Virtus: Unlocking Climate Finance Through Biomass Storage and Strong Environmental Policies
Welcome to the May edition of Virtus!
In the month of flowers, we feature innovative solutions and critical conversations aimed at advancing our fight against climate change.
In “Our Take,” we explore biomass storage as a buzzing carbon dioxide removal (CDR) technique. The essay highlights the potential of terrestrial and marine biomass storage to aid in our decarbonizing goals and how this project type can generate valuable carbon credits in the carbon markets.
In our “Untangling Climate Finance” episode, Jay sits down with Timothy Male, the Executive Director at the Environmental Policy Innovation Center (EPIC). They discuss how effective policy can protect and restore nature, activate nature-based climate finance, and the pivotal role of public-private partnerships in these efforts.
Our content selection for May offers a bunch of insightful reports that cover topics such as carbon markets and pricing, emission reduction strategies in national climate plans, a global energy outlook, and a podcast discussing the heroes and villains of the energy transition.
As always, we share significant climate finance deals from around the world, including a nasty one that poses a severe challenge to our collective climate fight mission.
Happy reading and listening!
We are Igniting Climate Solutions: Mobilizing $1 Billion Per Year in Impact Investment by 2030!
Carbon dioxide removal (CDR) has been receiving significant attention recently from governments, corporations, investors, and project developers as a strategy for combating climate change. Rightly so because estimates indicate that achieving most Paris-aligned net-zero pathways by 2050 will likely require an annual carbon dioxide (CO2) removal capacity of six to ten gigatonnes, which is more carbon than the entire United States emits in one year.
Amidst this surge of interest, much of the conversation has centered around well-known methods like biochar (which we wrote about in March), direct air capture (DAC), and carbon capture and storage (CCS).
In this essay, we are exploring another, less-discussed approach – biomass storage. This method offers another avenue for potentially achieving long-term carbon sequestration and enhancing our overall CO2 removal efforts.
To read more, click here.
Client Served in the United States
We were engaged over two high-pressure years with a multinational industry leader in its sector with almost weekly trips to their head office for protracted planning sessions. Acting as an extension to their team, our task was to help them develop an impact investing strategy for amounts that began with a B. This strategy involved the acquisition of tens of millions of verified credits from the voluntary carbon market. We ran a blind RFP on their behalf to land on a screened and prioritized list of projects that aligned with their acquisition mandate. Our client then had us conduct comprehensive due diligence on a handful of project opportunities that appealed to them. Even though our engagement with them began in 2019, they still stay in touch with us as the market evolves.
“Helping RenewWest determine what to prioritize and focus on has allowed many other doors to open. Gordian Knot Strategies helps reduce the clutter and makes good connections.”
John Cleland – (Former) CEO, RenewWest
🎙️ In our May episode, Jay connects with Timothy Male, the Executive Director at Environmental Policy Innovation Center (EPIC).
Tim outlines EPIC’s mission and its impact on U.S. environmental policies, focusing on initiatives like environmental restoration. They explore challenges in conservation efforts, discuss innovative financial mechanisms such as debt-for-nature swaps and state revolving loan funds.
The two talk about how pay-for-success contracts are scalable policy tools for nature-based climate finance. Tim highlights the value in public-private partnerships for finance and points out how improving policy narratives could drive financial resources toward enhancing our relationship with nature.
Click any of the links below to listen!
May showered us with a wealth of fantastic reports covering carbon markets and pricing, emission reduction strategies (or lack thereof) in countries’ national climate strategies, and a global energy outlook. We’ve also included a fun podcast about the bad guys and the good guys of the energy transition.
✍️ One Earth released a report titled “Residual Emissions in Long-Term National Climate Strategies Show Limited Climate Ambition.” As indicated by the title, the findings reveal a concerning lack of ambition. The report examines 71 long-term national climate strategies. It highlights that residual emissions, though crucial to the net-zero framework, are often overlooked. Key findings include that agriculture is the largest contributor to residual emissions by sector and that some countries may continue to rely heavily on fossil fuels under high-residual scenarios. Not good!
✍️ The World Bank published a report on carbon markets and pricing around the world, titled “State and Trends of Carbon Pricing 2024.” The report is an update on existing and emerging carbon pricing instruments globally, including international, national, and subnational initiatives. It explores trends in the development and implementation of these instruments over the past year. The report discusses carbon taxes, emissions trading systems (ETSs), and crediting mechanisms, with key topics including the adoption of ETSs and carbon taxes in low- and middle-income economies, sectoral coverage, and the integration of crediting mechanisms into policy frameworks. This is the perfect weekend read for all the carbon wonks out there!
✍️ BloombergNEF released its 2024 New Energy Outlook, which outlines long-term energy and climate scenarios for transitioning to a low-carbon economy. The report presents independent, credible scenarios for the electricity, industry, buildings, and transport sectors, and examines the key drivers influencing these areas through 2050. It provides global and country-level scenarios to aid corporations, financial institutions, and policymakers in navigating the energy transition. The report hammers home the urgency of immediate action to achieve net-zero emissions by 2050, warning that delay could jeopardize even the 1.75°C global warming target.
🎙️ In line with the same topic as the BloombergNEF report, David Roberts, the host of Volts, teams up with Michael Liebreich, a seasoned clean-energy analyst, for an engaging chat. In the episode called “The Energy Transition’s 5 Supervillains and 5 Superheroes,” they discuss into five reasons to feel a bit gloomy about the net-zero transition, but they also provide five reasons to stay hopeful about the future.
Every week brings a wave of new climate finance activities worldwide. Here are some standout headlines. Unfortunately, not all the news is good. That is something all of us in the climate space are accustomed to. We believe it’s important to highlight the negative headlines as well.
USAID Launches $6M Program for Climate Resilience Efforts in Kenya
Earlier in May, USAID launched a $6 million initiative to support small businesses and financial institutions in northern Kenya, helping them adopt climate-smart practices and improve their resilience. This region frequently experiences severe droughts and floods, devastating livestock, crops, and pastures, leaving many reliant on aid. The $6 million is part of a larger $38 million investment aimed at boosting the resilience of small businesses in these arid and semi-arid areas.
Banks Back Fossil Fuels With $6.9 Trillion 😡😡
Despite increasing extreme weather events, financial institutions continue to fund climate change by investing in fossil fuels, delaying the low carbon transition. Since the Paris Agreement, the world’s 60 largest private banks have financed $6.9 trillion in fossil fuels, with $3.3 trillion for expansion, ignoring the International Energy Agency’s warning that new fossil fuel projects are incompatible with achieving net zero by 2050.
Holcim Breaks Ground On State-of-the-Art GO4ZERO Plant in Belgium for Net Zero Cement
Cement is a significant carbon emitter! With annual production exceeding 4 billion tonnes, the cement ecosystem accounts for a whopping 8% of global CO2 emissions. Concrete, the most widely used man-made material, is second only to water in terms of consumption. This makes GO4ZERO’s €500 million project in Belgium a box-office milestone in advancing Europe’s decarbonization efforts. The plant is slated to produce 2 million tons of net-zero cement annually by 2029.
Ørsted Enters Into New Major Agreement on Carbon Removal with Microsoft
Microsoft is not playing around when it comes to reducing its carbon footprint and investing in carbon credits. Ørsted has struck a deal to sell an additional one million tonnes of carbon removal over ten years to Microsoft through its bioenergy carbon capture and storage (BECCS) project, the ‘Ørsted Kalundborg CO2 Hub’. This brings Microsoft’s total contracted purchase to 3.67 million tonnes of CO2. The 430,000 tonnes per year of biogenic CO2 from the combined heat and power plants will be transported to a storage reservoir in the Norwegian part of the North Sea for permanent storage. The ‘Ørsted Kalundborg CO2 Hub’ is set to become operational by early 2026.
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