Green Markets #5
Financial news in environmental markets.
Green Markets is a weekly series dedicated to highlighting events of interest or developing trends within environmental markets. The emphasis is on news that could impact investable opportunities in public stock markets.
Global Plastics Treaty
Our world is coming to terms with the fact that, much like O&G, plastic usage will not disappear anytime soon. In total, we produce around 400M tons of plastic waste per year. That number is only growing. We need a plan for dealing with this crisis.
In fact, according to the Center for International Environmental Law, the petrochemical industry is set to increase its plastic production by 40% over the next few decades.
The United Nations hopes to finalize a global treaty, similar to the Paris Agreement, on efforts to fight plastic waste by the end of 2024. A new round of negotiations is set to take place in Ottawa, Canada, starting next week.
Themes of the event:
1. Plastic pollution in the marine environment.
2. Approaches to capacity building, financing, and financial mechanisms.
3. Enabling just transition.
So far, negotiators have failed to make any tangible decisions on what actions the treaty should outline for member nations.
Regardless of what the results might look like for the time being, the plastic industry is scrambling for new recycling solutions. They see the writing on the wall, public resentment about plastic pollution is growing.
Currently, only 5-10% of plastic waste can be recycled. Most existing technologies are unprofitable without subsidies. A new treaty could help spur funding for the development of innovative recycling methods.
Stock(s) set to benefit from this news: Aduro Clean Technologies (future write-up)
US Standards for Carbon Markets
The United States will soon release new guidelines for using carbon credits in offsetting efforts. Exact details are unknown.
These rules are a part of the Energy Transition Accelerator (ETA) framework, a carbon finance platform dedicated to encouraging private capital investment in the carbon economy.
ETA was born out of a collaboration under COP28, the U.S. Department of State, Bezos Earth Fund, and The Rockefeller Foundation.
Early estimates conclude that the ETA could increase financing for renewable energy development in the developing world by $72-207B by 2035.
The core framework serves as a foundation for the creation of the ETA Coalition. It describes the Coalition and its objectives and provides an overview of key elements of the ETA:
Its approach to carbon crediting, including the development of an independent sectoral-scale crediting standard for emissions reductions from electricity generation;
Criteria for participating companies and information on how they would use ETA carbon credits to help meet their voluntary climate commitments;
Just transition provisions to address worker and community needs; plans to dedicate a portion of the finance generated to address adaptation and resilience in vulnerable countries; and options for innovative financial structures to mobilize investment into energy transition strategies.
New Green Funding Initiatives
Chevron’s VC arm, Chevron Technology Ventures, is launching a third fund to search for opportunities in low-carbon fuel technology, advanced materials, and transforming carbon into higher-value products. The company has dedicated $500M in initial capital to the subsidiary.
UniSuper, one of Australia’s largest pension funds, has committed $400M to the Macquarie Green Energy and Climate Opportunities Fund (MGECO). The fund invests in wind, solar, battery storage, climate, and carbon-related projects.
SOSV, a VC climate-focused investment fund, recently raised $306M to back new decarbonization and re-industrialization startups.
PE firm Astarte Capital Partners, in partnership with carbon developer Silvipar, has formed a $325M nature-based solutions fund. The Impact Forestry Fund plans to generate 18M carbon credits through a 60M tree project in Paraguay.
Petrobras and BP have signed a memorandum of understanding to collaborate on researching business opportunities in sustainable fuels, carbon credits, and E&P.