid-20th century New York City, saw the car as the ultimate symbol of progress and modernity, building miles of highways and tearing down entire neighbourhoods in the process. Given his car-centric legacy, you might think that Robert Moses is the last person from whom we should take advice when it comes to sustainable urban mobility. And yet there is a <a href="https://americanarchive.org/catalog/cpb-aacip_80-60qrg5qh">famous phrase by him, used almost to the day 70 years ago to justify his reckless approach to bulldozer renewal</a>, which is quite relevant to the current debate on the need for active transport, the reduction of car traffic and the like: &quot;You can&#x27;t make an omelette without breaking some eggs.&quot;
The need to change the way we move around in cities is more pressing than ever. The global climate crisis is worsening, and cities worldwide face issues such as air pollution, traffic congestion, and inadequate public space. The IPCC&#x27;s &quot;Synthesis Report of the Sixth Assessment Report&quot; released earlier this week underscores the urgent need to transition towards sustainable forms of urban mobility, reducing emissions, and mitigating the devastating impacts of climate change.
Fortunately, both city leaders and city dwellers are increasingly recognising this. A range of initiatives has emerged over the past years aimed at promoting active travel, reducing the dominance of the car and transforming mobility in our cities. Limited traffic zones such as the UK’s &quot;low traffic neighbourhoods&quot; are a prominent example, but there are others too - pedestrianised or shared streets, cycle lanes, congestion charges, emission zones, and the list goes on.
The arguments in favour of these measures are many and varied. For one, they help reduce carbon emissions as well as air and noise pollution and make our streets more pleasant and create healthier environments. They make it safer and more attractive to walk or cycle, reduce car dependency and congestion, and contribute to equity by prioritising active travel and public transport, which are often the only options for those who cannot afford a car. And let&#x27;s not forget the positive impact on local economies. If done right, green travel initiatives can contribute to economic development by getting more people out and about to linger and stroll without fear of being run over, as this recent example from London shows. 
But of course, not everyone is on board with these initiatives. There are concerns - some justified, some hysterical - for example about the displacement and concentration of car traffic elsewhere, increased travel times for those who rely on their cars, the loss of parking spaces, the impact on emergency services and local businesses, and how disabled or elderly people will move around their city. And then there are nefarious forces at work - the interests of the car lobby, the Nimbyism of some residents, the sinister populist undertones of part of the opposition and, along with it, attempts to instrumentalise the issues at hand for other, devious ends.
Perfect examples of this are the recent infiltration of protests against traffic calming measures in Oxford by the Far Right, and the spread of conspiracy theories that seek to discredit the concept of the &quot;15-minute city&quot; by claiming that it is part of a larger socialist plot aimed at restricting personal freedoms and increasing state control over people&#x27;s lives.
Given the increasingly shrill and raucous protests we have seen in recent years against efforts to make cities and urban transport safer, greener and more sustainable, it is easily forgotten that research suggests that there is frequently a silent majority that is in favour of (or at least not vehemently opposed to) measures to reduce car use and improve the urban environment. This begs the question of how to deal with those who mobilise and agitate against them, often by hijacking consultation processes and making meaningful dialogue impossible.
It is here that the omelette metaphor comes in. It reminds us that progress often means making difficult decisions and persevering in the face of opposition. And it is also a warning that while democratic and inclusive decision-making processes are something we should always strive for, there may come a point when some eggs need to be cracked. Of course, planners should do everything in their power to gain as much support as possible for sustainable mobility initiatives. And of course, they should strive to mitigate any undue negative impacts to avoid backlashes where possible. The success of said initiatives depends on this, after all. That means engaging with local communities, listening to people’s concerns and adapting plans accordingly. It means providing clear, accurate information about what is being proposed and why. And it means being open to compromise and alternative solutions where appropriate. However, it should not mean giving in to typically small but vocal minorities and compromising the goal of making cities healthier, more sustainable and more equitable as a result of hysteria, misinformation or pressure from vested interests.
Whatever one&#x27;s opinion of Moses, there is no denying that he understood the need for bold actions in responding to big challenges, and this same spirit is required today, albeit for different ends. The issues at stake are too important and the benefits of greener, more liveable urban environments are too great to be sacrificed on the altar of misplaced and often ill-informed resistance. So, let&#x27;s get cooking and crack those eggs, one omelette at a time.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
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What Robert Moses can teach us about today's struggle for sustainable mobility and liveable cities

The world has a problem: Big Oil’s hijacking of the climate action narrative. The power of the legacy energy industry means that mountains of flawed and backwards thinking – much of which contributed to the climate crisis – are preventing major institutions from recognising the most transformative pathways forward. It’s also exposing them to gigantic financial risks which are about to unfold in the next few years. I decided to write directly to Sultan Al Jaber, the UAE President of the upcoming United Nations COP28 climate summit, to provide them with an economic and technological reality-check. Here’s my open letter:

Nafeez

The COP28 Agenda is a Recipe for Economic Armageddon: An Open Letter to Sultan Al Jaber, UAE President of COP28

Hydrogen (H2) presents a vital opportunity for decarbonizing the road transportation sector in the United States. Since the United States has the world’s largest economy, its decarbonization is essential for attaining global greenhouse gas (GHG) emissions reduction of the magnitude needed to fight climate change. Such efforts need to be undertaken on the federal, state, and municipal levels.

Venera N.

Hydrogen deployment in the road transportation sector: US decarbonization strategy (Part 2)

Increasing interest in effective global climate action in recent years has brought the voluntary carbon market to the fore. At its base, the voluntary carbon market is a mechanism to try and bring negative externalities - namely, the release of carbon emissions into the atmosphere - into the global market.

But with all the new attention on the carbon market space, many of its challenges have come to light. To solve some of these problems, one unlikely group has begun to step forward: blockchain entrepreneurs.



Hayley

Increasing interest in effective global climate action in recent years has brought the voluntary carbon market to the fore. At its base, the voluntary carbon market is a mechanism to try and bring negative externalities - namely, the release of carbon emissions into the atmosphere - into the global market.
The voluntary carbon market works by allowing organizations that have verifiably avoided or removed carbon emissions to then sell those carbon credits - each representing one metric tonne of carbon - to organizations that have emitted carbon. This mechanism incentivizes carbon reduction or removal (often taking place in the Global South) by making it a profitable endeavor, while allowing companies (often in the Global North) to compensate for - or offset - their carbon impact.
But with all the new attention on the carbon market space, many of its challenges have come to light. Specifically, bottlenecks include verification taking too long, market fragmentation, lack of standardization, financing barriers, intermediaries taking a lot of value, limited availability of quality supply, and opaque pricing information.
To solve some of these problems, one unlikely group has begun to step forward: blockchain entrepreneurs.
Several companies are exploring the use of blockchain technology in the voluntary carbon market, including exchanges, marketplaces, measurement and verification providers, and more.
These companies have different approaches to using blockchain technology: some focus on creating blockchain-based registries for carbon credits, others create blockchain-based marketplaces for buying and selling carbon credits, and others still tackle decentralized data collection methods for the monitoring, verification and reporting that happens before a carbon credit can be issued.
Yet blockchain technology&#x27;s application in the voluntary carbon market is still a subject of debate. While many see blockchain as a powerful tool that can address some of the voluntary carbon market’s most pressing challenges, others argue that blockchain technology is a solution looking for a problem in the voluntary carbon market.
Critics dismiss blockchain technology as a scam, conflating it with cryptocurrency. However, the two are not synonymous, and blockchain technology has various applications beyond cryptocurrency. Decentralization creates security, making it difficult for hackers to alter a chain, and the more people on a blockchain network, the more secure it is.
Another common myth is that blockchain technology consumes a lot of electricity and has a negative environmental impact. While this is true for some blockchain designs that use the Proof-of-Work consensus mechanism, it does not apply to all blockchain designs. The Proof-of-Stake consensus mechanism consumes much less energy.
But the reality is that well-designed blockchain solutions can help the voluntary carbon market address its challenges by enhancing transparency, traceability, and accountability, reducing transaction costs and risks, and building trust between buyers and sellers. Blockchain-based solutions can also help ensure the integrity of carbon credits using immutable and transparent ledgers, decentralized verification, and smart contracts.
Increasingly, even participants in the legacy carbon markets are beginning to see the benefits of blockchain technology for the industry. For example, Gold Standard, the second largest carbon issuer in the world, recently announced steps to move toward allowing its carbon credits to be digitalized on the blockchain.
In sum, the potential for blockchain technology to enhance the efficiency, transparency, and trustworthiness of the voluntary carbon market is significant. It is crucial for stakeholders to collaborate in leveraging this potential to create a more sustainable carbon market ecosystem - the carbon market of the future.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
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The Nexus of Voluntary Carbon Markets & Blockchain: What You Need to Know

Today, the climate crisis is pushing for a green transition to renewable energy. This shift offers unique challenges and opportunities not just to insurers, but other financial institutions and players at the grassroots level in uniquely synergistic ways. It calls for re-laying the money pipelines. All these present blue-sky opportunities. 

Praveen

India has come a long way since the early 1990s when the country commenced power sector reforms and started wooing big international producers. The focus then was on thermal energy and the dialogue — including with some Hong Kong-based big boys — but was bogged down by endless negotiations on Purchase Power Agreements (PPAs), something I was privy to as I was based there back then. They were happy to focus on Mainland China and everyone knows why — all action and no discussion — or the Philippines and Indonesia.
The latter urgently needed to fix their notorious brownouts. Today, the climate crisis is pushing for a green transition to renewable energy. This shift offers unique challenges and opportunities not just to insurers, but other financial institutions and players at the grassroots level in uniquely synergistic ways. It calls for re-laying the money pipelines. All these present blue-sky opportunities.
<h1>Delayed and disorderly carbon transition</h1>
Insurers do three things. They are risk managers, risk carriers and investors. They have a pivotal role to play. However, there are disconnects, divergences and manifestations of oxymorons when it comes to what they actually do and what they ought to do.
Moody’s believes the credit impact of “a delayed and disorderly carbon transition” is the greatest threat to financial firms, as the increasing frequency of catastrophic weather events will lead to loan defaults and rising insurance claims. If insurers were serious, they would think hard before insuring anything that accentuates the burgeoning climate crisis. Nor would they invest in it. They need to be nudged to facilitate the green transition. There is no stopping them from insuring projects in seismically sensitive locations and patronizing the fossil fuel industry both as insurers and investees. The top four National Pension Scheme (NPS) players make similar allocations of their funds to the same fossil fuel company. Perhaps because they get the best returns for the pensioners and thereby also comply with the regulations. Stranded assets do not exist in their glossaries yet.
Environmental, Social and Governance (ESG) is slowly beginning to make inroads into the stock market (SEBI) and the central bank (RBI) regulators’ narrative. It struggles with the insurance (IRDAI) and pension funds (PFRDA) regulators. Thanks to the government’s push on sovereign green bonds, there is a fleeting reference by the IRDAI in this circular where “insurers are encouraged to consider investing in sovereign green bonds.” Removing investment barriers to fund India’s energy transition calls for improving climate disclosures and ESG ratings to encourage investments.
The total investment corpus of the insurance industry is Rs. 5868948 crores (1 USD = 82.50 INR) as of 31st December 2022 (Life: Rs.  5,370,834 crores and General: Rs. 498,114 crores). Add another Rs. 500,000 crores of the national pension scheme (NPS). Despite a rapid erosion vis-à-vis the US dollar, imagine what a small portion of this, channeled into solar energy rather than fossil fuel, can do.
Vibhuti Garg of the Institute for Energy Economics and Financial Analysis (IEEFA) throws some light on this: “India is currently investing around $18-20 billion in energy generation capacity and a further $20 billion in the grid on an annual basis. To achieve the Sustainable Development Scenario (SDS) in the International Energy Agency’s India Energy Outlook 2021, the country would need to triple its current rate of annual investment to $110bn”. An affirmative guidance from the regulator can surely help overcome what appears to be a “daunting” task. While most Indian general insurers would insure the asset side of solar power generation, only two private insurers provide a parametric cover. Insurers could also help the renewable energy cause by means of guarantees and credit insurance.
<h1>ABCD</h1>
To get to the alpha of solar energy, ‘BCD’ (<a href="https://en.wikipedia.org/wiki/Blended_finance">Blended</a>, Cooperatives, Diversity &amp; Inclusivity) is a possible way forward. Imagine a consortium of Azim Premji Foundation (philanthropy), SEWA Bank (financing a self-help group of women entrepreneurs), Asian Development Bank (ADB), Bandhan Bank (origins in microfinance for women), PFC (Power Finance Corporation) and, let’s say, Life Insurance Corporation of India (LIC) working towards financing solar power generation and transmission grid in rural India. Sounds challenging and would raise many an eyebrow.
Imagining is the easiest part but a patchwork of siloed regulations, if any, for respective entities is where blended finance is the solution. Sovereign green funds mean the credit rating of the country will apply, however ‘deficient’ the startup’s rating. Again, each participant in the fund is free to decide their share of risk appetite and who takes how many hit and when. Multiple financial services regulators must, however, converge to ensure efforts toward decarbonisation.
<h1>Cooperatives</h1>
Yes, an <a href="https://en.wikipedia.org/wiki/Amul">Amul</a> for Solar Energy. Tapping into the proven genius of a community. Calls for a <a href="https://en.wikipedia.org/wiki/Verghese_Kurien">Verghese Kurien</a>-like leader for solar power. He and the team saw merit in pioneering the cooperative model: farmers willing to associate together for produce and to be led by professionals while being owners of the cooperative. In a newly independent resource-constrained nation, where food security was of utmost importance, focus on social capital rather than the formation of capital assets bode well. The rest is history.
Moreover, investing in projects that improve one&#x27;s community, increases one&#x27;s sense of connection and social responsibility. Given the size and complexity of the country, a top-down approach to clean energy alone would not work. It calls for a grassroot approach.
<h1>Diversity &amp; Inclusion</h1>
I had the pleasure of <a href="https://www.linkedin.com/posts/praveenguptafcii_studies-evidence-positive-correlation-between-activity-6906498986497179648-Matg?utm_source=share&amp;utm_medium=member_desktop">interviewing</a> Vibhuti Garg of IEEFA India last year on the IWD. Here are some brilliant, assorted thoughts: 
<blockquote>“With greater access to electricity, more women are able to free their time from general household chores and divert their time on income generating opportunities… many women in small towns are now selling solar lamps and solar house systems which enhance energy access but also create opportunities for them to become entrepreneurs… Also, it allows more girls to undertake education and be part of the formal workforce. Women feel more protected with improved street lighting in their areas. Further, in some households shifting to electric cooking will also save them the time and hard work of collecting biomass, cow dung and wood pellets for cooking. It will also have a positive impact on their health as they will not be exposed to indoor pollution using traditional fuels which are polluting…</blockquote>
<blockquote>Most of the micro-enterprises set up by women are self-financed, which makes them more vulnerable. A lot more supportive ecosystem needs to be created for them to thrive and have better livelihood opportunities… They do not have the finance for upfront payment to start a business… a low proportion work in science, technology, engineering and mathematics (STEM) roles. It has been demonstrated that a lack of gender equality in the energy sector puts utilities at a disadvantage, boards with at least 30% women have higher profit margins than those that do not. It has also been suggested that energy sector organisations that improved gender equality can boost innovation.</blockquote>
<blockquote>Women in rural India are now getting opportunities in high earning jobs and because of improved energy access they will have more options. <a href="https://www.signify.com/global/our-company/blog/people/solar-sahelis-india">Solar Sahelis in Rajasthan</a> is a classic example of how women have turned into entrepreneurs. They rope in more women to their network and demonstrate improved sales through after-sales services. By participating in income-generating activities, their welfare and both physical as well as mental wellbeing has improved”. </blockquote>
<a href="https://www.bbc.com/news/business-43837484">Women-power</a> also focuses on the business of solar power generation and distribution.
Stranded assets
IEEFA warns that:
<blockquote>“Power Finance Corporation (PFC)/Rural Electrification Corporation (REC) growth will not come from coal. Their share of coal lending to loan book has been declining, down from 71% to 47% for PFC and 45% to 40% for REC, since FY 18. New coal plant construction over the next decade will be marginal at best and <a href="https://www.linkedin.com/company/climate-risk-horizons/">Climate Risk Horizons</a> estimates that the growth in conventional generation loan books for both companies will be negative over the coming years.</blockquote>
<blockquote>PFC/REC are failing to adapt to the energy transition underway, it says. The proportion of renewable energy in PFC’s gross loan assets has grown from 4% to just 11% between FY 2018-21; its share in REC’s loan book has been stagnant at 3-4%... We estimate that without course correction in favour of investments in the energy transition, PFC and REC’s net profit will grow at a mere 0.2% and 2.5% CAGR respectively from FY 2022-2025, due to slowdown in loan book growth and lower yields. PFC and REC will need 142% and 156% CAGR growth in their renewable energy loan book over the next 3 years in order to deliver a 10% net profit CAGR.</blockquote>
<blockquote>To achieve this loan book growth PFC and REC would need to disburse approximately Rs. 497,315 crores over the next three years. If achieved, this quantum of lending will meet the debt capital requirement of approximately 89 GW of solar and 38 GW of wind capacity”. </blockquote>
This tells us that unless a course correction towards green energy is adopted, these lenders will surely be in real trouble. Big investors like the LIC ought to see the writing on the wall, as should others investing in and insuring these assets or for that matter pensioners expecting continued returns. Access to low-cost capital via green bonds in international markets will be key for PFC/REC. Continued lending to new coal projects will pose a material risk in this regard, as ESG-aligned investors become wary of greenwashing.
<h1>In conclusion</h1>
In a report published in February this year, IEEFA highlights that India requires a further US$500 billion in investments in new wind and solar infrastructure, energy storage, grid expansion and modernisation to <a href="https://www.hindustantimes.com/india-news/independence-day-2021-hydrogen-energy-hub-solar-energy-india-climate-goals-modi-101629012924744.html">reach 450 gigawatts</a> of capacity by 2030. Given its investible corpus and the expected growth, insurers have the transformative power to exceed this expectation. While almost all of the fresh capacity installed during 2022 is renewable energy, the fact remains that fossil fuel still accounts for almost 80% of energy. Solar is the way forward but it must proceed both top-down and bottom-up — drawing on all the blue-sky opportunities it can.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
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Ensuring the Success of Solar - India's Green Energy Transition

There is ample evidence that we need to significantly reduce our GHG emissions to stave off potentially disastrous climate change. Evidence of this can already be seen in unusual dryness/wetness and high/low temperatures for the time of year. I genuinely believe nobody wants this to happen. But that does not make it easy to deal with the changing behavior, technology and growth outlook that this entails. A clear example of this is the discussion surrounding the heat pump that was recently started with a report by the Dutch National Environmental Database Foundation (NMD).

Leon

For almost everybody, it is pretty clear that our current energy system and economy need to decarbonize. There is ample evidence that we need to significantly reduce our GHG emissions to stave off potentially disastrous climate change. Evidence of this can already be seen in unusual dryness/wetness and high/low temperatures for the time of year. I genuinely believe nobody wants this to happen. But that does not make it easy to deal with the changing behavior, technology and growth outlook that this entails. A clear example of this is the discussion surrounding the heat pump that was recently started with a report by the Dutch National Environmental Database Foundation (NMD). Basically, this report stated that a heat pump is much more polluting than anybody previously thought.
This fact got taken up by a lot of people and organizations as evidence that even the prized sustainable option of the heat pump is not ‘clean’ and we should therefore go back to burning natural gas in our homes or just wait until other options like nuclear fusion are available to solve all our problems. I understand this reaction to a certain extent. We are used to specific technologies and use cases in our homes such as a natural gas boiler. These are especially prevalent in regions where natural gas was, or is, the dominant fuel like in the Netherlands, UK and Germany. Being told that we need to electrify and that this entails installing a quite expensive and bulky heat pump can be hard to digest for some, especially if it is perceived as top-down. Any evidence stating that this might potentially not be the best solution is then taken up immediately to justify waiting and not changing.
But let’s examine this claim a little further. Just a simple analysis of the workings of a heat pump compared to a natural gas boiler makes it clear that a significant CO2 reduction is just a fact. A heat pump extracts energy from its surroundings and upgrades this to useful heat with electricity. It does this with an efficiency coefficient between 3 to 5, thus generating 3 to 5 units of useful energy (heat) with 1 unit of energy input (electricity). A natural gas-fired boiler will convert 1 unit of energy input (natural gas) into 1 unit of useful energy (heat). So even if you power the heat pump completely with fossil fuel electricity, you are still more efficient by a factor of 2 or more and thus less polluting than with natural gas. Furthermore, the heat pump can be powered with renewable electricity, of which we currently have a significant share that is fast rising, while the natural gas boiler can only be powered by biomethane or hydrogen, of which we have very little and none at all at the moment. So a heat pump has a very real possibility of achieving zero emissions in the near future, which in fact it comes closer to every year, compared to the continued use of natural gas boilers.
But that is not the heart of the calculation by the NMD. The main reason why the environmental impact is high stems from the use of materials in the production process. The calculations used are giving this a factor of 11 times more impact compared to the use of materials for manufacturing a natural gas boiler, giving it a ‘weight’ of 16-37% in the Dutch new building code. This frankly makes no sense because it would mean that the materials of the heat pump used in the new building code would be the equivalent of 16-37% of the actual weight of the total building. A heat pump is a heavy machine and bulkier than a gas-fired boiler but this is simply not true. It may also use a little bit more electronics (and thus heavy and rare earth metals) in comparison but by no means is this significantly more than a normal natural gas boiler. The reason the NMD arrives at this conclusion is by assuming that the coolant used in the heat pumps is not disposed of properly and ends up completely in the environment. And because the calculations do not take into account the evident (and not denied) environmental benefit of using a heat pump as opposed to a boiler, all the negative effects of the coolant give rise to a bad score.
By itself, the coolant is indeed a quite powerful greenhouse gas. The older coolant (R410a) is 2000 times more powerful than CO2, while the newer standard used like R32 is 675 times more powerful. The future use of propane will limit this negative effect further to only 3. The study calculates completely with this R410a and, thus, the most negative case.
But is the use of even the most ‘polluting’ coolant really a problem? Not exactly. Of course, we should be careful with the use of resources and materials and enable the best possible recycling practices. This is also completely possible for heat pumps and specifically the coolant, as is now also the case with refrigerators and freezers. Assuming it all ends up in the environment is quite a stretch at best. But even if you assume the worst-case scenario, it pales in comparison with the gains over a lifetime of using a heat pump. When taking this into account, 90% of the benefit is during use. More importantly, the heat pump can be completely zero emission in a decade or so, which is very much debatable for a gas-fired boiler. So a heat pump still remains a very sustainable option to heat your home!
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
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The Bumpy Road to Decarbonization: The Heat Pump Discussion

Marine shipping is considered to be a hard decarbonization target, but that actually isn’t true. It’s a small fraction of ground transportation in terms of fossil fuel consumption, a lot of it is pretty short haul, and there are obvious wedges. But that doesn’t mean that there isn’t a lot of hype and hopium in the space.

And so, a walk through a simple taxonomy of various marine transportation overhyped fluff and practical but often ignored solutions. 




Michael

Marine Shipping has to Decarbonize and Hype is Strong Around Sexy but Foolish Solutions

The degrowth movement is calling for an end to economic growth, as measured by GDP, and shrinkage of the economies of developed countries. Developing countries should use this space in world GDP created by the contraction of developed economies to develop - freed from the unequal and exploitative restrictions imposed by global capitalism. Degrowth advocates do not believe in green growth, the compatibility of continued GDP growth within planetary boundaries, or that technological solutions exist.

Degrowthers diagnose a real problem. Unfortunately, the downsizing of western economies is not a solution. At least seven reasons can be highlighted why degrowth is insufficient.

<a href="https://www.overshootday.org/">Earth Overshoot Day</a>, &quot;when humanity has used all the biological resources that the Earth regenerates during the entire year&quot;, fell on 28 July 2022. In 1971, it fell on 25 December. This acceleration in using biological resources means that humanity is overshooting planetary <a href="https://www.science.org/doi/10.1126/science.1259855">boundaries</a>. Our ecological <a href="https://www.theguardian.com/environment/2018/oct/26/facts-about-our-ecological-crisis-are-incontrovertible-we-must-take-action">crisis</a> is an <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2602943/">overshoot</a> crisis, of which anthropogenic climate change and <a href="https://conbio.onlinelibrary.wiley.com/doi/abs/10.1111/cobi.12380">biodiversity</a> losses are symptoms. The full <a href="https://www.frontiersin.org/articles/10.3389/fcosc.2020.615419/full">scale</a> &quot;of the threats to the biosphere and all its lifeforms - including humanity - is so great that it is difficult to grasp for even well-informed experts.&quot; We face a “<a href="https://www.frontiersin.org/articles/10.3389/fcosc.2020.615419/full">ghastly future</a>.”
To avoid this, the degrowth movement is calling for an end to economic growth (as measured by GDP) and shrinkage of the economies of developed countries. Developing countries should <a href="https://degrowth.org/wp-content/uploads/2012/11/Kerschner-2010.pdf">use</a> this space in world GDP created by the contraction of developed economies to develop - freed from the unequal and exploitative restrictions imposed by global capitalism. Degrowth advocates do not believe in green growth, the compatibility of continued GDP growth within planetary boundaries, or that technological solutions exist - they <a href="https://earth.org/techno-optimism/">reject</a> techno-optimism or any possibility of <a href="https://gaiageld.com/wp-content/uploads/2021/02/decoupling_debunked_evidence_and_argumen.pdf">decoupling</a> between growth and the material footprint of nations.
<h1>Limitations of Degrowth</h1>
Degrowthers diagnose a real problem. Unfortunately, the downsizing of western economies is not a solution. At least seven reasons can be highlighted why degrowth is insufficient.
<h2>Degrowth will not decrease decarbonization</h2>
Most (<a href="https://www.cgdev.org/media/developing-countries-are-responsible-63-percent-current-carbon-emissions">63%</a>) of current carbon emissions come from developing countries - where it will only continue to increase in the foreseeable future. The 2022 <a href="https://www.unep.org/resources/emissions-gap-report-2022">Emissions Gap Report</a> notes (p. 67) that “virtually the entire future increase in global primary energy demand is expected to occur in these [developing] economies.”  Even if western economies are shrunk, they would still be extensive and emit significant carbon.
<h2>Degrowth will make matters worse</h2>
Degrowth may be <a href="https://www.sciencedirect.com/science/article/abs/pii/S0921800910004209">dirty</a>. Global redistribution, as degrowthers envisage, will increase aggregate consumption through a well-known &quot;growth through redistribution&quot; effect. Inequality <a href="https://cepr.org/voxeu/columns/redistribution-inequality-and-sustainable-growth-reconsidering-evidence">reduces</a> economic growth, hence the opposite will raise growth.
Businesses may substitute more expensive cleaner production techniques for cheaper but more polluting technologies. Governments would also not be able to borrow further to spend on social and basic needs or environmental protection.
<h2>Degrowth is politically infeasible</h2>
Because of the <a href="https://www.aeaweb.org/articles?id=10.1257/jep.5.1.193">endowment effect</a>, people would be unlikely to vote for politicians who propose lowering their levels of GDP per capita, especially in certain countries, at least if it is to fight climate change. A 2022 poll found that <a href="https://www.nytimes.com/2022/07/17/us/politics/climate-change-manchin-biden.html">only 1%</a> of USA voters listed climate change as the most crucial challenge. And politicians, being generally subject to a <a href="https://www.aeaweb.org/articles?id=10.1257/jep.5.1.193">status quo bias</a>, would be reluctant to propose such a radical policy. As proponents <a href="https://www.nature.com/articles/d41586-022-04412-x">acknowledge</a> “political parties that have put forward degrowth ideas have received limited support in elections.”
<h2>Degrowth is expensive</h2>
Degrowth is not only politically infeasible because voters would not give up their incomes but also because it is a costly way to tackle the ecological crisis. It has been <a href="https://www.jstor.org/stable/43664658">calculated</a> that if the world shrinks GDP per capita by 10% (around US$7,000 billion), it will reduce carbon emissions by about 3.3 gigatons, meaning a cost of US$2,100 per ton of emissions. A recent study published in <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9605864/">Nature</a> put the social cost of carbon dioxide (SC-CO2) at US$185 per ton of emissions. Degrowthers want us to pay more than ten times the price.
<h2>Degrowth policies are disappointing</h2>
A recent inventory of degrowth policies identified <a href="https://www.sciencedirect.com/science/article/pii/S0959652622023629#:~:text=The%20study%20outlined%20three%20broad,to%20a%20convivial%2C%20participatory%20society">530</a> proposals associated with the movement. This proliferation is because the degrowth movement is  “<a href="https://www.sciencedirect.com/science/article/pii/S0959652622023629#:~:text=The%20study%20outlined%20three%20broad,to%20a%20convivial%2C%20participatory%20society">multi-faceted</a>&quot;. It has become a rally-cry for anyone with a societal and environmental grievance, whether against capitalism, colonialism, patriarchy, or utilitarianism.
Because of the confusion this proliferation creates, a recent <a href="https://www.sciencedirect.com/science/article/pii/S0959652622023629#:~:text=The%20study%20outlined%20three%20broad,to%20a%20convivial%2C%20participatory%20society">paper</a> prioritized these into an “Iceberg model of degrowth policy proposals.&quot; At the top of the iceberg, prominent policies are universal basic income, work-time reductions, job guarantees, maximum income caps, non-for-profit cooperation, eco-villages, and housing cooperatives.
None of these are novel and most are, or have already been, implemented - most extensively in market economies. Furthermore, there is no attempt to link these policy proposals to decoupling - how many carbon emissions would they eliminate? How fast? No evidence is provided.
<h2>Degrowth is irresponsible</h2>
The lack of evidence on the carbon reduction that the iceberg model of policies will achieve - and achieve soon, as the matter is pressing - is a concern. We would not imagine subjecting human populations to potentially dangerous experimental drugs without rigorously testing their efficacy. Why embrace the &quot;medicine&quot; prescribed by the degrowth movement? Olivier Simar-Casanova <a href="https://www.ecosceptique.com/60-le-point-sur-la-decroissance/">described</a> this ethical and moral problem with degrowth clearly:
<blockquote>“Global warming is a serious issue, and claiming to respond to it with solutions of uncertain carbon efficiency, which we do not know how to implement in practice, is irresponsible.”</blockquote>
The dangers of shackling economies without any evidence as to the likely outcome are that it would leave the world much <a href="https://globalprioritiesinstitute.org/wp-content/uploads/Leopold-Aschenbrenner_Existential-risk-and-growth_.pdf">more exposed</a> and vulnerable to shocks, make the adjustment to a zero-carbon-emitting economy <a href="https://www.sciencedirect.com/science/article/pii/S0040162520304157">more costly</a>, and raise the risk of conflict by turning the economy into a <a href="https://astralcodexten.substack.com/p/book-review-what-we-owe-the-future">zero-sum game</a>.
<h2>Degrowth is hypocritical</h2>
Degrowth is no solution to the ecological crisis because it is, at its roots, hypocritical. As one <a href="https://www.spectator.co.uk/article/the-dangerous-myth-of-degrowth/">commentator</a> put it:
<blockquote>“It is one thing to advocate the end of economic growth if you have no actual fear of poverty. If you are struggling to keep yourself warm and fed, on the other hand, the idea of self-denial – still less of shrinking the economy – will have rather less appeal. Degrowth is a middle–class luxury, an indulgence to be conducted from the comfort of your sofa with its electronic foot-raiser […] People who express disgust with consumerism have a tendency to disapprove of other people’s while overlooking their own.”</blockquote>
<h1>Conclusion</h1>
Neither degrowth nor the more mainstream green growth approach offer viable solutions for the ecological crisis. Worse, a recent editorial in <a href="https://www.nature.com/articles/d41586-022-00723-1">Nature</a> magazine pointed out that the disagreement between degrowth and green growth “is impeding action. It’s time for researchers to end their debate. The world needs them to focus on the greater goals of stopping catastrophic environmental destruction and improving well-being.” 
This is a distraction that cannot be afforded because GDP growth and population growth are, in any case, in decline. We do not need a degrowth experiment to slow it down. We live in the <a href="https://rootsofprogress.org/technological-stagnation">Great Stagnation</a>. Society is gradually <a href="https://academic.oup.com/cje/article/46/1/105/6378308?login=false">ossifying</a>, and with it, its supply of innovative <a href="https://www.nature.com/articles/s41586-022-05543-x">science</a> and <a href="https://web.stanford.edu/~chadj/IdeaPF.pdf">ideas</a>, which remain, however remotely, our only chance of avoiding the premature curtailment of humanity’s potential.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
<h6>Photo by Afbeelding van <a href="https://pixabay.com/nl/users/anhot-4256108/?utm_source=link-attribution&amp;utm_medium=referral&amp;utm_campaign=image&amp;utm_content=2804437">anhot</a> via <a href="https://pixabay.com/nl/?utm_source=link-attribution&amp;utm_medium=referral&amp;utm_campaign=image&amp;utm_content=2804437">Pixabay</a>​ </h6>
<h6>​ </h6>

Seven Reasons why Degrowth is No Solution to the Ecological Crisis

Confidence in the supposedly 500 million tons worth of carbon represented by global VCMs is quickly waning. Mounting controversies continue to intensify skepticism among corporates, investors, regulators, regulatory standard setters and other stakeholders over the quality and efficacy of VCCs. As a result, market demand for cheap, questionably reliable credits is on the decline as the supply of credits tied to more dependably effective offset projects, such as direct air capture, remains scarce and expensive. A middle market of readily available, affordable but nevertheless high-quality VCCs is clearly necessary.

Mahesh

This is part two of a series on the potential of the buildings and construction sector to impact the voluntary carbon market. You can find the first article <a href="https://illuminem.com/illuminemvoices/d6df124a-c4d3-4c4f-91aa-12dec33aeda9">here</a>.
For carbon offset projects, the voluntary carbon credits (VCCs) that their outcomes support and the voluntary carbon markets (VCMs) that their credits activate, there are two fundamental truths — they are necessary tools for financing the reduction and removal of carbon emissions and are in need of an overhaul.
Confidence in the supposedly 500 million tons worth of carbon represented by global VCMs is quickly waning. Mounting controversies continue to intensify skepticism among corporates, investors, regulators, regulatory standard setters and other stakeholders over the quality and efficacy of VCCs. As a result, market demand for cheap, questionably reliable credits is on the decline as the supply of credits tied to more dependably effective offset projects, such as direct air capture, remains scarce and expensive.
A middle market of readily available, affordable but nevertheless high-quality VCCs is clearly necessary. Otherwise, prospective claimants (i.e., those who retire a credit and take it out of circulation) across hard-to-abate industries or those dependent on high-emitting discrete energy applications may punt on their immediate stopgap decarbonization efforts.
As I’ve written in the past, the global buildings and construction sector is capable of filling this void. The sector is not only capable of issuing high-quality carbon credits representing additional, durable, and easily monitored, verified and reported (MRV) carbon offset projects, but well-positioned to be a source of differentiated credits.
But standing-up high-quality carbon offset projects amenable to life cycle MRV, whether from onsite renewables, battery packs and electric vehicle charging stations or deep energy efficiency retrofits, is just the first step. Project developers will need to implement the right technologies to give prospective VCC buyers and claimants the confidence they need in the variety of built environment-based offset projects they produce. And end-users of these built environment-based VCCs will also need to strengthen their operational data collection, governance and analysis capabilities to integrate their VCC holdings and transactions within their broader sustainability performance management efforts.
<h1>Tapping New Technologies</h1>
For both parties, and for their respective stakeholders, the adoption of enterprise blockchain applications and advanced Environmental, Social, and Governance (ESG) performance measurement, management and reporting software will be essential.
For offset developers, the emissions-related data generated by their projects must be assembled, analyzed and prepared for MRV with a pertinent VCC registry. The benefits of bespoke blockchain applications for these producers, then, are fairly straightforward. In short, blockchain’s distributed ledger technology enables the creation of “smart contracts” which, essentially, are capable of automating the confirmation, or rather, completion of an achieved carbon offset (usually one metric ton of avoided, reduced or removed carbon emissions).
The blockchain application achieves this by tapping into the operational data (i.e., energy consumption, energy stored or energy consumption avoided) generated by a building’s fleet of net zero-enabling technologies and automatically applying conversion metrics to determine the quantity of emissions addressed. And once the registry-determined carbon offset verification criteria for the VCC is satisfied, the smart contract tokenizes the offset by the project.
For those charged with MRV of the offset project, including developers themselves, credit registries and third-party verifiers, the blockchain ensures the integrity and traceability of the project data used to complete the smart contract it enables. Once the offsetting outcomes of the project are verified—typically by a VCC registry—the tokenized offset emissions can be conferred an on-chain credit through the smart contract mechanism and then tendered in the appropriate VCM. By virtue of the immutable distributed ledger, the issuance, sale, trade and, most importantly, retirement of the VCC applied to the tokenized offset can be continuously traced. This enables end-users to trust that their claiming of a tokenized credit will not compromise the integrity of their broader carbon accounting efforts.
Should these systems be adopted at scale and used to undergird carbon offsets and their attendant VCCs over their full life cycles, this can be a model for a more transparent, credibly effective VCM.
Indeed, both offset project developers and VCC end-users will need to ensure that their engagements in this process don’t cause them to embellish their emissions reductions claims, deflate their emissions reductions outcomes or worse, disincentivize their achievement of deeper and more holistic sustainability improvements.
ESG software, which automates the collection of end-users’ environmental and social risk management data to help them monitor their composite ESG “performance,” is the natural supplement to blockchain-enabled offsetting schemes. For offset project developers, these systems enable continuous insight into the effects of producing tokenized, credit-worthy offsets on their carbon balances. And for prospective users and claimants of a tokenized VCC, ESG software facilitates their accounting of offset emissions against their owned and controlled carbon sources.
Importantly, for both parties, the interaction between participation in a blockchain-enabled carbon offsetting scheme and their respective composite ESG performance outcomes can be monitored in real time.
To understand how this works in practice, take the offset project developer. They exercise caution regarding the data that’s fed into their smart contract-supporting blockchain application. Humans, not computers, will need to determine the ultimate utility of a given offset project, and they will need to evaluate how their organizations’ pursuit of tokenizable carbon offsets affects its management of other ESG issues. Relatedly, there must be stringent controls to prevent the blending of avoided, reduced or removed emissions that are counted against their own “E” performance with those that are reserved for tokenization and eventually credit issuance.
Similarly, for prospective users of VCCs, ESG software that automates the collection and analysis of their organizations’ sustainability risk management data will help them to determine whether their need for offsetting, rather than insetting, is merited in the first place.
Whether it’s achieved in part with tokenized carbon credits, the ultimate goal for companies is the achievement of net zero emissions—sooner, rather than later. And by digitizing climate action, employing analytics and embracing experimentation, the climate-laggard buildings and construction sector can lead market transformation and accelerate the collective path to zero.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
<h6>Photo by <a href="https://unsplash.com/es/@christopher__burns?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Christopher Burns</a> on <a href="https://unsplash.com/photos/8KfCR12oeUM?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Unsplash</a>​ </h6>

The Built Environment: Transformation Needed for Net Zero Tools in Carbon Markets

Read an excerpt from Chapter 1 of "Sustainability, Technology and Finance: Rethinking How Markets Integrate ESG" by Herman Bril, Georg Kell, and Andreas Rasche. Published by Routledge.

While sustainability and finance are connected through the discourse on sustainable finance and ESG, it is less clear how ESG relates to technology. We suggest considering three different perspectives on the relationship between ESG and technology.

Georg

Andreas

Herman

While sustainability and finance are connected through the discourse on sustainable finance and ESG (Bril, Kell, Rasche, 2021), it is less clear how ESG relates to technology. We suggest considering three different perspectives on the relationship between ESG and technology. Naturally, the three perspectives are based on analytical distinctions which overlap in practice. Figure 1.1 provides a summary of the three perspectives.
<img src="https://illuminem.b-cdn.net/articlebody/3f3de64de10066d49879fc5528f8ac003e9a5b69.png" alt="Figure 1.1: Three Perspectives on the Relationship between ESG and Technology">
<h1>ESG and Technology</h1>
Technological changes and innovations are disrupting companies’ business models and allow for sustainable business practices to move mainstream (e.g., new battery technologies enabling electric mobility). These changes have consequences for how investors value companies, and how they view risks and opportunities in the context of sustainability. The “ESG and Technology” perspective looks at the many technological innovations in the economy and tries to understand how these innovations can impact the ESG performance of companies (Kell &amp; Rasche, 2021).
ESG-minded investors need to develop basic knowledge of technologies like carbon capture, robotics, battery storage capacity, and hydrogen energy so that they can judge ESG-related opportunities and risks. The “ESG and Technology” perspective also provides a platform to discuss how technology and sustainability reshape entire industry dynamics. Consider, for instance, how new technological developments create so-called ‘sector couplings’ between different industries, such as when energy consuming sectors and energy producing sectors are increasingly intertwined. The rise of electric mobility, for example, requires that the automotive industry is increasingly ‘electrified’ (Appunn, 2018). Such dynamics unfold creative destruction processes that impact how investors assess companies. 
There is, of course, no conclusive list of technological developments that an ESG investor should be aware of. Whether and how a technology is impacting a firm’s ESG performance is influenced by many factors, including, but not limited to, the industry a company operates in, the company’s size, its geographic location, and the regulatory environment it faces. Also, while some technologies are well-known by now (e.g., increased battery storage driving decarbonization in some sectors), other technologies are just about to emerge. In 2021, the World Economic Forum (2021) listed self-fertilizing crops, on-demand drug manufacturing, energy through wireless signals, and 3-D printed houses as some of the most promising emerging technologies that can help to address ESG challenges.
<h1>ESG through Technology</h1>
Sustainable finance itself has been exposed to massive changes due to digitalization. While a decade ago sustainable finance was mostly practiced through screens (excluding or including firms with low/high ESG performance), more recent innovations in AI and machine learning (ML) have opened up new possibilities for investors to integrate ESG criteria into portfolio construction. These new investment technologies evolve alongside the technological changes in society at large.
Monk and Rook (2020: 16-24) have outlined a short history of investment technology. They conclude that almost each major innovation in investment technology (e.g., double-entry book keeping and telegraph enabled stock-tickers) is related to advances in one (or more) of three capabilities: (1) latency of data (i.e. the speed with which investment-related data can be communicated); (2) depth of data (i.e. the level of detail and complexity of investment analyses); and (3) resource efficiency (i.e. how efficient investors’ organizational resources can be utilized). These three capabilities are interlinked and trade-offs exist. For instance, if investors find ways to obtain and analyze relevant data more swiftly, this can potentially come at the expense of analytical depth (Monk &amp; Rook, 2020: 17). We therefore must debate advances in investment technology against this background. We need to see where new analytical techniques can help investors gain a competitive advantage and at which cost such an advantage may be created.
Recently, the role of AI and ML within ESG-related investment decisions has been much discussed (Selim, 2021). The starting point for such discussions is usually the recognition that ‘traditional’ ESG data does not give investors a comprehensive perspective on companies’ ESG performance. Some problems relate to the fact that most ESG data is self-reported and hence likely to be biased. Other problems occur when focusing on what rating agencies do with this data and the divergence of evaluations that are created due to raters using different methodologies (Berg, Koelbel, &amp; Rigobon, 2020). Given these constraints, AI can be used to advance portfolio decision making, especially in situations where investors want to include extra-financial information (e.g., news items, social media) into the analysis. We can think of AI delivering early “digital smoke signals” (Lohr, 2013) – that is, hidden risks and anomalies that would otherwise escape the attention of investors (Antoncic, 2020). AI can also be used by venture capital investors to make investment decisions. For instance, Antretter et al. (2020) trained an algorithm to make VC investment decisions. They found that the algorithm outperformed inexperienced VC investors while experienced investors fared much better.
Whatever their application, new technologies allow investors to supplement the use of structured data sources with analyses of vast amounts of unstructured data. Sentiment analysis algorithms, for instance, are increasingly used to study the tone that underlies a conversation. Using natural language processing (NLP) such algorithms can extract attitudes and other subjective information from texts. Sentiment analysis can be used to study a company’s commitment to ESG, for example when analyzing data from quarterly earnings calls (S&amp;P Global, 2020). In the end, such applications can meaningfully supplement existing data sources and hence allow for a more fine-grained analysis of firms’ ESG performance.
<h1>ESG as Technology</h1>
Technology and digitalization not only affect how ESG is practiced; they increasingly also constitute ESG issues themselves. For instance, consider the role of cybersecurity which can significantly undermine the stability of firms’ operations and hence must be considered within governance-related discussions. Further, bitcoin-related activities (to which some investors are exposed) have a negative carbon footprint and hence impact environmental performance. Some have called this emerging agenda Environmental, Social, Governance, Technology (ESGT) (Bonime-Blanc, 2020). ESGT is important because it emphasizes that some technological issues, which have significant consequences for a firm’s level of sustainability, are not adequately captured by more traditional ESG thinking.
Adding the “T” to ESG does not just imply to find a new acronym or to promote a new framework (we already have enough acronyms and frameworks). Corporations must understand that many technological issues impact exactly those risks and opportunities that ESG analyses are trying to assess. In some contexts, technological issues can be treated as topics that need to be addressed on their own. In other contexts, technological issues will interact significantly with established E, S, and G topics. Consider, for instance, the role of cybersecurity. Through the COVID-19 pandemic working from home has become a new norm for large parts of the global workforce. This exposes firms to new cybersecurity risks, and it also throws up questions on the potential social impact of firms’ cybersecurity measures (e.g., aligning such measures with human and labor rights). Further, a lack of adequate cybersecurity can impact client privacy in cases where potential sensitive and confidential information may be shared unduly (Nasdaq, 2020).
<h1>Beyond the Three Perspectives</h1>
The three perspectives do not exist in isolation (indicated by the arrows in Figure 1.1). Which technologies are used by investors depends on what kind of innovations are mainstreamed within the economy. Also, which ESGT issues become salient depends on the general trajectory of technological developments and their uptake by the finance community.
A possible fourth perspective on the relationship between ESG and technology would be to consider firms’ own reporting practices and how these practices are shaped by technological innovations. Increasingly, firms can produce more granular sustainability data allowing them to zoom in on parts of their supply chain or regional operations (Amesheva, 2017). For instance, Patagonia’s famous Footprint Chronicles allows the consumer to follow the ESG performance of the company’s products along all stages of the value chain (including raw material sourcing). Without doubt, such fine-grained ESG data create higher levels of transparency and can support investment analysis (especially if such data is combined with technologically advanced investment methods). However, as this book is primarily concerned with the investor side of ESG, we do not further unpack this perspective within the forthcoming chapters.
<h3>References</h3>
<h5>[i] Amesheva, I (2017). Five technology trends defining the future of corporate sustainability. Available at: <a href="https://www.eco-business.com/opinion/five-technology-trends-defining-the-future-of-corporate-sustainability/">https://www.eco-business.com/opinion/five-technology-trends-defining-the-future-of-corporate-sustainability/</a> (Accessed: 13 January 2022).</h5>
<h5>[ii] Antretter, T., Blohm, I., Siren, C., Grichnik, D., Malmstrom, M., &amp; Wincent, J. (2020). Do Algorithms Make Better -- and Fairer -- Investments Than Angel Investors? Harvard Business Review Digital Articles, 2–6.</h5>
<h5>[iii] Appunn, K. (2018). Sector coupling – Shaping an integrated renewable energy system. Available at: https://www.cleanenergywire.org/factsheets/sector-coupling-shaping-integrated-renewable-power-system (Accessed: 13 January 2022).</h5>
<h5>[iv] Berg, F., Koelbel, J. F., &amp; Rigobon, R. (2019). Aggregate Confusion: The Divergence of ESG Ratings (MIT Sloan School Working Paper 5822-19). MIT.</h5>
<h5>[v] Bonime-Blanc, A. (2020). Boom to Gloom: How Leaders Transform Risk into Resilience and Value. London: Routledge.</h5>
<h5>[vi] Kell, G., &amp; Rasche, A. (2021). Renewing Markets from Within: How Businesses and the Investment Community can Drive Transformational Change. In Bril, H., Kell, G., &amp; Rasche, A. (eds.). Sustainable Investing: A Path to a New Horizon. London: Routledge, pp. 45-65.</h5>
<h5>[vii] Lohr, S. 2013. Searching big data for ‘digital smoke signals’. New York Times, August 7.<a href="http://www.nytimes.com/2013/08/08/technology/development-groups-tap-big-data-to-direct-humanit%20arian-aid.htm"> </a>https://www.nytimes.com/2013/08/08/technology/development-groups-tap-big-data-to-direct-humanitarian-aid.html</h5>
<h5>[viii] Monk. A., Prins, M., &amp; Rook, D. (2021). Data defense in sustainable investing. In Bril, H., Kell, G., &amp; Rasche, A. (eds.) Sustainable Investing: A Path to a New Horizon. London: Routledge, pp. 263-284.</h5>
<h5>[ix] Nasdaq, (2020). 2020 Sustainability Report. Available at: <a href="https://www.nasdaq.com/docs/2021/06/16/2020_Sustainability_Report.pdf">https://www.nasdaq.com/docs/2021/06/16/2020_Sustainability_Report.pdf</a> (Accessed: 17 January 2022).</h5>
<h5>[x] S&amp;P Global (2020). How Can AI Help ESG Investing? Available at: <a href="https://www.spglobal.com/en/research-insights/articles/how-can-ai-help-esg-investing">https://www.spglobal.com/en/research-insights/articles/how-can-ai-help-esg-investing</a> (Accessed: 14 January 2022).</h5>
<h5>[xi] Selim, O. (2021). ESG and AI. In H. Bril, G. Kell, &amp; A. Rasche (Eds.), Sustainable Investing: A Path to a New Horizon (pp. 227–243). London: Routledge.</h5>
<h5>[xii] World Economic Forum (2021). Top 10 Emerging Technologies of 2021. Available at: <a href="https://www.weforum.org/reports/top-10-emerging-technologies-of-2021">https://www.weforum.org/reports/top-10-emerging-technologies-of-2021</a> (Accessed 13 January 2022). </h5>
This is an excerpt from Chapter 1 of &quot;<a href="https://www.routledge.com/Sustainability-Technology-and-Finance-Rethinking-How-Markets-Integrate/Bril-Kell-Rasche/p/book/9781032200545">Sustainability, Technology and Finance: Rethinking How Markets Integrate ESG</a>&quot; by Herman Bril, Georg Kell, and Andreas Rasche. Published by Routledge. © 2023
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
<h6>Photo by <a href="https://unsplash.com/@deepmind?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">DeepMind</a> on <a href="https://unsplash.com/photos/s2TPKAD6fag?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Unsplash</a>​ </h6>

How Do Sustainability, Finance, and Technology Connect?

The links between human interactions with wild animals and the emergence and spread of zoonotic diseases, including through regulated, unregulated, and illegal trade and markets, is well known. The COVID-19 pandemic shone a spotlight on serious gaps in the wildlife trade regime, yet efforts to fill these gaps are lacking a sense of urgency.

Sharon L.

The links between human interactions with wild animals and the emergence and spread of <a href="https://www.emro.who.int/fr/about-who/rc61/zoonotic-diseases.html">zoonotic diseases</a>, including through regulated, unregulated, and illegal trade and markets, is well known.
Many <a href="https://www.nationalgeographic.com/animals/article/to-prevent-next-pandemic-focus-on-legal-wildlife-trade">articles</a> exist, and the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) released a relevant <a href="https://ipbes.net/sites/default/files/2020-12/IPBES%20Workshop%20on%20Biodiversity%20and%20Pandemics%20Report_0.pdf">report</a> in 2020, all discussing the risks posed by international trade on the spillover of high-risk zoonoses. Of critical importance are those emerging zoonoses that can cause a pandemic or an epidemic for which a cure does not exist; including the <a href="https://www.who.int/activities/prioritizing-diseases-for-research-and-development-in-emergency-contexts">World Health Organization (WHO) Blueprint</a> diseases, such as <a href="https://www.science.org/doi/10.1126/science.abp8715">COVID-19</a>.
The COVID-19 pandemic shone a spotlight on serious gaps in the wildlife trade regime, yet efforts to fill these gaps are lacking a sense of urgency and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) largely wrote itself out of the <a href="https://www.ilaparis2023.org/en/white-paper/health/">script</a>.
CITES and COVID-19
At the height of the COVID-19 pandemic when the world’s attention was focused on its origins and response, the <a href="https://cites.org/eng">CITES</a> Secretariat issued a <a href="https://cites.org/eng/CITES_Secretariat_statement_in_relation_to_COVID19">statement</a> that “matters regarding zoonotic diseases are outside of CITES’ mandate.” Surprisingly, the statement made no reference to the <a href="https://cites.org/sites/default/files/eng/disc/sec/Cooperation_Agreement_CITES_and_OIE_dec_15.pdf">Memorandum of Understanding</a> (MoU) signed in <a href="https://cites.org/eng/node/18857">2015</a> between CITES and the World Organisation on Animal Health (OIE/WOAH).
Given its existing mandate, CITES’ role in preventing zoonoses may be relatively limited, but the Secretariat’s absolute statement displayed a disinterest that likely locked them out of crucial discussions on the topic. CITES was not included in the <a href="https://www.unep.org/resources/publication/quadripartite-memorandum-understanding-mou-signed-new-era-one-health">Quadripartite</a> MoU between the Food and Agriculture Organization of the UN (FAO), WOAH, the <a href="http://sdg.iisd.org/news/cop-15-event-highlights-linkages-between-pandemics-and-biodiversity/">UN Environment Programme</a> (UNEP), and WHO on advancing a One Health approach – an approach necessary for pandemic prevention and response – and is not a central player in ongoing discussions.
The non-government sector was quick to act with new initiatives, including the Association of Zoos and Aquariums’ <a href="https://www.aza.org/connect-stories/stories/preventing-pandemics?locale=en">Reduce the Risk</a> and <a href="https://www.freeland.org/newsroom/end-pandemics-appeal-to-world-leaders1761673">End Pandemics</a> initiatives, the <a href="https://endwildlifecrime.org/">Global Initiative to End Wildlife Crime</a> (EWC), <a href="https://www.preventingfuturepandemics.org/">Preventing Pandemics at the Source</a>, and the informal <a href="https://www.four-paws.org/get-involved/pandemics-and-animal-welfare">Pandemic and Animal Welfare Coalition</a> – all advocating for prevention and presenting practical options on how to do so. 
CITES and risk to public health and animal health
CITES regulates international wildlife trade to ensure it is not detrimental to the survival of the species, without requiring consideration of the public health or animal health implications.
CITES does not regulate the way wildlife is harvested, handled, or stored in the source state, or how it is handled, stored, sold, or consumed in the destination state. Captive breeding now accounts for close to <a href="https://cites.org/sites/default/files/documents/E-CoP19-Inf-24.pdf">65% of trade</a> in animals. Captive breeding <a href="https://cites.org/sites/default/files/document/E-Res-12-10-R15.pdf">operations</a> are not assessed by CITES on public health grounds. Yet all these activities can pose a risk factor for zoonotic disease emergence.
Some <a href="https://www.linkedin.com/pulse/cites-one-health-commentary-john-scanlon/">refer</a> to the <a href="https://cites.org/eng/disc/text.php">Convention</a>’s reference to “any living specimen will be so prepared and shipped as to minimize the risk of injury, damage to health or cruel treatment” as a mandate. Read in context, it likely means to the health of the animal(s) in trade. However, parties could seek to give it a wider interpretation to help address some aspects of wildlife trade that present pandemic potential. However, the text is limited to ‘living’ specimens, not dead animals, their parts or derivatives, and it does not address the capture, holding prior to transport, marketing of the animal, or the criteria for listing a species.
CITES and One Health
Two documents were <a href="https://cites.org/eng/cop/19/agenda-documents">submitted</a> to CITES CoP19, including a proposed <a href="https://cites.org/sites/default/files/documents/E-CoP19-23-02_0.pdf">Resolution</a> on ‘One Health and CITES,’ which demonstrated that parties to CITES had an interest in the topic. The plenary ultimately adopted a consolidated set of <a href="https://cites.org/sites/default/files/documents/E-CoP19-Com-II-06.pdf">decisions</a>.
Any progress made toward adopting a One Health approach to wildlife trade and markets is welcome. However, given CITES’ current mandate, such decisions are of limited effect. Parties to the Convention on Biological Diversity (CBD) showed slightly more ambition at COP 15, through the adoption of the <a href="https://www.cbd.int/article/cop15-final-text-kunming-montreal-gbf-221222">Global Biodiversity Framework</a> and related decisions, which is also welcome. 
While valuable, non-binding decisions by CITES and CBD are inadequate to address the scale of risks presented by wildlife trade and markets, and the current response leaves us unnecessarily exposed to future zoonotic diseases.
Amending CITES to cover risk to public health and animal health
Our initial <a href="https://www.scientificamerican.com/article/a-crucial-step-toward-preventing-wildlife-related-pandemics/">preference</a>, and that of the <a href="https://endwildlifecrime.org/">EWC</a>, was to amend CITES, given its well-established governance and permitting processes, and the impact it has on national legislation. It is, however, a big step for CITES to broaden its <a href="https://www.linkedin.com/pulse/wildlife-trade-origins-covid-19-preventing-future-john-e-scanlon-ao/">focus</a> after nearly 50 years, and, it did not find favor with parties, as well as some observers, including over a <a href="https://endwildlifecrime.org/faqs/">concern</a> that opening CITES for these amendments could open it to others.
Another viable way forward
It is essential to coordinate the regulation of wildlife trade, markets, and consumption together with human health and animal health, to help avert the next wildlife-related pandemic.
Other <a href="https://www.linkedin.com/pulse/fresh-look-global-wildlife-trade-law-can-cites-help-scanlon-ao/">options</a> may even offer greater scope as they start afresh, especially the Pandemics instrument being negotiated in the WHO. The EWC has made <a href="https://endwildlifecrime.org/wp-content/uploads/2021/12/EWC-Response-to-WHA-Decision.pdf">submissions</a> and <a href="https://www.linkedin.com/pulse/preventing-pandemics-through-one-health-approach-john-e-scanlon-ao/">presentations</a> on the need to include prevention in the scope of the instrument, along with preparedness and response. The <a href="https://apps.who.int/gb/inb/e/e_inb-4.html">zero draft</a> of the Pandemics instrument specifically references “wildlife trade” but not markets, in Article 18. Animal welfare is thus far absent.
The final outcome of these negotiations remains to be seen, but the current zero draft, while still insufficient, offers some hope. However, by taking the current WHO route, the wildlife conservation community is not in the driver’s seat and is largely ceding global leadership on how to address the risk to human health posed by wildlife trade and markets to public health organizations.
Looking ahead to the next 50 years
In failing to immediately ‘grasp the nettle,’ CITES removed itself from a central role in negotiations to scale up the global effort to prevent future wildlife-related pandemics.
Nevertheless, the world will increasingly take a One Health approach to wildlife trade and markets at both international and <a href="http://sdg.iisd.org/news/cop-15-event-highlights-linkages-between-pandemics-and-biodiversity/">national</a> levels. The risk they pose will be addressed, in some way, within a new Pandemics instrument.
Memories of the COVID-19 pandemic will fade with time, and decisions taken during that period may be slowly <a href="https://can01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.theguardian.com%2Fenvironment%2F2022%2Fdec%2F15%2Fchinas-return-to-wildlife-farming-a-risk-to-global-health-and-biodiversity&amp;data=05%7C01%7Cekosolapova%40iisd.org%7Ce2ea513624904acec63608db0ba799c6%7C01a20ec6cfd9471cb34bedc36161c3ce%7C1%7C0%7C638116586739358021%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&amp;sdata=m2pLEdc6B%2Fv3rAYDOiGva6FXMPo2a0XhmXW6BMjpmcU%3D&amp;reserved=0">wound back</a>. Incremental changes will be made over time, but not as rapidly as is necessary, through a combination of a new Pandemics instrument, implementing resolutions under CBD and CITES, and scaling up efforts to update national <a href="https://endwildlifecrime.org/wp-content/uploads/2023/01/02.02.23-Press-Release-EWC-x-GIZ-Project-2.pdf">legislation</a> and policy.
A failure to rapidly institutionalize how we regulate the risk posed by wildlife trade and markets at the global level and across all countries means we will remain unnecessarily exposed to the risk of future emerging zoonotic diseases, such as those identified by the WHO.
This article is also published by <a href="https://sdg.iisd.org/commentary/guest-articles/cites-wildlife-and-pandemics-failure-to-grasp-the-nettle/">IISD - SDG Knowledge Hub</a>. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.

CITES, Wildlife, and Pandemics: Failure to Grasp the Nettle

The Intergovernmental Panel on Climate Change (IPCC) has emphasized that meeting the Paris Agreement’s temperature objectives will require both highly aggressive measures to decarbonize the global economy as well as large-scale initiatives to remove carbon dioxide from the atmosphere. 

One approach to scaling up the carbon removal industry is Enhanced Oil Recovery (EOR), which may be counterintuitive and contentious, but can also play a significant role in decreasing carbon emissions.

The Intergovernmental Panel on Climate Change (IPCC) has emphasized that meeting the Paris Agreement’s temperature objectives will require both highly aggressive measures to decarbonize the global economy as well as large-scale initiatives to remove carbon dioxide from the atmosphere. In 2018, the IPCC concluded that “<a href="https://www.ipcc.ch/site/assets/uploads/sites/2/2022/06/SPM_version_report_LR.pdf">all pathways that limit global warming to 1.5°C with limited or no overshoot project the use of carbon dioxide removal (CDR) on the order of 100–1000 GtCO2 over the 21st century</a>.” In some scenarios that limit global warming to 1.5°C, <a href="https://www.researchgate.net/profile/Max-Franks/publication/366399767_Pigou&#x27;s_Advice_and_Sisyphus&#x27;_Warning_Carbon_Pricing_with_Non-Permanent_Carbon-Dioxide_Removal/links/63a03cce40358f78eb015cc4/Pigous-Advice-and-Sisyphus-Warning-Carbon-Pricing-with-Non-Permanent-Carbon-Dioxide-Removal.pdf">half of current carbon emissions have to be removed annually in the second half of the 21st century</a>. Moreover, in its Sixth Assessment Report, the IPCC declared that deployment of carbon dioxide removal approaches is “<a href="https://www.ipcc.ch/report/ar6/wg3/downloads/report/IPCC_AR6_WGIII_SPM.pdf">unavoidable</a>” if the net-zero objectives of the Paris Agreement are to be realized.
In the 2021 <a href="https://www.congress.gov/117/bills/hr3684/BILLS-117hr3684enr.pdf">Infrastructure Investment and Jobs Act</a>, the U.S. Congress allocated $3.5 billion for the development of four “<a href="https://www.energy.gov/oced/four-regional-clean-direct-air-capture-hubs">regional direct air capture hubs</a>.” <a href="https://www.iea.org/reports/direct-air-capture">Direct air capture facilities</a> can extract carbon dioxide from ambient air, with the CO2 subsequently stored in deep geological formations, or converted for use.
Currently, there are only <a href="https://www.iea.org/reports/direct-air-capture-2022">18 direct air facilities operating globally</a>, sequestering approximately 10,000 tons of CO2. However, the <a href="https://www.iea.org/reports/direct-air-capture-2022">International Energy Agency has projected</a> that we may need almost a billion tons of carbon removal from such facilities by 2050 to keep us on track to meet the objectives of the Paris Agreement. Many believe that U.S. investments in direct air capture hubs can help scale up the industry by helping to bring down the currently <a href="https://www.wri.org/insights/direct-air-capture-resource-considerations-and-costs-carbon-removal#:~:text=The%20range%20of%20costs%20for,less%20than%20%2450%2Ftonne.">imposing costs</a> of such facilities <a href="https://bipartisanpolicy.org/blog/dac-hubs/">by fostering economies of scale and learning by doing</a>, much as policy measures <a href="https://www.catf.us/2019/06/leveraging-enhanced-oil-recovery-for-large-scale-saline-storage-of-co2/">helped to drive down the cost of solar energy</a>. Government support of this nature can also drive the <a href="https://www.pnas.org/doi/epdf/10.1073/pnas.1806504115">infusion of capital into the construction of critical transport infrastructure</a> for both carbon capture projects.
In January, the U.S. Department of Energy issued a <a href="https://www.fedconnect.net/FedConnect/default.aspx?ReturnUrl=%2ffedconnect%3fdoc%3dDE-FOA-0002735%26agency%3dDOE&amp;doc=DE-FOA-0002735&amp;agency=DOE">Funding Opportunity Announcement</a> for the hubs. The Announcement detailed that direct air capture hubs could be developed for both geological storage of carbon dioxide, as well as “utilization,” which could include “storage in conjunction with hydrocarbon extraction,” a form of an operation known as “enhanced oil recovery (EOR).” CO2 EOR entails the injection of carbon dioxide into an oil reservoir that is 80-90% depleted to <a href="https://reader.elsevier.com/reader/sd/pii/S1364032112007435?token=F51C568FF16DDBE5C15361BCF7C13DAFF73F3E1ABD7E1E4855A50A82382F4E589FE2469CCFA436FD195ED44F6FFAAFB4&amp;originRegion=us-east-1&amp;originCreation=20230311221121">displace the oil with a density of less than 900 kg/m3 from the rock pores, pushing it toward production wells. It can increase the production from oil reservoirs by </a><a href="https://www.sciencedirect.com/science/article/abs/pii/S1750583617300099">5-20% over and above primary production (driven by the natural pressure of a reservoir) and tertiary recovery</a> (water injection) methods. Approximately a third of injected CO2 in the EOR process is geologically stored, with the remainder produced with oil, recaptured, and reinjected <a href="https://www.catf.us/wp-content/uploads/2018/11/CATF_Factsheet_CO2_EOR_LifeCycleAnalysis.pdf">until all of the CO2 is ultimately sequestered</a>.
CO-based EOR operations began in West Texas in the early 70s and now account for <a href="https://www.natlawreview.com/article/enhanced-oil-recovery-energy-transition">approximately four percent of U.S. oil production</a>. While North American operations predominated historically, <a href="https://www.iea.org/commentaries/whatever-happened-to-enhanced-oil-recovery">60% of such operations are now based in other countries</a>.
85% of the CO2 used in EOR operations <a href="https://www.vox.com/energy-and-environment/2019/10/2/20838646/climate-change-carbon-capture-enhanced-oil-recovery-eor">is derived from natural sources</a>, primarily a few large terrestrial reservoirs. However, the consensus is that such operations can only scale up further <a href="https://iea.blob.core.windows.net/assets/bf99f0f1-f4e2-43d8-b123-309c1af66555/Storing_CO2_through_Enhanced_Oil_Recovery.pdf">if supplemented by anthropogenic sources, most notably from carbon capture with storage or carbon dioxide removal options</a>. In turn, many proponents of EOR argue that it can play a critical role in scaling up both carbon capture with storage (CCS) and carbon dioxide removal operations <a href="https://www.frontiersin.org/articles/10.3389/fclim.2019.00005/full">by providing a critical source of revenue to incentivize such operations</a>, <a href="https://www.vox.com/energy-and-environment/2019/10/2/20838646/climate-change-carbon-capture-enhanced-oil-recovery-eor">driving down costs</a> by economies of scale, and <a href="https://www.vox.com/energy-and-environment/2019/10/2/20838646/climate-change-carbon-capture-enhanced-oil-recovery-eor">helping to foster development critical infrastructure</a>, such as pipelines to help effectuate sequestration at the gigaton level. Historically, CO2-EOR has, by far, used more captured CO2 than any other industrial process, and is the only commercially established carbon utilization option that provides large-scale permanent storage for captured CO2. However, a number of commentators have expressed consternation about the prospects of a role for enhanced oil recovery in the nascent carbon dioxide removal industry. For example, the non-governmental organization, Carbon180, has argued that EOR could “<a href="https://carbon180.medium.com/a-breakdown-of-the-dac-hubs-funding-opportunity-announcement-40409db708d5">prolong … a reliance on fossil fuels</a>,” while the Energy Justice Network has contended that the process can increase carbon dioxide emissions by combustion of “<a href="https://www.energyjustice.net/coal/eor">oil that would otherwise be left in the ground</a>.”
However, I think these positions are misguided and potentially unfortunate in terms of global climate goals. Carbon180’s argument is premised on assumption that without EOR, fossil fuel use would be phased out more quickly. Yet the reality is that IPCC modeling projects that the globe <a href="https://www.wri.org/insights/co2-direct-air-capture-plant-will-help-extract-oil-texas-could-actually-be-good-climate">will still be using substantial amounts of fossil fuels in the middle of this century, even under 1.5°C scenarios</a> due to constraints in decarbonizing many sectors dependent on such resources. Moreover, meeting this demand will not be contingent on EOR, as there are currently <a href="https://www.e-education.psu.edu/egee102/node/1932">50 years’ worth of proven petroleum reserves</a> at current levels of consumption.
Also, while perhaps counterintuitive, EOR is likely to actually result in a net decrease in carbon dioxide emissions under most circumstances. Each ton of carbon dioxide injected into a well in the EOR process <a href="https://www.pnas.org/doi/epdf/10.1073/pnas.1806504115">can yield 2-3 barrels of oil production</a>, and <a href="https://www.pnas.org/doi/epdf/10.1073/pnas.1806504115">1.2 tons of carbon dioxide when this oil is burned</a>. However, the International Energy Agency (IEA) has estimated that <a href="https://www.iea.org/reports/storing-co2-through-enhanced-oil-recovery">80% of each barrel that is produced through the EOR process displaces other oil production</a>.
After taking into account all emissions associated with the process, including energy use in the EOR process and emissions associated with combusting the oil, the IEA estimates that each ton of CO2 injected in the EOR process results in CO2 abatement of 0.63-0.79 tons. Drawing upon the IEA’s lifecycle analysis, the Clean Air Task Force concluded that “a barrel of EOR oil represents 37 percent less CO2 than conventional oil.” Another recent study concluded that EOR could ultimately achieve somewhere between 4.5-8% of the reduction in carbon dioxide emissions necessary to meet the Paris Agreement’s objectives. However, these numbers must be qualified by the carbon intensity of oil supplies that EOR operations displace. For example, oil production in Venezuela has approximately twice the carbon emissions on average than U.S. operations, while emissions are about 50% higher in Iranian production. Overall, CO2 EOR generates an emissions reduction benefit even when displacing low-intensity oil. Moreover, the benefits of EOR operations can be even higher in cases where it results in the displacement of unconventional sources of oil, which can have a carbon dioxide intensity of 108-173% of conventional oil.
Additionally, because EOR operations increase the quantity of carbon dioxide that dissolves in aquifer stores, it would <a href="https://royalsocietypublishing.org/doi/epdf/10.1098/rsta.2016.0447">facilitate more secure storage</a> than standard geological storage with top seal mudrocks.
Of course, the recent increase of federal tax credits for sequestration of carbon dioxide via direct air capture to <a href="https://theconversation.com/biden-signs-inflation-reduction-act-its-climate-promise-relies-heavily-on-carbon-capture-meaning-thousands-of-miles-of-pipeline-188591">$180/ton from its previous level of $50/ton</a> may privilege storage of carbon dioxide overuse in many projects, including those that might contemplate selling carbon dioxide for EOR purposes. However, since tax credits for the use of carbon dioxide were also recently ratcheted up from $30 to $130/ton, there may still be developers that deem this the more financially propitious course from a financial perspective. For example, revenue associated with EOR appears to be <a href="https://www.natlawreview.com/article/enhanced-oil-recovery-energy-transition">part of the business model</a> for the companies currently developing what is slated to be the world’s largest DAC facility, DAC-1 in Texas’s Permian basin. Thus, we should not be discouraging this path given both the potential climatic benefits of EOR, as well as the need to drive down direct air capture&#x27;s costs if it’s to play a substantial role in combating climate change.
However, at the same time, we should seek to ensure that EOR operations are conducted with integrity, and in a manner that maximizes the achievement of climate policy goals. Oil companies have sought to game the system and <a href="https://www.vox.com/energy-and-environment/2019/10/2/20838646/climate-change-carbon-capture-enhanced-oil-recovery-eor">avoid strict verification of the amount of carbon dioxide they claim to be storing through EOR operations</a>. In the context of federal support for direct air capture hubs, reporting requirements for any project that includes EOR should be extremely stringent. Moreover, government incentives and regulatory mechanisms should be designed to encourage those engaged in EOR operations to <a href="https://www.wri.org/insights/co2-direct-air-capture-plant-will-help-extract-oil-texas-could-actually-be-good-climate">utilize and bury as much CO2 as possible.</a> Finally, all EOR projects reach a point where operating costs are greater than waning revenue streams from fossil fuel sales. At that juncture, there is no economic motivation for operators to continue to pursue oil production. However, it would be salutary to provide incentives to maintain the viability of such sites as CO2-only storage facilities given lower unit costs compared to constructing CO2 storage facilities from scratch. Government incentives in the form of tax credits might help to drive down storage costs for the nascent carbon removal industry, accelerating its development.
EOR is assuredly a counterintuitive strategy for combating climate change. However, the optics of this approach should not keep society from considering the potentially salutary role that it can play, including in helping to scale up the carbon removal industry.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability &amp; Energy writers, their opinions do not necessarily represent those of illuminem.
<h6>Cover photo by <a href="https://unsplash.com/@zburival?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Zbynek Burival</a> on <a href="https://unsplash.com/photos/GrmwVnVSSdU?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Unsplash</a>​ </h6>

Don’t Rule out Enhanced Oil Recovery in Carbon Dioxide Removal Policymaking

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World Oil

Texas regulator assesses over $1 million in fines for oil and gas operators

A new provincial initiative aimed at getting oil and gas companies to come up with the millions of dollars in unpaid taxes they owe to rural municipalities is welcome, says Mountain View County Reeve Angela Aalbers.

Mountain View Today

Initiative to address unpaid oil and gas industry taxes applauded

India is snapping up discounted crude from Russia, refining it and selling it, becoming a key supplier to Europe as it reshapes global fuel flows more than a year into Moscow's war in Ukraine.

France24

Why is India so thirsty for Russian oil?

New oil and gas fields are not consistent with 1.5C of warming but the Government has just approved one and opened up applications for more, Marc Daalder reports

Newsroom

New oil and gas not consistent with 1.5C

To reduce greenhouse gas emissions in the nation, Portugal recently announced that it would launch a hydrogen auction in the second half of 2023 to sell H2 for injection into the country’s natural gas grid.

Hydrogen fuel news

First hydrogen auction to be launched in Portugal

As part of "Lease Sale 259," the Bureau of Ocean Energy Management offered up 76 million acres of the Gulf to oil and gas companies.

Environment America

More than 1.5 million acres of the Gulf of Mexico leased for oil and gas

The company’s new CEO needs to commit to a 100% electric vehicle future.

Asia Times

It’s time for Toyota to rethink its hydrogen strategy

For the first time, wind, hydro, solar, biomass, and geothermal energy have together surpassed coal in electricity production in the United States in 2022. Renewables surpassed nuclear power plants in output in 2021.

Balkan Green Energy News

Renewables Outpace Coal For First Time In US Power Production

India needs $540 billion of investment between 2020 and 2029 to meet its ambitious targets for electricity generation from renewable sources, S&P Global Ratings said on Thursday, as it sees private-sector-led energy transition entering a new phase.

BQ Prime

India Needs $540 Billion Investment By 2029 To Meet Renewable Targets

Mercedes-Benz has signed a power purchase agreement (PPA) for 140 megawatts of wind energy with Spain's Iberdrola.

Yahoo Finance

Mercedes Signs Deal With Spanish Renewables Giant

Modern electricity grids that can optimize clean power production from a constantly changing flux of renewable and fossil energy sources will play a vital role in enabling global energy transition efforts.

Reuters

Electric Grids Need Major Upgrades To Aid Global Energy Transition

It's not about cost (reduction) and competitiveness versus climate, but rather using climate to achieve both cost reduction and competitiveness.


Fortune

Why CEOs Are Going All In On The Energy Transition

The percentage of Sweden’s power to come from wind hit 27%, a record for production across consecutive months, as the government remains committed to increasing wind power capacity.



Power Technology

Sweden sets new record for wind energy

The Mekong River is one of Asia’s longest and most influential waterways. But over the past few decades, the construction of hydropower dams has undermined the river’s capacity to support life: more than 160 dams operate throughout the Mekong Basin, including 13 on the river’s mainstream, with hundreds more either planned or under construction.

Mongabay

As hydropower dams quell the Mekong’s life force, what are the costs?

Depending on how far down you dig, geothermal is available for running utility-scale power plants as well as heating and cooling individual districts, buildings and houses. And new techniques are being developed and piloted to deliver geothermal power “everywhere” – not just in optimal geological conditions – by creating systems that channel water through to the hot rocks. 

Energy Post

Geothermal’s full potential: 24/7 power everywhere, storage, environmental mineral extraction

Researchers from the IFM at Deakin University in Victoria, Australia have tested a novel method for removing silicon from used solar panels.



Lifegate

Scientists have found a new way to remove silicone from used solar panels

The UK Infrastructure Bank plans to invest as much as £200 million ($246 million) to support power-storage technologies for the energy transition.



Bloomberg

UK Infrastructure Bank to Invest £200 Million for Energy Storage

Grinding up old batteries might lead to a low-energy way to recycle the lithium and other metals used in them.



Could grinding up lithium batteries help to recycle them?

Latest on Energy

A widely touted effort to clean up the embattled carbon-offset market has been met with disappointment among experts.

The new guidelines from the Integrity Council for the Voluntary Carbon Market, released Thursday following three years of work, present incremental improvements to a system that allows corporations and individuals to pay for credits that compensate for their climate damage.

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