Vol 1, Oct 2022 | Uneasy money

A recent study by CARE shows that merely 6% of climate finance flows that they had studied were ‘new and additional’. Photo: UN

No one can yet reliably say which grants or loans to a poor country are truly meant to fight climate change, and which ones are merely greenwashed to claim credit .Read more

A recent study by CARE shows that merely 6% of climate finance flows that they had studied were ‘new and additional’. Photo: UN

Developing nations battle for clarity as climate finance remains inadequate

No one can yet reliably say which grants or loans to a poor country are truly meant to fight climate change, and which ones are merely greenwashed to claim credit 

By 2024 countries are to set a new climate finance target – money that developed countries should provide to poorer nations to fight climate change. India has demanded that it be revised upwards of USD 1 trillion annually.

It’s a tall order considering the developed countries have failed for the last ten years to provide the mere USD 100 billion annually that they promised in 2010. In 2015, the goalpost was extended to 2025 which means that we are still talking about their 2020 goal in the year 2022. 

But the target in itself may mean little unless developed countries heed the warning scientists gave in the recent report of the Intergovernmental Panel on Climate Change (IPCC): For more than 28 years, countries have not got around to even defining what constitutes climate finance. 

The IPCC report hit the headlines across the world on its release in February 2022 but this significant bit from it – which matters most to developing countries – got lost in the din. 

The scientists on the panel concluded, “The measurement of climate finance flows continues to face definitional, coverage and reliability issues despite progress made by various data providers and collators.”

This means that no one can yet reliably say which grants or loans to a poor country are truly meant to fight climate change, or which ones are merely greenwashed to claim credit despite their unfulfilled promises. 

Take the example of a grant from Italy to India in 2020. A school in Telangana’s Warangal received USD 224,502 for the expansion of a school opened for hearing-impaired students. This was classified as both adaptation-related and mitigation-related finance. The description of the grant, however, makes no mention of climate-related work to be undertaken. 

Another grant of USD 341,000  from the United Kingdom was given to the National Housing Bank to provide loans for low income families. This was labelled as mitigation-related development finance. Another grant to India from Japan meant for “Iran and other neighbouring developing countries” earmarked for Covid relief has featured in the list of climate-related development finance. Japan has also provided a grant to the underprivileged in Mathura for procuring eye medical equipment. 

This data released by the Organisation for Economic Co-operation and Development (OECD) was used in its report measuring where countries stand on their USD 100 billion goal. 

How did these expenses, which are at the most development-related finances, pass off as climate finance? Even as developed countries push for the term to remain ambiguous, what does science have to say about what qualifies as climate finance? 

Land Conflict Watch, an independent network of researchers studying land conflicts, climate change and natural resource governance in India, looked beyond the summary of the IPCC report that most politicians, policymakers and climate activists often read, to find what the scientists have said about climate finance. 

The summary is drawn up after haggling between governments and scientists before a short document called Summary for Policy Makers (in this case of 40 pages) is prepared. 

In reaching consensus, often important scientific findings which may not favour one or the other country’s political stance are left out. The full report – written only by scientists contains truth bombs that get buried.  

What do IPCC scientists have to say on defining climate change?

In its chapter on ‘Investment and Finance’, the IPCC report states that from a climate policy perspective, climate finance refers to finance “whose expected effect is to reduce net GHG emissions and/or enhance resilience to the impacts of climate variability and projected climate change” (UNFCCC 2018a). The report goes on to say that adaptation financing is difficult to define as it ultimately boils down to fulfilling SDG goals. 

Even current estimation methods are not sufficient to be the basis for global negotiations, conclude scientists. They warn that this needs to be resolved to avoid getting into a ‘climate investment trap’, especially in the case of developing countries. Due to their growing energy demand, a huge portion of the world’s climate investment requirements are in low and middle income countries in Africa, Asia, Latin America and the Middle East. Current estimates also do not include information on how climate policies impact the growth of countries and the importance of fiscal and financial policies to nullify their adverse effects. 

Would development-related finances then qualify as climate finance such as the grant from Italy to build a school? 

A later part of the chapter makes a clarification. Scientists observed that the finance provided for climate change must be new and additional, and not at the cost of United Nations-adopted Sustainable Development Goals. In fact, a recent study by CARE shows that merely six per cent of the climate finance flows that they had studied were ‘new and additional’. 

While the Summary for Policy Makers makes only a brief mention that countries are below their collective goals, the IPCC report goes on to say that it is actually difficult to estimate where countries stand due to the lack of a universally accepted definition for climate finance. 

This absence of a definition, has made it impossible to gather accurate data on climate finance flows.    

Currently, the only measure of climate finance flows is the USD 100 billion yardstick. Since the adoption of the goal, several independent reports show drastically different climate finance numbers.

Despite the “significant room for interpretation”, climate finance commitments are nowhere close to what scientists’ estimates of what is actually needed to combat climate change.  The IPCC report warns that  the financial community continues to underestimate climate-related financial risks which is limiting capital reallocation necessary for low-carbon transition. Even investors do not opt for climate-friendly options despite the increased awareness of climate change and its effects.  

Two reports published by the UNFCCC and IPCC in 2018 have estimated that more finance would be required between 2020 to 2035 to contain global temperature rise at levels below 2°C and 1.5° C respectively. While the biennial assessment estimates that 1.75 trillion USD would be required to cap temperature levels below 2°C, the IPCC’s Special Report on Global Warming estimates that 2.4 trillion USD yr-1 would be required for the energy sector alone. In fact, independent reports show that a gap of 67% in mitigation financing was reported in 2015 and was 76% for the energy sector alone in 2017. The gap would be greater if other sectors are included, and their inclusion could also increase finance requirements to curtail global temperature levels by three times the USD 2.4 trillion amount.  

Why is the term ‘climate finance’ open to interpretation?

Scientists observed that since the term climate finance is open to interpretation, differences arise due to what the independent author accepts as “climate” and the different types of “finance” that they take into account. 

If authors are more conservative on what qualifies as activities combating climate change, the number would be much lesser. If the author decides to include loans at market rates as finance, the overall numbers would be much higher. 

The report also mentions that defining climate finance flows is critical to ensure just transition of climate finance. It mentions that countries must agree on key definitions as soon as possible in order to build greater confidence levels. The report also points out that every other public international good finance provision under the SDGs accounts for only grants and net finance flows.

It notes that the nature and volume of finance  varies according to whether the finance was measured at the stage when it was pledged, committed or disbursed. This could determine whether it counts as private or public finance and also which country it is measured in. 

The IPCC looks at what two independent reports say on the USD 100 billion goal. While the OECD report mentioned before shows that a target of 78.9 billion USD was achieved in 2018, a report by Oxfam showed a lesser figure. This is because the Oxfam report considered only grants and grant-equivalents as climate finance flows. 

In the OECD report, however, almost 74% of the finance flows consisted of loans. Though scientists mention that the new framework under the Paris Agreement may lead to improvement wrt to transparency around climate finance flows, they note that analysis measuring the USD 100 billion goal remain rare. Even the UNFCCC’s Biennial Assessment does not exactly measure it. 

How much of this made it to the Summary for Policymakers? The issue around climate finance definition, which is expected to be one of the key fights in this year’s COP in Egypt, finds no mention in the summary. In fact, the summary mentions climate finance barely three times, with no mention of where countries stand in quantifiable terms.  

In fact, according to a report by Third World Network, when the SPM was being finalised, developed countries contested the mention of their failure to meet the USD 100 billion goal. They called it the ‘politicisation’ of the IPCC, and so the final line that was adopted was heavily watered down. This is part of the efforts by developed countries to undermine their climate finance commitments. In the Glasgow CoP held last year, recommendations by developing countries to decide on a definition for climate finance were bitterly contested by developed countries, and finally watered down in final decisions adopted. 

At a side event at the Bonn Climate talks this June, G77 and China’s coordinator on financial issues Zahir Fakir stated in Bonn that the real financial obligations of developed countries was captured in Article 4.3 of the UNFCCC which stressed on the provision of new and additional financial resources. He added that while the UN Convention refers to ‘provision’ of climate finance, the USD 100 billion has become about ‘mobilization’ and that it is important to understand the difference between the two. ‘Without provision of finance, terminologies such as ambition, tipping point and urgent climate action do not matter’ he added. 

“Climate finance definition is important because it is linked to accountability,” says Indrajit Bose, Senior Researcher, Climate Change at Third World Network. “How do you assess if this finance is actually coming through, when there is no definition of climate finance? Developed countries have not engaged in the issue because it helps their cause at the end of the day.” 

“After several years of negotiations, the Standing Committee on Finance, a technical body of the UNFCCC, is discussing the matter and the issue is expected to be contested in COP 27 in Egypt.“ says Indrajit Bose. 

“The IPCC describes itself as a policy relevant organisation and is not policy prescriptive. It’s not therefore IPCC’s role to define what is climate finance,” he added on why nothing has changed wrt definitional clarity between AR5 and AR6. 

IPCC scientists have warned that there is still some distance to go before the USD100 billion goal is achieved. Going by this, India’s USD 1 trillion demand remains a distant hope.

Mrinali is a researcher with Land Conflict Watch, an independent network of researchers studying land conflicts, climate change and natural resource governance in India. 

Sinking farms: Farmers suffered huge crop losses following extreme rainfall right before the crops were ready for the September harvest. Photo: Rod Trevaskus_WikimediaCommons

Monsoon withdrawing: 27% of India left dry, 4 million ha of crops damaged in Marathwada

Farmers in Maharashtra’s Marathwada region suffered huge crop losses following extreme rainfall right before the crops were ready for harvest in September. The region was caught in a spell of extreme rainfall during August and September. Over 4.48 million farmers suffered severe crop damage and the figures may increase over the coming months, according to the divisional commissionerate, Aurangabad, DTE reported. 

According to the news portal, some 3,652,872 hectares (ha) of land have been affected due to the unexpected rains, of which 35,34,371 ha are rain-fed. Around 68,391 ha come under irrigation and 5,0,109 ha fall under horticulture. The Aurangabad, Beed and Latur districts received over 100% above normal rainfall in the last three weeks of September according to official data, resulting in large-scale crop loss.

Around 27% of the country (188 districts) were left dry during this monsoon. Central India received 19% excess rainfall, southern peninsula received 22% excess rain. Jharkhand, Bihar, Uttar Pradesh, Uttarakhand, Assam, Haryana, Delhi and Punjab received very little rainfall. But in the last week of September Uttar Pradesh received more than 193% of the normal rainfall. Haryana received 916%, Punjab 350%, Himachal Pradesh 207%, Uttarakhand 223%, Rajasthan 190% and Madhya Pradesh 83% above normal rainfall.

Climate change behind extreme snowfall and avalanche of October 4 in Uttrakhand?

Extreme rainfall exacerbated by climate change may be the cause of the avalanche of October 4, on Danda-2 peak of Himalayas in Uttarakhand. The state received extreme rainfall in the lower altitudes and heavy snowfall in the higher reaches of the region in the last three weeks of September. Scientists told DTE the avalanche indicates that more snow has deposited on a mountain peak than it can support. 

According to official data, in the first week of September the southwest monsoon usually starts to retreat from Uttarakhand, but in 2022 it rained in the last week of the month which was 20-59% above the average. The rainfall for the state during the entire month was 267.6% above the average figure of 182.4 mm, DTE reported.

Hurricane Ian wreaks havoc in parts of Florida, Cuba; more than 60 dead

Hurricane Ian made landfall in Florida’s southwestern coast this past week, killing at least 62 people, flooding neighbourhoods and cutting off power lines with maximum sustained head winds of about 240 km per hour. 

After making landfall in Florida, and impacting neighbour Cuba as well, Ian turned towards North Carolina, bringing heavy rain and strong winds to the area. This week, protestors took to the streets in Havana, Cuba, after Ian brought down power lines, most of which have remained inoperative since September 27. In Florida, 600,000 people remain without power.  

Over 6,000 trees cut to make way for tiger safari in Corbett Tiger reserve

More than 6,000 trees were felled in preparation for a tiger safari in the Kalagarh forest division of Corbett Tiger Reserve. The Forest Survey of India (FSI), in its report, stated 6,093 trees were felled over 16.21 hectares of land in place of 163 that had been approved by the ministry of environment, forestry and climate change (MoEFCC). The FSI submitted the report based on a survey taken in June this year.

Swiss glaciers record worst melt rate ever 

Switzerland’s glaciers recorded the worst melt rate this year since records began more than a century ago. According to monitoring body GLAMOS, the glaciers lost more than 6% of their remaining volume this year. 

This is nearly double the previous record set in 2003. At one site, bare rock that remained buried for more than a millennia was seen, while a plane that crashed in the alps years ago was found because of the extreme melt. Small glaciers have vanished, according to the data.   

Hollow promises: Only 23 of the 200 countries that signed the Glasgow agreement have updated their 2030 climate plans. Photo: Dati Bendo_WikimediaCommons

Most govts failed to deliver on commitments made at COP26

Most governments failed to live up to their COP26 commitments made in Glasgow last year. All countries promised to strengthen their 2030 climate goals at the climate summit in 2021 and align national goals with Paris Agreement goals. However, only 23 of the 200 countries that signed the Glasgow agreement have updated their 2030 climate plans.

Most adaptation finance pledges made at COP26 also remained undelivered ahead of the next summit. As of September, 22, 2022, pledges made by the US, the UK, European Commission, Spain and Canada remain undelivered. So around $230 million is outstanding out of the $356 million that was pledged i.e. 65% is yet to be delivered.  

Govt to launch single-window system by year-end to expedite green nod for infra projects

All environment, forest, wildlife and coastal regulation zone clearances in India will get a faster single-window system by the end of the year. The Union environment ministry said it was launching the system to reduce the amount of time taken to get a green nod for infrastructure projects. A system called Parivesh already exists for such clearances, but the government will launch Parivesh 2.0, which will cut short the time taken to give green nods by allowing a project steering committee consisting of state and central officials to assess the project at the same time.  

MGNREGS will fund Indian govt’s efforts to reverse desertification across states

The Indian government, which is looking to reverse desertification in the country, is looking to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) to fund the endeavour. The employment scheme will converge with the Pradhan Mantri Krishi Sinchayee Yojana for the task. According to the government’s 2021 Desertification and Land Degradation Atlas, at least 30% of land in India falls under the “degraded land” category, a majority of which is being seen in states such as Jharkhand, Rajasthan, Delhi, Gujarat and Goa.  

Vanuatu calls for global treaty to phase out fossil fuels

At the UN General Assembly held this past weekend, the Pacific island of Vanuatu pushed for a global treaty to phase out fossil fuels. Vanuatuan president Nikenike Vurobaravu also called for “a global just transition for every worker, community and nation with fossil fuel dependence”. He also urged other nations to join efforts to make ecocide a crime punishable by the international criminal court. 

Exceptions only: During the ‘severe +’ category entry of trucks will be halted and Delhi-registered diesel-operated medium and heavy goods vehicles will not be allowed to ply, except for essential activities. Photo: Sumita Roy Dutta_WikimediaCommons

Now GRAP restrictions to be imposed 3 days ahead of bad air forecast

This year, measures under the Graded Response Action Plan (GRAP) for air pollution in Delhi will be imposed three days ahead of the AQI reaching a particular level. A ‘poor’ air quality index (AQI) forecast (from 201 to 300) will halt construction on more than 500 sqm plots where the site has not been registered on the web portal for monitoring of dust mitigation measures, enforcing guidelines on anti-smog guns and water sprinkling on roads, and ensure that diesel generator sets “are not used as a regular source of power supply”, reported The Indian Express. 

When the AQI is forecast to be ‘very poor’ (301 to 400), restrictions will include stopping the use of diesel generator sets except for emergency services, not allowing coal or firewood in tandoors at restaurants and enhancing parking fees to discourage private transport. 

Three days ahead of the AQI reaching the ‘severe’ category, a ban on construction and demolition activities will kick in. Restrictions on industries that are not running on PNG will also be imposed when the AQI is likely to turn ‘severe’. State governments may also impose restrictions on BS-III petrol and BS-IV diesel four-wheelers. During the ‘severe +’ category entry of trucks, except for essentials, will be halted and Delhi-registered diesel-operated medium and heavy goods vehicles will not be allowed to ply, except for essential activities. State governments may also then consider measures like closure of schools.

Fly-ash-related shutdowns cause loss of over 17 billion units of power in the past three years: Study 

A recent study revealed that fly ash, one of the major pollutants from coal power plants, caused a loss of 17.6 billion units of power generation in India. The study conducted by Sehr Raheja, Ashish Sinha of Manthan Adhyayan Kendra states that between 2019 and 2022, the closure of thermal power plants due to ash-related issues in country has led to a loss in power generation of 17,625.46 MU (calculated at 80% PLF).

According to the study, 17 units were shut for over a month at a time during these years, some of them being closed repeatedly, and five units were shut for more than 100 days at a time. The analysis is based on data from the Central Electricity Authority’s Daily Generation Reports (DGR).

Air pollution increasing the prevalence of anaemia among women of reproductive age

Meeting clean air targets could help reduce the anaemia burden among women of reproductive age in India, a new study found.

Mongabay reported that scientists led by the Indian Institute of Technology-Delhi, used multiple datasets, including the National Family Health Survey and satellite data to link pollution and health. Their findings show that for every 10 microgram/metre cube increase in ambient PM2.5 exposure, the average anaemia prevalence among women increases by 7.23%.

According to the study, anaemia among women of reproductive age in India was 53.1%—one of the highest percentages globally, with urban India having slightly fewer cases compared to rural. Mongabay reported that anaemia prevalence among women of reproductive age (15 to 49 years of age) will fall from 53% to 39.5% if India’s clean air targets are met, taking 186 districts below the country’s target of anaemia reduction to 35% for women of reproductive age.

Particulate matter found in vital organs of foetuses

Toxic particles breathed in by pregnant women are passed on to their foetuses, a new study found. Particles linked to air pollution have now been found in the lungs, livers and brains of unborn babies. Researchers found thousands of black carbon particles in each cubic millimetre of lung, liver and brain tissue, which were passed on to the foetus through the bloodstream and placenta, after being breathed in.

Fossil fuel power projects clubbed with renewables can dispatch power without agreement

Under new norms, thermal power plants can set up renewable energy projects anywhere and dispatch power without additional agreement. The new norms are part of the revised programme on ‘Flexibility in Generation and scheduling of thermal and hydro power stations through bundling with renewable energy and storage power’, Mercom reported.

The new guidelines allow all new and existing coal and gas-based power plants or hydro power stations to set up or procure renewable energy from projects either co-located within the premises or outside. Fossil fuel power projects can use renewable energy to supply power against their existing PPAS. The RE in the mix will count towards the Renewable Purchase Obligation compliance of the DISCOM, according to the Mercom report. 

$2.5 billion aid on cards for domestic manufacturers of grid-scale batteries 

India is planning to introduce a $2.5 billion subsidy scheme to boost domestic manufacturing of grid-scale batteries to bring down the cost of energy storage in the country. The government is in the early-discussion stage to offer incentives to battery manufacturers over a certain period of time and the total subsidy could be around Rs200 billion, power minister Raj Kumar Singh said.

The minister said India is considering importing lithium from Australia to counter China’s dominance over the metal’s trade. To assure energy security, India plans to expand its coal power fleet by 25% through 2030 unless cheaper storage is available, the minister said.

New battery waste management rules: Producers and importers to recycle batteries

The Indian government released new Battery Waste Management Rules, 2022, in line with its recent announcement to back the “circular economy”. Under the Extended Producer Responsibility concept (EPR), the producers, including importers, will have to collect, recycle or refurbish the waste batteries, Mercom reported. They will be responsible for recovering material such as cobalt, lead, nickel, lithium, plastics, rubber and glass etc. from waste into new batteries. The new norms mandate producers, traders and suppliers to get the waste batteries recycled and not dumped. The Central Pollution Control Board (CPCB) will monitor the entire process of inspecting waste batteries for recycling. Disposal of batteries in landfills and incinerators are also prohibited. 

Rajasthan regulator: Firms selling solar power outside should give 10% free to state

Rajasthan’s electricity regulatory commission advised the state government to consider framing rules to mandate solar power producers selling power outside the state to provide 10% free power to state discoms. Those supporting the move argue that the generators use the entire ecosystem of local areas, including vast stretches of land, power infrastructure and environment, which is much more in comparison to that used by any other industry. Therefore, they owe the discoms free power, which can be supplied to the local population.

But solar industry representatives said that Rajasthan Renewable Energy Corporation is already taking Rs2 lakh per megawatt from power generators who supply it to customers outside the state and if the state goes ahead with the plan, it will set a bad precedent for the rest of the country. 

To EVs credit: The instrument would act as a hedging mechanism for banks to access and is expected to bring down the cost of financing EVs by 10-12%.

A billion dollar fund to finance 2/3-wheeler EVs is underway

The government, World Bank and Small Industries Development Bank of India (SIDBI) are set to launch a $1 billion fund to provide guarantees against loan default to lenders financing purchase of electric two- and three-wheelers, the Economic Times reported. According to a person involved in the talks, the entities will initially set up a $300 million “first loss risk sharing instrument” and all financial institutions would be able to use the funds as a first-loss instrument.  In case of defaults of loans on purchase of electric vehicles, the instrument would act as a hedging mechanism for banks to access and is expected to bring down the cost of financing EVs by 10-12%, he further added. Currently, the interest rate on loans to purchase electric two- and three-wheelers is 20-25%. NITI Aayog is the facilitating agency for the project, aimed at ensuring faster and easier financing of electric vehicles.

More e-buses in Delhi could reduce pollution-related mortality and morbidity : study

A study found that Delhi’s current bus fleet could lower its overall pollutant emissions by 74.67%  if it switched to electric buses. According to the study, e-buses could prevent 44 tonnes of PM 2.5 from being produced annually, as well as 1,370 deaths and 2,808 hospital admissions. At present, Delhi has a total of 7,310 public transportation buses, including 7,060 CNG buses and 250 e-buses, of which 150 e-buses were introduced in May this year. In the next three years, the Delhi government intends to electrify 80% of its buses, and by 2025, it hopes to have 8,000 e-buses in total.  However, experts said that loss of productive time on charging and deterioration of batteries over time continue to affect the potential benefits of electrification of public transport in the national capital. 

Govt to digitally monitor EV parts localisation under the FAME-II scheme

To promote domestic manufacturing and to ensure imported vehicles do not get incentivised at the expense of Indian taxpayers, the government will soon make an automated data transfer system to monitor localisation content of electric vehicles availing subsidies under the Rs10,000 crore FAME-II policy. The IT-enabled system based on Application Programming Interface (API) would enable smooth transfer of a set of critical data related to domestic value addition (DVA) from the beneficiaries’ existing enterprise resource planning (ERP) systems to the nodal ministry’s portal along with traceability of products based on digital footprints from October 1. The system will not encroach on non-disclosure agreements (NDAs) and yet enable monitoring and verification of domestic value addition being done by companies, said top sources. 

Earlier, the Department of Revenue Intelligence (DRI) started investigations against multiple electric vehicles makers alleging they could have violated the minimum local value addition criteria to receive subsidies under the flagship EV promotion scheme, causing revenue loss to the government in excess of Rs 300 crore.

Centre set to replace its petrol and diesel cars with EVs

The central government plans to procure 3,500 electric vehicles in order to replace petrol and diesel-powered cars from its fleet, the Economic Times reported. The report mentioned that the programme will expand as and when more affordable EVs enter the market. Currently, the total number of vehicles with state governments and the Centre is nearly 600,000. Convergence Energy Services (CESL) CESL, the agency that handles the acquisition of EVs for the Centre and the state governments, said that it has received an order of 3,500 EVs. CESL’s spokesperson further added that given the pace of adoption, the figure of 3,500 could go up to 10,000 in the next two years.

EV battery safety norms deadline now pushed to December 

Electric vehicle manufacturers have been given some more time to comply with the new set of EV battery safety standards announced by the Road & Transport Ministry government earlier this year.  The safety norms introduced were to come into effect on October 1, but the deadline has now been deferred to December 1, 2022. In a recent press statement by the ministry, it said that the new EV battery safety norms will be brought into effect in two phases. Phase 1 will begin on December 1, 2022 and phase 2 will come into effect on March 31, 2023.

Leaking havoc: UNEP termed the Nord Stream gas pipelines the largest methane release ever recorded.

“Largest methane release ever recorded,” UN warns as Nord Stream gas pipelines develop mysterious leaks

Last week, the Nord Stream 1 & 2 pipelines that carry gas from Russia to Europe developed mysterious leaks in its section that passes through the Baltic Sea. Even as investigations are underway to ascertain the reasons for the leaks, anywhere between 100,000 to 350,000 tonnes of methane are estimated to have been released from the leaks before they were plugged, with the UNEP terming it the largest methane release ever recorded.

OPEC+ agrees deepest production cut since COVID, oil prices climb

The major oil producers group, OPEC+, this week decided to slash oil production by two million barrels a day, the deepest cut since early 2020 when oil demand was decimated due to the coronavirus pandemic. While the group has justified the cuts as a response to the global economic downturn and reduction in demand, there are strong suspicions in Europe and the US that the move is a political one, at the behest of Russian President Vladimir Putin. The oil production cuts are likely to send oil prices soaring, further exacerbate the looming energy crisis in Europe, and fuel inflation further as winter sets in. 

China to build 80 GW of coal power plants each year until 2024?

A new report revealed China’s plans to start 80 GW of new coal power projects each year until 2024. Chinese media group Caixin published the article citing “a number of industry sources”. The report also noted that the country’s five major power generation companies lost 36bn yuan (£18 billion) in 2021. 

Overseas, China has completed building 14 power plants and will finish 27 more soon, according to another report. According to the Center for Research on Energy and Clean Air and People of Asia for Climate Solutions, these plants are likely to emit around 140 million tonnes of CO2 a year. 

UN chief urges rich nations to levy windfall tax on oil & gas, use revenue for climate finance

United Nations secretary general  António Guterres urged rich countries to levy tax on windfall profits made by oil and gas companies. The revenue generated can then be used towards climate finance for developing countries, which are most impacted by climate change, Guterres suggested in his speech at the UN general assembly held this past weekend. Guterres also urged developed nations to use this revenue to help those struggling with rising food and energy costs.  

France keeps its COP26 promise, restricts public finance for oil and gas 

France announced a new policy that restricts public finance for fossil fuels from its export credit agency, BPIFrance. This is in line with its COP26 commitment to end international public finance for fossil fuels by the end of this year. 

According to experts, this will put pressure on other countries that signed last year’s Glasgow Statement, such as Germany, USA and Canada, to follow suit. France joins other countries such as the UK, Denmark, Belgium and Sweden, which have also published policies in line with their Glasgow commitment. If all remaining signatories do the same, analysis shows that $28 billion a year will shift from fossil fuels towards clean energy.   

Carmakers’ global emissions 50% higher than what they are reporting, says new research

New research revealed global emissions by carmakers are 50% higher than what they are disclosing. According to the report by Transport & Environment (T&E), companies such as Hyundai-Kia and BMW are under-reporting their emissions by as much as 115% and 80%, respectively. 

According to experts, this does not bode well for financial institutions invested in car companies as the EU is set to make it mandatory for them to disclose their Scope 3 (indirect) emissions starting 2023. The report stated that the reality is car companies are as carbon intensive as oil firms when looked at from an investment perspective.