Hurdles remain for $100bn climate finance pledge
Developed countries continue to fall far short of their pledge to provide and mobilise $100bn/yr in climate finance to developing nations over 2020-25. With finance having been declared a priority of this year's UN Cop 27 climate conference in Egypt, several factors could still hamper reaching a figure the adequacy of which is already in question.
Developed countries agreed to provide and mobilise $100bn/yr in climate finance jointly for developing countries by 2020 at 2009's Cop 15 in Copenhagen. Parties at 2015's Cop 21 in Paris agreed to continue this level until 2025. But while financing increased to $83.3bn in 2020 from $58.5bn in 2016, it was still well below the $100bn mark, latest OECD data show, and unlikely to be met before 2023 even under its best-case scenario.
The foundations of the goal may in part be hampering its achievement. For instance, the convention setting out the goal contains no means of monitoring, reporting or acting on whether it is being achieved, co-chair of the UN Framework Convention on Climate Change Standing Committee on Finance (SCF), Zaheer Fakir, highlighted at June's UN climate change conference in Bonn, marking the midway point between the annual Cops. The SCF will produce a report on progress towards the goal for consideration at Cop 27 in Sharm el-Sheikh in November.
A lack of common accounting methodology could cause further problems, Fakir warned, with potential disagreements over how much money has been "mobilised" or "provided". The concept of mobilising finance itself amounts to "diminished responsibility" for the developed country parties providing the finance on the one hand, and increased responsibility on the developing country parties on the other to leverage the finance, Fakir added.
With no common definition of climate finance, "it will always be contested" whether a precise finance flow should be counted as climate finance or not, head of WWF Poland's climate team Marcin Kowalczyk said at the Bonn conference. Kowalczyk pointed to several other potential pitfalls in the set-up of the target, such as the risk of double counting information originating from different sources, and the issue of exchange rates — $100bn means different things in different currencies, and this will shift over the period up to 2025.
The $100bn question
Even the elusive $100bn could be far off what is required to prevent the worst effects of climate change. "The 100bn was never based on any needs, it was based on a collective group of individuals who sat around in a room and thought 100bn is a very sexy figure," said Fakir, according to whom the true amount needed to address the objectives of the convention and meet the goals of the Paris climate agreement stands somewhere between $5 trillion and $11 trillion.
"Even if we multiplied the $100bn by 10, it would not even cover half of the funding gaps for developing economies to address climate change," the UN Climate Change high-level champion for Egypt Mahmoud Mohieldin told Argus last month, highlighting that the topic of finance and mitigation at Cop 27 should not just be limited to talking about the $100bn. Egyptian Cop 27 president Sameh Shoukry and UK Cop 26 president Alok Sharma have emphasised that finance will be a priority at this year's event.
And with similar issues as those dogging the $100bn goal threatening to recur in negotiations on the new collective quantified goal on climate finance post-2025, which will be finalised in 2024, concrete progress on discussions for both targets will be considered key to a successful conference. But "nobody's talking about what an ambitious, quantified goal would be", Fakir warned in Bonn of the discussions.
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Beccs revenues 'dependent on sustainability'
Beccs revenues 'dependent on sustainability'
London, 3 May (Argus) — Danish state-controlled utility Orsted and UK utility Drax are increasingly dependent on sustainability criteria for their revenue streams from carbon removal (CDR) credit sales from bioenergy with carbon capture and storage (Beccs) projects, delegates heard at the Argus Biomass conference in London last week. "The key to be able to create such a project is to secure finance, which actually comes from the sale of carbon removal certificates," Orsted senior lead business developer for CCS David Fich said. Adding that the ability of companies to prove the sustainability of the biomass they source was now key to securing financing — including from CDR — for Beccs, and not only a matter of communicating that bioenergy and Beccs were environmentally friendly and carbon neutral businesses. Drax commercial director Angela Hepworth agreed: "Sustainability here is not a nice-to-have, this is the very foundation of our licence to upgrade and our ability to sell the credits and enable us to progress in these projects." Aligned standards within the industry and stronger incentives would encourage corporates to buy carbon credits against reputation backlashes, Hepworth added. Drax and Swedish utility Stockholm Exergi commissioned a methodology for measuring the net CO2 removal through Beccs published in October 2023, which was overall well-received by market participants. The utilities also presented it to the European Commission in the same month. A standardised approach to Beccs would encourage smaller buyers, which rely on certifications to identify the sustainable criteria of the carbon removal value chain when purchasing CDR credits, Fich said. While most larger corporates were doing their own due diligence. "The smaller buyers are those that are able to pay more," Fich said, adding that these companies were necessary to improve the liquidity of the market. Orsted signed a contract with Microsoft in May 2023 for the purchase of 2.76mn t of carbon removals over the next 10 years. Drax is also selling CDR certificates in the voluntary carbon market](https://direct.argusmedia.com/newsandanalysis/article/2441200) and is hoping to get the credits into the UK's trading scheme. Such deals "will help to make Beccs credits be seen in the more mainstream markets," Hepworth said. By Marta Imarisio Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Oregon renewable diesel pours into CFP bank
Oregon renewable diesel pours into CFP bank
Houston, 2 May (Argus) — Rising renewable diesel deliveries helped grow the volume of Oregon Clean Fuels Program (CFP) credits available for future compliance by a record 30pc in the fourth quarter of 2023, according to state data released today. The roughly 253,000 metric tonne (t) increase in available credits from the previous quarter — bringing the total to 1.1mn t — illustrates the spreading influence of US renewable diesel capacity on markets offering the most incentives for their output. California and Oregon low-carbon fuel standard (LCFS) credit prices have tumbled as renewable diesel deliveries generate a surge of credits in excess of immediate deficit needs. LCFS credits do not expire. LCFS programs require yearly reductions to transportation fuel carbon intensity. Higher-carbon fuels that exceed the annual limits incur deficits that suppliers must offset with credits generated from the distribution to the market of approved, lower-carbon alternatives. Renewable diesel volumes in Oregon increased by 12pc from the previous quarter to about 37,000 b/d — more than double the volume reported in the fourth quarter of 2022. The fuel represented 24pc of the Oregon liquid diesel pool for the period, while petroleum diesel fell to 75pc. Renewable diesel generated 46pc of all new credits for the quarter, compared to the 14pc from the next-highest contributor, biodiesel. Deficit generation meanwhile shrank from the previous quarter. Gasoline deficits fell by 6.6pc from the third quarter as consumption fell by roughly the same amount. Gasoline use trailed the fourth quarter of 2022 by 7.1pc. Diesel deficits also shrank as renewable alternatives push it out of the Oregon market. Petroleum diesel deficits fell by 19pc from the previous quarter and consumption was 27pc lower than the fourth quarter of 2022. Spot Oregon credits have fallen by half since late September, when state data offered the first indications that renewable diesel that was already inundating the California market had found its way to the smaller Oregon pool. The quarter marks the first time Oregon credits available for future compliance have exceeded 1mn t. Oregon in 2022 approved program targets extending into next decade that target a 20pc reduction by 2030 and a 37pc reduction by 2035. An ongoing rulemaking process this year will consider changes to how the state calculates the carbon intensity of fuels and verifies the activity of participants, but will not touch annual targets. By Elliott Blackburn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
G7 coal exit goal puts focus on Germany, Japan and US
G7 coal exit goal puts focus on Germany, Japan and US
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G7 countries put timeframe on 'unabated' coal phase-out
G7 countries put timeframe on 'unabated' coal phase-out
London, 30 April (Argus) — G7 countries today committed to phasing out "unabated coal power generation" by 2035 — putting a timeframe on a coal phase-out for the first time. The communique, from a meeting of G7 climate, energy and environment ministers in Turin, northern Italy, represents "an historic agreement" on coal, Canadian environment minister Steven Guilbeault said. Although most G7 nations have set a deadline for phasing out coal-fired power, the agreement marks a step forward for Japan in particular, which had previously not made the commitment, and is a "milestone moment", senior policy advisor at think-tank E3G Katrine Petersen said. The G7 countries are Italy — this year's host — Canada, France, Germany, Japan, the UK and the US. The EU is a non-enumerated member. But the pledge contains a caveat in its reference to "unabated" coal-fired power — suggesting that abatement technologies such as carbon capture and storage could justify its use, while some of the wording around a deadline is less clear. The communique sets a timeframe of "the first half of [the] 2030s or in a timeline consistent with keeping a limit of 1.5°C temperature rise within reach, in line with countries' net-zero pathways". OECD countries should end coal use by 2030 and the rest of the world by 2040, in order to align with the global warming limit of 1.5°C above pre-industrial levels set out in the Paris Agreement, according to research institute Climate Analytics. The countries welcomed the outcomes of the UN Cop 28 climate summit , pledging to "accelerate the phase out of unabated fossil fuels so as to achieve net zero in energy systems by 2050". It backed the Cop 28 goal to triple renewable energy capacity by 2030 and added support for a global target for energy storage in the power sector of 1.5TW by 2030. The group committed to submit climate plans — known as nationally determined contributions (NDCs) — with "the highest possible ambition" from late this year or in early 2025. And it also called on the IEA to "provide recommendations" next year on how to implement a transition away from fossil fuels. The G7 also reiterated its commitment to a "fully or predominantly decarbonised power sector by 2035" — first made in May 2022 and highlighted roles for carbon management, carbon markets, hydrogen and biofuels. Simon Stiell, head of UN climate body the UNFCCC, urged the G7 and G20 countries to lead on climate action, in a recent speech . The group noted in today's outcome that "further actions from all countries, especially major economies, are required". The communique broadly reaffirmed existing positions on climate finance, although any concrete steps are not likely to be taken ahead of Cop 29 in November. The group underlined its pledge to end "inefficient fossil fuel subsidies" by 2025 or earlier, but added a new promise to "promote a common definition" of the term, which is likely to increase countries' accountability. The group will report on its progress towards ending those subsidies next year, it added. Fostering energy security The communique placed a strong focus on the need for "diverse, resilient, and responsible energy technology supply chains, including manufacturing and critical minerals". It noted the important of "guarding against possible weaponisation of economic dependencies on critical minerals and critical raw materials" — many of which are mined and processed outside the G7 group. Energy security held sway on the group's take on natural gas. It reiterated its stance that gas investments "can be appropriate… if implemented in a manner consistent with our climate objectives" and noted that increased LNG deliveries could play a key role. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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