Investing

Fossil fuel's turning point, and ICMA's Martin Scheck on Europe's green bond revolution

By David Callaway, Callaway Climate Insights

The ground is still wet from Northern California’s most recent rainfall, and spring ski conditions are perfect up in Lake Tahoe, but the state is already gearing up for a tough summer of fires and energy blackouts that will almost certainly overwhelm its renewable energy capabilities.

While California regards itself a leader in renewables, particularly solar, in reality it relies on gas and nuclear for more than half its energy. It has effectively been cornered by rapid advances in global warming into having to use natural gas supplies to keep its grid running to avoid the heat and wind blackouts that threaten lives. A deadline to shutter its last remaining nuclear plant, the Diablo Canyon plant near San Luis Obispo, in four years looms large as it supplies almost 10% of the grid’s energy.

The unpleasant position is a microcosm of what the rest of the country — and world — face if the hybrid transition from fossil fuels is not executed fast enough. A vicious cycle of having to burn more fossil fuels to avoid the growing threats of global warming is the last thing anybody wants.

California, for better or for worse, looks set to get there first.

More insights below. . . .

ZEUS: Game of two halves in 2020 fossil fuel financing

. . . . An interesting stat about bank lending to fossil fuel companies leaped out of a new report today about bank financing of the oil and gas industry, and how it has continued since the Paris Agreement in 2016. It goes to the heart of the question of whether we’ve turned the corner on what some call the great climate re-pricing, writes David Callaway in his ZEUS column. And whether fossil fuel companies can ever truly make the shift to renewable energy. . . .

Read the full ZEUS column

Sustainability Stars: Martin Scheck and the green bonds of Europe

. . . . A surge in sovereign green bond issues in the past year in Europe is being credited, in part, to rapid adoption of a set of principles laid out by the Zurich-based International Capital Market Association (ICMA), which is spurring investor confidence the money raised will be used for environmental purposes. Marsha Vande Berg talks with ICMA Chief Executive Martin Scheck about the Green Bond Principles (GBP) and their potential to influence green bond growth in Asia and beyond. . . .

Read the full story

Wednesday’s insights: Rhino bonds, and the potential damage of the planned EU carbon levy

. . . .You’ve surely heard of green bonds, and maybe even blue bonds, by now, but an even more direct environment-focused fixed income instrument is coming to the table: Rhino bonds. A brainchild of the Zoological Society of London, the bonds will pay investors based on the resurgence of the threatened black rhino population and add a new, um, wrinkle to the ESG world — conservationism. Read more here. . . .

. . . . The drumbeat for a carbon tax by the European Union this summer grows louder each week, and without a unified global carbon price, looks inevitable. But new taxes and international trade discord are the last thing we need as the world pivots from Covid ahead of COP26 in Glasgow later this year. Read more here. . . .

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