Biden Administration proposes rules aimed to supercharge electric car sales
The US Environmental Protection Agency will propose rules aiming to make electric cars total two thirds of all car sales in the country by 2030. The organisation hopes to achieve this by placing increasingly strict limits on the total emissions of cars sold by individual manufacturers – all but forcing them to reduce the amount of conventional autos in favour of emissions-free electric vehicles.
Transportation is America’s largest source of emissions and a key environmental challenge globally. In 2021, global road transport contributed 5.86 Gigatonnes of CO2e Electrifying cars a sufficient pace to tackle climate change will be a monumental challenge. The most apparent problem is a current lack of sales – electric vehicles comprised only 5.8% of total vehicles sold in the US last year.
Investors have also highlighted that mass electrification of transport and other areas of the economy will require large amounts of critical minerals for batteries and electronics. It is predicted that the demand for metals such as lithium will vastly outstrip demand. The Global Investor Commission on Mining 2030, an emerging coalition of investors has highlighted this issue in particular, arguing that mining will need to expand to meet the needs of the net zero transition. Ultimately, whether global governments can successfully encourage manufacturers and consumers to “go electric” will be decisive in meeting emissions targets.
EU approves significant changes to its carbon market
On Tuesday, the European Parliament approved a major expansion of its Emissions Trading System (ETS), that will tighten emissions requirements on many businesses – obliging them to reduce emissions or buy carbon credits.
These reforms had been anticipated for some time, leading to an unprecedented price of €100 per tonne in February. As emissions requirements tighten, the ETS will lead to excessive pollution becoming increasingly punishing for companies operating in Europe.
These reforms faced resistance in the EU parliament, with legislators arguing that extending the ETS to fuel used for transport and heating would pass costs to consumers.
As part of these reforms, the EU also adopted the Carbon Border Adjustment Mechanism (CBAM) which they had first proposed in December, establishing the world’s first levy on high carbon imports. The legislation aims to remove the incentive for companies to relocate to countries with more lax environmental laws by ensuring high polluters pay a price regardless of where they produce their goods. This levy is due to be implemented in 2026.
Rainforest Action Network releases list of top institutional fossil fuel financers
The campaign group Rainforest Action Network has released a new report that details financial institutions that continue to finance fossil fuels worldwide – contributing to an industry that jeopardises global climate goals.
According to the report, fossil fuel financing from the world’s 60 largest banks has reached USD $5.5 trillion since the adoption of the Paris Climate Agreement in 2015, with $673 billion in 2022 alone. The report shows that many institutions have reduced their exposure to fossil fuels since 2015, but this has not been the case across the board. The Royal Bank of Canada (RBC)’s investment in the sector has remained consistent over this period,with a total investment of $42 billion, making it the largest global investor in fossil fuels.
A recent New York Times analysis has found that new oil and gas projects are being approved at an alarming rate, showing that the industry has recovered to pre-pandemic levels. Current climate consensus holds that the world will need to transition from fossil fuels as soon as possible to prevent the worst effects of climate change. For this to happen, asset owners and managers will need to play a key role in pressuring institutional investors to move away from fossil fuel investments.
A new index from The Economist shows the emissions impact of food
A new index from The Economist proposes that we measure the emissions of food by a consistent baseline – bananas. Similar to previous Economist indices (such as the Big Mac index), this one attempts to encapsulate a complicated topic using a common product.
A consistent conclusion from this data is the significant emissions impact of meat and dairy products, which produce some of the most emissions by weight and calorie count.
The FAIRR initiative recently highlighted this in the latest Climate Risk Tool, which showed that due to ballooning emissions from the sector, the meat and dairy industry was uniquely exposed to risks emerging from climate regulations. Their tool reveals that half of major meat and dairy companies could be operating at a loss by 2030 if they fail to meaningfully adapt to climate realities.
Achieving a truly sustainable food system would be an enormous undertaking. According to a report by think-tank Planet Tracker, to be truly sustainable by a sufficient timeline would require a $300-$350bn annual investment. Doing so would unlock significant benefits however, reducing global emissions by 20% and unlock up to $1.5tn for the economy by reducing waste and protecting against harms to biodiversity.