Green Markets - November 12, 2024
News in environmental markets.
Green Markets is a daily series dedicated to highlighting events of interest that could impact investments within environmental markets.
General Environmental/Regulatory
At COP 29, UK Prime Minister Keir Starmer announced a new climate target to reduce greenhouse gas emissions by 81% by 2035, compared to 1990 levels. This update raises the UK's ambition from the previous 78% target set in 2021. Starmer also outlined key actions, including scrapping a ban on onshore wind, committing to no new North Sea oil licenses, and launching a £10 billion clean energy initiative to position the UK as a climate leader.
Brazil has unveiled a new climate pledge targeting a reduction of greenhouse gas emissions by 59% to 67% by 2035, compared to 2005 levels. This pledge is part of Brazil's commitment to achieving climate neutrality by 2050.
The Biden administration has finalized a methane fee targeting large oil and gas producers to reduce methane emissions. Starting in 2024, the fee will be set at $900 per metric ton of methane emitted and will rise over time. It applies to facilities emitting more than 25,000 tons of CO2 equivalent annually. This rule, part of the 2022 Inflation Reduction Act, aims to cut methane emissions by 1.2 million metric tons by 2035. However, with Republicans likely to take control of Congress and the presidency in the next election, there is a strong possibility that the fee will be repealed.
Shell has won an appeal against a 2021 ruling that required it to reduce its carbon emissions by 45% by 2030, compared to 2019 levels. The appeals court in The Hague ruled that while Shell has a responsibility to reduce emissions, it dismissed the previous order to cut emissions from the use of its products, citing potential negative global impacts.
China and Indonesia have signed $10 billion in agreements across various sectors, including new energy, technology, and biotechnology. The deals include collaborations on new energy vehicles, lithium batteries, photovoltaics, and the digital economy.
Biofuels/Chemicals
Egypt is investing $530 million in a new SAF plant near Alexandria, set to produce 120,000 metric tons of SAF annually. The plant is planned to begin operations in the coming years, with 15% of the project funded by private sector shareholders and the rest by public companies.
Suomen Lantakaasu Oy is investing $106.5 million in a biogas plant in Kiuruvete, Finland, which will produce renewable liquefied biogas from manure and agricultural and food industry by-products. Construction is set to begin in the winter of 2025, and completion is expected by 2026. The total investment for the Ylä-Savo project is around €100 million, with €19.2 million in EU recovery support.
Related Stock List(s): Biofuels & Chemicals Stocks
Voluntary Carbon Markets (VCMs)
At COP 29, Saudi Arabia launched its first carbon credit exchange, managed by the Regional Voluntary Carbon Market Company (RVCMC), to advance carbon neutrality and encourage private sector involvement in carbon trading. The exchange’s inaugural auction included 2.5 million high-quality carbon credits from projects across the Global South. Backed by the Public Investment Fund and Saudi Tadawul Group, this initiative aims to boost confidence and integrity in carbon markets despite current challenges with offset quality and pricing.
Related Stock List(s): Carbon Credit Stocks
Nuclear Energy
Turkey is expanding its nuclear energy infrastructure, with plans to build two new plants in the Sinop and Thrace regions. The Sinop facility will be developed in partnership with Russia's Rosatom. Despite concerns over sovereignty, long-term financial commitments, and national security, the Turkish government is proceeding with the projects. The licensing process for the Sinop plant is expected to conclude within the next few years.
Related Stock List(s): Nuclear Energy & Uranium Stocks
Renewable Energy
China has passed a new Energy Law, effective January 1, 2025, aimed at boosting renewable energy and facilitating a low-carbon transition. The law prioritizes renewable energy development, enhances mechanisms for green and low-carbon growth, and promotes green consumption. Key provisions include a focus on optimizing energy structure by increasing non-fossil energy use, dual carbon emission controls, and specific measures for renewable energy utilization across various sectors such as solar, wind, and hydrogen.
Vattenfall has announced plans to invest over €5 billion ($5.3 billion) in Germany by 2028, primarily in renewable energy projects and energy storage. This investment follows the recent sale of its Berlin heating business, enabling a stronger focus on expanding renewables. Vattenfall aims to commission the 1.6 GW Nordlicht 1 and 2 offshore wind farms by 2028 and is progressing with a 1.5 GW pipeline of onshore wind projects in Germany, which the company describes as Europe’s fastest-growing market for renewable energy.
Investment Funds
The Asian Development Bank (ADB) will boost its climate-related lending by up to $7.2 billion following an agreement with the United States and Japan to underwrite risk for existing loans. This marks the first-ever use of sovereign guarantees for climate finance, allowing the ADB to lend more for climate projects without requiring new capital from countries.