CREATING A HIGH TRUST MARKET FOR CARBON OFFSETS

Alexandra Tracy, Green Finance Advisor of Friends of the Earth (HK)

Investors around the world are looking at ways to decarbonise their portfolios and setting targets for themselves to meet over the next ten, twenty or thirty years.

The number one strategy for most investors must be to reduce emissions across the portfolio by reallocating capital among higher and lower carbon assets, and working with investee companies on their own transition to a greener business model.

Some industries, however, are going to be more challenging and very costly to decarbonise, and will continue to be emissions heavy in the short to medium term.  This will probably mean that by 2030, say, there will be residual emissions remaining in companies in the portfolio.  One response is to divest.  Another is to use carbon offsets to neutralise the greenhouse gases that they are creating.

Offset markets still have a way to go

Mandatory carbon markets have been around for years (see the European Union, North America and now China).  But the voluntary carbon credit market has really grown significantly in just the last few years, as large companies like IBM, Amazon and Microsoft have looked to carbon offsets as part of the solution to meeting their net zero targets.

Given its relatively early stage of development, the voluntary carbon market today faces big challenges in attracting investors.  Carbon credits (generated by activities as diverse as renewable energy, forestry, sustainable farming or preserving landscapes and coastlines) are not standardised.  Collecting data from these projects can be difficult, the methodology for verifying the credits is not consistent and the benefits are often not well defined.

A lack of trust in the market causes investors to be cautious about participating.  This, in turn, means that the market will continue to lack the liquidity necessary for efficient trading.  Greater transparency and oversight will be very important for building investor appetite, as will the development of better risk management services and financing alternatives.

But the future could be huge

McKinsey estimates that the need to meet corporate commitments could push global demand for high quality carbon credits in the voluntary carbon market up by at least fifteen times by 2030.  Indeed, if the current structural issues can be addressed, and substantially more liquidity created, the market size by then could be as much as US$50 billion, according to the Taskforce on Scaling Voluntary Carbon Markets, a private sector grouping.

Climate Impact X

A new venture in Singapore aims to tackles the shortcomings and create a voluntary carbon marketplace with the necessary transparency and liquidity to attract investors at scale.  The four partners behind the new platform – the Singapore Exchange, Temasek, DBS Group and Standard Chartered – will leverage their own expertise and Singapore’s strong regulatory reputation to develop a global exchange for trading trusted, high quality carbon credits.

CIX will offer two digital platforms tailored to the needs of different buyers and sellers.  Its carbon exchange will facilitate the sale of carbon credits in large volumes through standardised contracts, mostly to multinational corporations and institutional investors.  Alongside this, a project marketplace will enable the purchase of carbon credits directly from specific projects developing natural climate solutions.

The marketplace will allow a broader range of project companies to participate in the voluntary carbon market by offering credits to global buyers, including corporates looking to meet their sustainability objectives.  Every transaction will be backed by detailed information on the additionality, benefits and carbon impact of the underlying project.

For both platforms, CIX will utilise satellite monitoring, machine learning and blockchain technology in order to increase transparency and ensure the availability of trustworthy data on the quality of the carbon credits being traded.


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NET ZERO – Optimism 101

Mostafa Monira Firdouse, Green Finance Advisor of Friends of The Earth (HK)

Climate Change – ‘Will we revert to historic norms after the pandemic? OR WILL IT BRING ABOUT SOME LONG-LASTING CHANGES? Do we know yet?’ – These were some of my concerns in my last blog; HERE. I expect to get some of my answers from COP-26.

Why am I optimistic

The pandemic has forced every single business, regardless of size or sector, to rethink. Not all businesses are proactive or even have plan to manage future disruptions, whether they be climate, disease or policy-related. The pandemic has disrupted everything, but so will the net-zero transition. Global emissions are projected to fall by 8% in 2020 as a result of Covid-19.

Transition: The shift to a net-zero global economy is already well underway and implies a complete transformation of almost every sector. We are seeing a major scale-up of clean power, a shift to electric mobility, and a push towards more efficient electric buildings. Zero-emission fuels promise to transform processes in the industrial and manufacturing sectors, and agriculture is moving towards regenerative practices and more climate-friendly diets. Along with solutions to cut emissions, we will need a huge scale-up in carbon removal solutions such as reforestation, peatland and mangrove restoration, and direct-air capture technologies.

Rise of green financing: Another reason for optimism is the renewed focus on the green agenda from investors, a notoriously risk-averse sector. More than $50bn of green bonds were issued globally in September 2020, making it a record month despite the economic impact of Covid-19, BloombergNEF has revealed. Around $270bn of green bonds were issued in 2019, making it a record-breaking year. If the trends seen in September persist, 2020 could break records once more. Race to Net Zero: Finally, supercharging public-private efforts in the race to net-zero. The Alliance of CEO Climate Leaders steps up and calls on G7 and other world leaders to accelerate a just transition.


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恒生指數成份股碳排放

香港地球之友綠色金融顧問 黃思靈

最近大家常聽到什麼減碳目標、碳中和,是因為很多國家和地區(包括中國及香港)為配合巴黎條約的協定,陸陸續續宣佈設下以2050年前將二氧化碳及其他溫室氣體的排放淨值降至零的目標,冀能控制全球平均溫度升幅低於1.5℃之內。

除了政府口號式的宣傳,港交所近年亦要求上市公司需每年報告碳排放量,否則需要解釋原因。本人根據一間ESG評級機構提供的碳排放數據,對現時60間恒指成份股公司做了個小小的統計,嘗試了解香港大型上市公司在減碳方面的情況。由於並非所有公司皆有提供碳排放資料,部份可能以碳排放估值來進行分析,結論只供參考,不要太在意。

60間恒指成份股公司在2019年及2018年的總碳排放量分別為5.14億公噸和5.44億,整體下降了5.4%左右。碳排放量最多的行業為石油及天然氣,恒指裡僅三間氣油生產商,但他們貢獻了約7七成的指數碳排放;其次的是兩間電力公司,佔了指數碳排放量的一成。2019和2018年度的數據結果相約,所以假如這兩個行業的公司能再為減碳做多少少,應該可為香港整體碳中和的目標推前一大步。

恒指裡的金融業成份股雖然相對多(11間),但由於業務性質關係,行業帶來的碳排放只有指數的0.5%。不過這些公司亦努力支持低碳經濟,除了對自身的辦公室進行環境管治,制定公司的環保政策,亦推動綠色融資計劃,滿足條件的客戶可以更低的成本、更短的處理時間得到貸款,鼓勵他們投資環保設備,以提升效益及減少污染。

筆者寫此文時已過了中秋,但氣温仍接近33℃。減慢地球暖化刻不容緩,希望一齊努力下真能達成2050碳中和的目標。近日讀到有關國內研發出將二氧化碳轉化成麵粉的技術,雖然聽上去有點荒誕,但倘若是真的而且對人體無害,大家是否也應該支持這種創意?畢竟目前看來也只有利用科技才可以更有效地排碳或消耗被製造出來的溫室氣體。


瀏覽香港地球之友網頁 www.foe.org.hk 了解更多
綠色金融 Facebook 專頁: https://www.facebook.com/greenfinancefoehk/
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Upcoming Events on Green Finance/ 今期綠色金融活動一覽

Check out the above calendar for the fantastic green finance events for October! Interested to join and learn more about green finance? Browse the links below to check out the upcoming events on Green Finance.

以上一圖看清十月精彩的綠色金融活動!如欲參加及了解綠色金融相關的活動,歡迎瀏覽以下網址了解更多。

[1] Global Trends in Corporate Tax Disclosure – An Investor Perspective

[2] PRI Digital Conference

[3] Friends of the Earth (HK) Executive Certificate ESG Courses Application Deadline

[4] Route to Net Zero: Asia

[5] COP26: Industrial Transition to Net Zero How can business and the investment sector come together to achieve global decarbonisation?

[6] CESGA® Scholarship Programme Application Deadline

[7] CESGA® Exam December Intake Deadline


Visit www.foe.org.hk for more news about Friends of the Earth (HK)!
Green Finance Facebook page: https://www.facebook.com/greenfinancefoehk/
FoE (HK) LinkedIn page: https://www.linkedin.com/company/friends-of-the-earth-hk/


瀏覽香港地球之友網頁 www.foe.org.hk 了解更多
綠色金融 Facebook 專頁: https://www.facebook.com/greenfinancefoehk/
香港地球之友 LinkedIn 專頁: https://www.linkedin.com/company/friends-of-the-earth-hk/

執行全球甲烷承諾至關重要

香港地球之友綠色金融顧問

為了應對氣候變化,我們需要減少溫室氣體的排放。雖然二氧化碳是主要溫室氣體,佔年排放量的 74%,但其他溫室氣體具有更高的全球升溫潛能值 (衡量氣體吸熱的能力 )。如果我們以 20 年為期限來衡量,甲烷的升溫潛能值是二氧化碳的 80 倍以上。值得注意的是,甲烷是第二大溫室氣體,佔全球暖化成因的四分之一。降低甲烷排放是減緩氣候變化的有效方法。

人類活動(主要與農業、化石燃料和廢物相關)約佔全球甲烷排放量的 60%。 2021 年 5 月,氣候與清潔空氣聯盟 (CCAC) 和聯合國環境規劃署 (UNEP) 聯合啟動了全球甲烷評估。根據評估報告,如果人為造成的甲烷排放量能減少 45%,到 2040 年我們將可避免攝氏0.3度的全球變暖。

9 月 18 日,美國和歐盟達成一項合作協議,承諾幫助在2030年前將全球甲烷排放量從 2020 年的水平上減少 30%。這協議被稱為“全球甲烷承諾”,將在今年十一月在格拉斯哥舉行的聯合國氣候變化大會(COP 26)上正式啟動。全球甲烷承諾的其他支持國家包括阿根廷、加納、印​​度尼西亞、伊拉克、意大利、墨西哥和英國。根據最新的 IPCC 報告,需要持續大量減少甲烷排放以控制溫升。我們鼓勵中國和其他國家支持全球甲烷承諾。最重要的是,我們期待各簽署國以行動體現承諾。

全球甲烷承諾連結(英文)
全球甲烷評估報告連結(英文)


瀏覽香港地球之友網頁 www.foe.org.hk 了解更多
綠色金融 Facebook 專頁: https://www.facebook.com/greenfinancefoehk/
香港地球之友 LinkedIn 專頁: https://www.linkedin.com/company/friends-of-the-earth-hk/