Virtus: Wrapping Up a Dynamic September


Image by Kanenori

September has been a whirlwind!

From the inaugural African Climate Summit to the New Delhi G20 meeting and Climate Week NYC, it’s been non-stop. While a breather might be tempting, there’s no slowing down with COP28 just around the corner. Each of these major events brought a wave of new climate finance commitments, global partnerships, moments of frustration, and glimpses of optimism for our shared climate objectives.

All that said, we’re thrilled to be back in the office, keeping you updated on our endeavors and global developments.

As always, we’re here to connect. Don’t hesitate to reach out via email or LinkedIn.

Gordian Knot Strategies

We are Igniting Climate Solutions: Mobilizing $1 Billion in Impact Investment by 2030!

Article 6 is a critical section of the Paris Agreement that deals with technical, market-based mechanisms aimed at reducing greenhouse gas (GHG) emissions and promoting international cooperation between developed and developing countries in addressing climate change, primarily via carbon emission trading.

We are approaching the decade mark of when Article 6 was introduced and agreed upon, however, we still do not have a functioning mechanism. Clearly, the process has been molasses-slow with recent debates on important topics like accounting adjustments to national emissions inventories, contribution versus authorized emission reductions, share of proceeds, treatment of avoided emissions, and the balance between removals and reductions holding back advancement.

At the same time, constructing a comprehensive and effective global carbon market is not a simple task. It is imperative that the Article 6 carbon market is crafted correctly because the financial and environmental costs of getting it wrong could be monumental. For comparison, take a look at the messy state of the current voluntary carbon market.

Let’s investigate the significance of an Article 6 carbon market. How does it contribute to the reduction of GHG emissions in countries? And what implications does it hold for both developed and developing nations?

To explore these inquiries, this essay will focus on Article 6.2 of the Paris Agreement, which revolves around ITMOs.

To continue reading, click here.

🎙️ The second episode of our podcast released last week!

In this episode, Jay talks with Nathan Truitt (Executive Vice President, Climate Funding – American Forest Foundation).

They cover topics including forest carbon credit projects, an innovative new green bond, AFF’s recent Verra methodology, and the challenges and opportunities for scaling up climate finance focused on forest projects. 

Click any of the links below to listen!

📚 Climate activists all over the world have been screaming at the top of their lungs about the changes that need to be made to save the world from total disaster. At times, it may seem like their endeavors are in vain, their voices echoing into an empty void. Andreas Malm’s 2021 book “How to Blow Up a Pipeline” captures this energy and shows how historic social movements have led to change. He issues a compelling call for greater activism.

🎙️ Paul Bodner, the Director of Sustainable Finance, Industry and Diplomacy for Bezos Earth Fund, is one sharp fella. He recently brought his wisdom to Harvard Business School’s podcast Climate Rising in a thoroughly engaging conversation with host Mike Toffel about the intersection between investing and climate change. This 55-minute conversation is loaded with top-notch insights. Check out “An Investor’s Perspective on Corporate Climate Action.

✍️ Another month brings forth yet another scathing critique of the voluntary carbon market (VCM). While this has become somewhat of a norm, it’s often not without justification. Those dedicated to enhancing the VCM still hold onto the optimism that it can be steered in the right direction, serving as the climate change solution it was initially envisioned as. Compensate’s recent publication, “From Crisis to Confidence,” highlights the present shortcomings and prospective opportunities for a robust VCM.

✍️ Not all carbon credit projects are wonky! Credit ratings group, Calyx Global, published a thoughtful insight in response to the recent Guardian article that claims the majority of largest credit producing projects actually generate junk credits.

Image by: Mizianitka

WOW! September was bustling with significant climate finance deals and updates. The entire list of headline-grabbing financial announcements that went down this month is extensive, so below are the standout articles. But beware, not all of them are positive!

$23 Billion Pledged at Africa Climate Summit, but Leaders Warn of Need ‘To Act with Urgency’

The first-ever Africa Climate Summit concluded with pledges totaling $23 billion for green projects from governments, investors, development banks, and philanthropists.

First African Offsets Platform Begins With Record 2 Million Credit Trade

Africa’s first emissions reduction platform is now operational, conducting a carbon futures transaction exceeding two million credits, setting a record for offsets in the region. This highlights the promise of climate initiatives for both projects and sovereign nations in the Global South.

‘World’s Money is Flowing in the Wrong Direction’: Funding of Fossil Fuels Eclipses Climate Finance 🤬

Major banks like HSBC, Citigroup, and JP Morgan Chase have invested nearly €3 trillion USD in expanding fossil fuels in the Global South since the adoption of the Paris Agreement seven years ago. This amount is 20 times greater than the funding Global North governments have provided to help developing nations address the climate crisis.

Germany Backs Kenya Hydrogen Among Africa Climate Pledges

Germany unveiled €450 million ($486 million) in climate finance commitments at the inaugural Africa climate summit. This includes a €60 million loan for a Kenyan fertilizer plant project in Olkaria, which aims to use geothermal energy for green hydrogen production. Additionally, €60 million of Kenya’s debt will be canceled, with the condition that it is invested in renewable energy and climate-friendly agriculture.

UK Prime Minister Announces Record Climate Aid Commitment as G20 in India Concludes

The UK will allocate £1.62 billion ($2 billion) to the Green Climate Fund (GCF), the world’s largest fund dedicated to aiding developing nations in reducing emissions and adapting to climate change. This marks a 12.7% rise compared to the UK’s prior commitment for 2020-2023.

Peru and US Strike $20 Million Amazon-Focused Debt-for-Nature Deal

The United States and Peru have agreed on a deal to aid in the restoration and protection of portions of the Amazon rainforest. In exchange for a $20 million reduction in debt, this debt-for-nature swap will fund the preservation of Amazonian protected areas, enhance natural resource management, and bolster sustainable livelihoods for rainforest-dependent communities.

“When you zoom out and look at all the new technologies coming online — AI, machine learning, remote sensors, blockchain, the list goes on — there’s just an incredible potential for unlocking new capital flows into verifiable climate action at scale.”

Anna Lerner – CEO, Climate Collective

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