Michele Leung, Green Finance Advisor of Friends of the Earth (HK)
The Paris Agreement aspires to keep global temperature rise to only 1.5°C by 2100. According to the Intergovernmental Panel on Climate Change (IPCC), limiting global warming to 1.5°C or 2°C would require “rapid and far-reaching” transitions in land, energy and industry etc. It is quantified that global net human-caused emissions of carbon would need to fall by about 45 percent from 2010 levels by 2030, reaching ‘net zero’ around 2050. Hence in other words, to achieve the goal of the Paris Agreement , global emissions in the real world must be Net Zero no later than 2050.
Many countries have made commitments on Net
Zero. For example, we have Net Zero Asset Owner Alliance that the asset owners
gather and set targets for emissions reduction of their equity and corporate
bond portfolios. Other large pension funds are likely to follow suit to make
plans on their decarbonization and to put allocations to support low carbon
transitions. They also drive a lot of momentum by systematically engage with
the top emitters in their portfolio and/or request a detailed analysis and
reporting on companies’ targets and associated trajectories from their
Meanwhile, the Network for Greening
the Financial System (NGFS), is a network of 83 central banks and
financial supervisors that aims to accelerate the scaling up of green finance
and develop recommendations for central banks’ role for climate change. It is
anticipated they will soon define and require climate stress tests to be run by
the banks under their oversight.
With the 2021 United Nations Climate
Change Conference, also known as COP26, scheduled in this November,
there are expectations that more regulations will come in place. For example,
it will lead to several countries announcing mandatory TCFD reporting.
After all, tackling climate change should not be only about reporting or ticking the box exercise but should also develop climate strategies. Forward looking metrics are essential as backward metrics do not capture future risk. Some investors may think that the available metrics might not be accurate and investment ready. It is undeniably that climate change is inherently uncertain and the application to finance is still maturing, yet being pragmatic with exclusions is the key. In absence of data disclosure, scientific modeling and granular assessment would be helpful in filling the data gap. Many asset owners and asset managers around the world are already doing so, have you get started?
近來熱烈討論的「綠色比特幣」之稱的奇亞幣Chia，只需消耗硬碟及網路資源，比起比特幣的ASIC挖礦大幅降低了資源消耗。由於Chia挖礦主要倚賴的是現今世界下供應過剩的磁碟空間，取代大量電力耗損、用途單一的ASIC硬體來進行驗證和交易，最終實現綠色、低能源消耗的去中心化的「綠色」特性。Chia 奇亞幣採用的是一條全新的公鏈，與以往的 POW 或是 POS 不同，它提出的概念叫 Proof of Space and Time (時空證明 PoST)，藉此可以在確保安全的情況下降低“挖礦”的能源耗損。 其實，Chia 連挖礦的概念也改變了，在它的系統設計中，挖礦不叫挖礦，而叫“種植”（farming），又是一個綠色的概念。 有興趣的讀者可以去官網研究一下 (https://www.chia.net/greenpaper/)。
Alexandra Tracy, Green Finance Advisor of Friends of the Earth (HK)
We are all familiar with the mangrove forests that line our coasts, but perhaps not everyone is aware of the tremendous value that they provide to ecosystems around Asia. Mangroves grow in shallow water, and have a unique filtration system which makes them one of the few plants that can survive in salty conditions. Mangroves are hubs of biodiversity, providing homes for fish, crabs, birds and hundreds of plant species.
Mangroves also have thick roots, which play a key role in protecting coastlines from erosion and creating natural buffers against storm surges. Following a study of 59 subtropical countries, scientists at the University of California Santa Cruz estimated that mangrove forests prevent over $65 billion in property damage every year, and help shelter more than 15 million people.
In addition to all these virtues, mangroves are some of the most effective carbon sinks in the world. Carbon stored in coastal ecosystems differs from that in forests and grasslands in that additional biomass accumulates from organic matter being washed up by the tide. The saltwater inhibits the breakdown of the organic material (which would otherwise produce methane). As a consequence, mangroves can sequester up to ten times more carbon than terrestrial forests, according to Conservation International.
However, mangroves are under threat. Rising sea levels and temperatures, as well as human impacts such as pollution and erosion, have caused rapid deterioration in coastal and marine areas. The most extensive mangrove coverage in the region is located in Indonesia, where it spans some 14,000 square miles. But sadly, up to 20 percent of Indonesia’s annual emissions total is created by loss and conversion of mangrove areas to aquaculture. Across Asia, mangrove destruction has reached around 95,000 acres every year.
Capturing the value
The concept of forest carbon is well known and recognised by payments through the global REDD+ programme and the voluntary carbon markets. Recently, the idea of “blue carbon” – carbon sequestration by marine and coastal ecosystems – has also begun to gain traction in international carbon credit markets.
Mangrove restoration is the most well developed kind of blue carbon credit project to date. Scientists at the National University of Singapore recently concluded that about 20 percent of the world’s mangrove forests are suitable for such projects, and possibly half of that could be protected with inexpensive carbon credit prices starting at $5 per ton.
A number of mangrove projects are in development or operating already, covering sites in Africa, Asia and South America. One of the largest efforts to date is the Delta Blue Carbon Project located in 350,000 hectares of tidal wetlands on the south east coast of Sindh in Pakistan. It aims to reforest more than 200,000 acres of mangroves and absorb two million tons of carbon dioxide equivalent every year.
Growing corporate demand for blue carbon
A number of corporates are already active in investing in the voluntary markets for blue carbon through buying offsets. Companies in industries such as shipping and tourism have been early entrants, as they can put money into conserving the landscapes on which they have a direct impact, while offsetting their own emissions. MSC Cruises, for example, recently announced that it will offset all carbon dioxide emissions from its fleet marine operations through a carbon offset portfolio focused on restoring ocean and coastal habitats.
As an indication of the growing momentum around blue carbon, over the past year, a number of big name brands have launched mangrove protection and restoration projects to help combat their greenhouse gas emissions. For example, Procter and Gamble has partnered with Conservation International on the Palawan Protection Project in the Philippines, which will safeguard 31 species of mangroves on almost 110,000 acres of forests. Earlier this year, Gucci announced its Muskitia Blue Carbon REDD+ project to protect over 12,000 acres of mangroves in Honduras. And Apple is involved in two large projects in Columbia, also with Conservation International, which together could sequester over two million metric tons of carbon dioxide.
The market for private investment is still relatively new, and carbon accounting frameworks need to be modified to facilitate the widespread uptake of blue carbon into the voluntary offset market. The efforts of specialists, such as Blue Ventures in Madagascar, as well as corporates like Apple, who have been pushing for a rigorous methodology to underpin blue carbon projects, will stimulate project development and attract greater interest from investors.