Paris Agreement

What’s in a name?

olgagalinLeave a comment

pinwheel-2222471_1920A lot it would seem, if you’re a large oil and gas company repositioning yourself as a low-carbon committed energy company. So, on 15 March, Statoil announced that it would be changing its name to Equinor, a name that signals equality and a return to its Norwegian roots. The proposed name change is now subject to a shareholder vote at the company’s AGM on 15 May but given the support of the Norwegian government, which is a majority shareholder, it is unlikely that there will be any dissent. The name change, which is rumoured to cost approximately US$32 million, will remove “oil” from the company’s name and fits nicely with its low carbon strategy unveiled last year. Will the new name embolden the company to accelerate its transition to a sustainable energy mix ahead of its current 2030 milestone? Time will tell.

Statoil’s name change comes after Orsted (previously Dong Energy) underwent a similar name transformation late last year. Orsted is a Danish energy company that started its existence with a heavy dependence on coal. It began its green transformation about a decade ago, phasing out coal consumption by 73% in 2017 and targeting a full withdrawal from coal by 2023. The company also divested all of its oil and gas assets in 2017 and is focussing on being a global leader in offshore wind. It currently holds a 25% market share in the industry, powering 9.5 million people. Its aim is to power 30 million people by 2025. The name Orsted is a homage to Hans Christian Orsted, a Danish scientist who discovered electromagnetism.

Full scale name changes are not the only ways the big oil and gas companies are trying to prove their commitment to the energy transition. Companies, such as Shell, are rebranding themselves as full service “energy” companies (not oil and gas companies). Indeed Shell is currently being pressed by an activist shareholder group to make a radical shift away from fossil fuels. This shareholder group, called Follow This, contends that Shell’s current commitment to reduce its carbon footprint by 50% by 2050 is not sufficient to meet Paris Agreement thresholds. A similar resolution brought by Follow This last year was rejected by 94% of Shell’s shareholders. However, with climate change, the Paris Agreement and global warming now regularly in the headlines, perhaps this  year the resolution will find more traction, especially following this week’s publication by Shell of the radical Sky Scenarios report. The report focusses on technically feasibly but challenging steps that need to be taken over the next 50 years to ensure the Paris Agreement targets are met. The seven key steps outlined in the report are:

“1. A change in consumer mindset means that people preferentially choose low-carbon, high-efficiency options to meet their energy service needs.

2. A step-change in the efficiency of energy use leads to gains above historical trends.

3. Carbon-pricing mechanisms are adopted by governments globally over the 2020s, leading to a meaningful cost of CO 2 embedded within consumer goods and services.

4. The rate of electrification of final energy more than triples, with global electricity generation reaching a level nearly five times today’s level.

5. New energy sources grow up to fifty-fold, with primary energy from renewables eclipsing fossil fuels in the 2050s.

6. Some 10,000 large carbon capture and storage facilities are built, compared to fewer than 50 in operation in 2020.

7. Net-zero deforestation is achieved. In addition, an area the size of Brazil being reforested offers the possibility of limiting warming to 1.5°C, the ultimate ambition of the Paris Agreement.”

Source: Sky Scenarios report, Shell

The increased activity among the large oil and gas companies to embrace transition is commendable. Whether they are doing this out of genuine concerns for the future of the planet or because investors are now rapidly starting to pull out of oil and gas stocks is debatable. Either way, though, provided the net effect is that we witness a sustainable realignment of the energy mix, all such news is good news.

 

 

Sustain a Future’s 2017 Review

olgagalinLeave a comment

design-2711676_19202017 was a year when sustainability, climate change and emissions reductions came to the fore on both private and public agendas. And so as we tumble towards 2018, I would like to do a run-down of the year’s developments that are helping to sustain a future.

Paris Agreement

One of the biggest developments early in 2017 was President Trump’s decision to pull out of the Paris Agreement (see blog). However, this only served to galvanise worldwide support for the agreement and as of today, 172 out of 197 countries have ratified it. The President’s actions also gave birth to the “We Are Still In” movement of over 2700 US companies, cities and states, together representing $6.2 trillion of the US economy, coming together to pledge allegiance to the Paris Agreement goals and ensure that America abides by its commitments, even when it withdraws from the agreement. The US withdrawal has also opened the door for Emmanuel Macron to become a leading voice in the fight against climate change, as evidenced at the One Planet Summit this December.

Electric vehicles

2017 also saw a reassessment of forecasts relating to electric vehicles. In a report published in July, Bloomberg New Energy Finance stated that it estimates that by 2040, 54% of new car sales and 33% of the global car fleet will be electric (see blog), a much more bullish forecast than it had issued just a year before. Added to this, a number of countries and car companies announced the ban or phase out of petrol-only vehicles. For example, Volvo announced that it would be going all-electric with every car in its range to have an electric train by 2019 and the UK and France announced a ban on the sale of new petrol and diesel cars from 2040.

Renewable power generation

Records were set in renewable energy generation in 2017. In the UK, low-carbon energy sources made up 52% of the energy mix throughout the year, making 2017 the “greenest” year on record for the UK. The country also succeeded in having a full 24 hours of coal-free power generation in May 2017 (see blog). Furthermore, in October 2017, wind power provided nearly a quarter of all energy generation in Europe as a whole. These records have been assisted by the continued falling costs of solar and wind power technology and renewed investment in renewable energy infrastructure. For example, earlier this year the world’s first floating wind farm came into operation offshore Scotland, operated by Statoil.

Business initiatives 

On the business side, the RE100 group of companies committed to 100% renewable power (see blog) grew again this year to 116 members including Google, Apple, Unilever,  Walmart, ABInv Bev…to name but a few! These huge, multinational companies have each set the goal of obtaining 100% of their electricity from renewable sources within the next decade or so. Traditional oil and gas companies have also embarked on the energy transition journey. Shell now commits $1 billion annually to investments in clean energy. BP is committed to a lower-carbon future with a move towards greater investments in gas and carbon capture and storage technology. Both companies are also members of the Oil and Gas Climate Initiative (see blog), which includes the world’s biggest oil and gas companies. These companies have committed US$1 billion of funding to be invested over the next decade in innovative technologies and start-ups which propose solutions to substantially reducing greenhouse gas emissions.

Plastic pollution

2017 also witnessed the first UN Ocean Conference, which highlighted the plight of our oceans due to growing plastic pollution and climate change (see blog). The Ocean Conference raised $5.24 billion in commitments to protect the oceans and created a Call for Action which affirmed the signatories’ “strong commitment to conserve and sustainably use our oceans, seas and marine resources for sustainable development”.  Greater awareness of the dangers of plastic pollution have also resulted in individual action to fight plastic pollution, including the Ocean Cleanup whose plastic waste collection system aims to remove half of plastic waste in the Great Pacific Garbage Patch in five years; Adidas teaming up with Parley to develop trainers out of plastic and Plastic Odyssey which has developed a boat that can be powered by plastic.

A look to the future…

So what are the predictions for 2018? I think that the key themes will be:

  • a broader conversation about peak oil, but due to falling demand rather than supply;
  • the role of gas in the future energy mix;
  • the use of blockchain to facilitate peer to peer energy transactions;
  • the rise of electric vehicle alternatives, such as the hydrogen motor; and
  • more innovative uses of existing technologies – such as the solar panelled motorway in China that intends to charge cars as they drive using wireless technology.

It’s been an eventful year and so for now, I wish you all a very happy and prosperous New Year!

G20 2017 Climate and Energy Action Plan

olgagalinLeave a comment

light-bulbs-1125016_1920

Among the many topics discussed at this year’s G20 Summit, was climate and energy. The summit culminated in the issue of a joint declaration summarising the agreements reached and the plans adopted by the G20 leaders. With respect to climate and energy, the declaration was decidedly split between the “G19” and the US, acknowledging the US’ desire to pull out of the Paris Agreement and its continued support for the use of fossil fuels, albeit “more cleanly and efficiently”.

As part of the summit, the G20 leaders also adopted the G20 Hamburg Climate and Energy Action Plan for Growth. The Action Plan  identifies six key areas of development, which include developing strategies for long-term low greenhouse gas emissions; creating a reliable and secure framework for the transition of the energy sector, which involves the promotion of energy efficiency and the scaling up of renewable and other sustainable sources of energy; realising access to modern and sustainable energy services for all; and aligning finance flows.

Although only the last-mentioned area of development specifically refers to finance, a recurring theme throughout the whole Action Plan is the need to secure more private and public investment. And this seems to be one of the biggest hurdles to meeting the Paris Agreement targets and to transitioning to clean energy.

The Action Plan identifies that significant levels of investment, both private and public, will be required to modernise infrastructure in line with the Action Plan’s goals and to continue the scaling up of renewable and sustainable energy. In addition to achieving climate and energy goals, such investment is likely to also generate local growth, employment and help with poverty eradication. Addressing several Sustainable Development Goals at the same time!

The Action Plan specifically notes the role played to date by Multilateral Development Banks (MDBs) in mobilising “climate finance” and calls on them to further enhance their involvement. In 2015, the following MDBs, the African Development Bank, the Asian Development Bank, the European Bank of Reconstruction and Development, the European Investment Bank, the Inter-American Development Bank and the World Bank Group, issued a joint statement at COP21 committing to work together to “substantially increase climate investments from public and private sectors to support”. This existing commitment is applauded but the Action Plan further encourages the MDBs to cooperate and coordinate efforts to finance ambitious energy and climate adaptation and mitigation projects and new technologies, and to identify how the private finance sector can assist with meeting the 2030 Agenda objectives and the Paris Agreement goals.

The investment question has also be considered in detail in the UN Green Finance Report published on 14 July 2017 by the UN Environment Programme (UNEP). The report identifies that the G20 in particular has made significant progress in mobilising private and public capital for climate and clean energy developments and initiatives. An example, is the recent joint commitment by eleven global banks to develop tools for assessing climate-related financial risks and opportunities; and to make more disclosures in relation to climate investments, making the sector more transparent. The banks are ANZ, Barclays, Bradesco, Citi, Itaú, National Australia Bank, Royal Bank of Canada, Santander, Standard Chartered, TD Bank Group, and UBS.

Commenting on the new Green Finance Report, the Executive Director of UNEP, Erik Solheim said: “This new research […] shows encouraging progress in this regard. From a record number of new green finance measures to ambitious plans for green finance hubs, we are seeing the smart money move to green financing.” He further added: “The challenge now is to rapidly increase capital flows to investments that will support our sustainable development objectives and create commercially viable green businesses for decades to come.”

The challenge has been set and the rewards are great economically, environmentally and socially. So let’s hope the investment starts to flow in the right direction!

“We’ll always have Paris”…continued

olgagalinLeave a comment

IMG_2427aIn my original post about Trump’s withdrawal from the Paris Agreement, I discussed Michael Bloomberg’s efforts to replace the outgoing USA with a new signatory consisting of a coalition of American states, cities and companies. Positive steps have now been taken in this direction.

The coalition has issued an open letter entitled “We are still in“, pledging allegiance to the Paris Agreement. It now boasts over 1400 signatures.

During a G-7 environment meeting in Bologna, Italy earlier this week, Patricia Espinosa, executive secretary of the United Nations Framework Convention on Climate Change, announced that she will work towards enabling regions, cities and other sub-national players to join the Paris Agreement officially.  It is still unclear how this would work in practice, but the political will is there to ensure that even if America withdraws, the efforts and contributions being made by its states, cities and companies are not ignored.

In a bold move on 6 June, Hawaii passed legislation affirming its dedication to the Paris Agreement. It is the first state to officially confirm its position and hopefully, this will pave the way for other states to join.

The G-7 meeting concluded with the issue of a communique signed by all ministers, other than the US (whose representative only attended one session of the two day event). This communique reaffirmed international commitment to the Paris Agreement and also addressed other sustainability issues, including ocean pollution, energy efficiency and the need for increased funding to assist with reaching the sustainability goals.

 

A Call for Action for our Oceans

olgagalinLeave a comment

loggerhead-turtle-123402_1920On 9 June, the first UN Ocean Conference came to an end. Deemed a resounding success by President of the UN General Assembly, Peter Thomson, the conference achieved the adoption of a 14 point Call for Action.

The Call for Action signatories affirmed their “strong commitment to conserve and sustainably use our oceans, seas and marine resources for sustainable development”. They recognised the importance the oceans play in maintaining our ecosystem, through the supply of oxygen and the absorption of carbon dioxide, and therefore, recommitted to the Paris Agreement climate change targets. They affirmed the need to “enhance the conservation and sustainable use of oceans and their resources by implementing international law as reflected in the UN Convention on the Law of the Sea“. They committed to “accelerate actions to prevent and significantly reduce marine pollution of all kinds” and to “implement long-term and robust strategies to reduce the use of plastics and microplastics”.

Equally impressively, the conference resulted in over 1300 voluntary commitments having been registered. These are commitments on the part of governments, NGOs, and other stakeholders to uphold the aims of Sustainable Development Goal 14.

Furthermore, the delegates from China, Thailand, Indonesia and the Philippines declared that they would begin tackling the problem of plastic waste from their countries ending up in the oceans. According to findings from the Helmholtz Centre in Leipzig, Germany, 75% of global plastic debris delivered by rivers to the sea comes from just 10 rivers, which are predominantly in Asia and reducing the plastic loads in these rivers by 50% would reduce global plastic inputs by 37%.

According to Andrew Hudson, head of the water and ocean governance progamme at the United Nations Development Programme, “This has been the biggest demonstration of interest in protecting our oceans – the biggest commitment to action. It’s really good, everybody is doing something,”.

 

 

“We’ll always have Paris”

olgagalin2 Comments

IMG_2427a…So goes the iconic phrase from the end of Casablanca. However, on 1 June 2017, President Donald Trump announced the US’ withdrawal from the widely respected Paris Agreement on climate change. What implications could this have for the agreement’s success? Unlike Ilsa and Rick from Casablanca, could it be that we will not always have Paris?

The Paris Agreement, adopted on 12 December 2015 and, as of today, ratified by 147 out of 197 signatories, is a commitment towards a sustainable, low carbon future. Its key aims are to curb global warming to 2 degrees Celsius above pre-industrial levels and to equip countries to deal with the consequences of climate change.

According to President Trump, the agreement is at odds with his “America First” mantra as complying with its terms could result in an apparent loss of 2.7 million US jobs. However, President Trump’s decision, somewhat counter-intuitively, may have actually galvanised support for the Paris Agreement around the world and given it an even greater impetus.

In Europe: Immediately on the back of President Trump’s announcement, Italy, Germany and France issued a joint statement reiterating these countries’ commitment to the Paris Agreement, stating that “We deem the momentum generated in Paris in December 2015 irreversible and we firmly believe that the Paris Agreement cannot be renegotiated, since it is a vital instrument for our planet, societies and economies“.

In America: Tesla’s Elon Musk and Walt Disney’s Bob Iger have announced their intentions to resign from White House advisory councils. And even more impressively, Michael Bloomberg is now spearheading the creation of a coalition of thirty American cities, three American states, and over 100 American companies which pledges to uphold America’s obligations under the Paris Agreement and even attempt to replace it as a signatory, once America fully withdraws. The coalition is currently in negotiations with the UN to be accepted as a signatory entity. This blog will follow the developments of this coalition.

In China: China also made it clear at the recent EU-China summit in Brussels that it considered President Trump’s actions to be an error. Although the summit was expected to produce a formal statement of cooperation on climate change between the EU and China, disagreements over trade intervened. Nevertheless, China has proven that it has an appetite for renewable energy with US$102.9 billion worth of investments into renewable energy in 2015* (however, falling to US$78.3 billion in 2016*) and with its Longyangxia Dam Solar Park becoming the world’s largest solar farm earlier this year. Here’s hoping therefore, that a formal cooperation statement between the EU and China will be forthcoming in the not too distant future…let’s watch this space.

In conclusion: President Trump’s withdrawal from the Paris Agreement does inevitably deal a blow to its ambitions. However, signatories and stakeholders around the world do not seem phased by his actions and indeed seem to have used his stance as a uniting counter-point. So yes at this stage, I think it is fair to conclude that we will always have Paris and in the words of Emmanuel Macron, there is substantial international commitment to “make the planet great again“.