Weekly News | 14th to 31th March 2023

Codo Advisory keeps an eye for you on the latest events and trends in climate finance and corporate sustainability, in the world and in Japan. Here’s what caught our attention last week. 

World | IPCC AR6 synthesis urges rapid and deep emissions cuts to avoid irreversible damage 

• The IPCC has released the final instalment of its sixth assessment report, which synthesizes the findings of the previous reports and provides a crucial summary for policymakers to address the urgent need for deep and rapid emissions cuts to avoid irreversible damage to the planet. 
• The report unequivocally states that greenhouse gas emissions generated by human activity have caused global warming. To avoid worsening the situation, the world must cut greenhouse gas emissions to 60% below 2019 levels by 2035. 
• The world is already experiencing 1.1C of warming, which calls for immediate and substantial action on both net emissions and total carbon budget to prevent irreversible changes and not hitting the landmark of 1.5C. Yet despite expanding policies to mitigate climate change, it is likely that the world will exceed it “in the near term.” 

Read more about this story: The Guardian, Bloomberg, Carbon Brief 

Codo’s comment: The AR6 report is the most severe and damming report from the IPCC so far. Achieving 60% reduction in GHG emissions relative to 2019 levels within the next 12 years is a strict requirement. Globally we need to immediately take intensive carbon reduction actions. Despite the recent surge in climate related disclosures, and even Science Based Target commitments aligned with a below 1.5C future, actualizing sufficient corporate action is still highly delayed. As we continue to increasingly experience the negative impact of climate change through more severe weather events, reduced food, energy, and water security, among others, there is no time to delay. Comprehensive, immediate, science-based actions need to be taken now.   

Asia Pacific | The Prime Minister of Samoa calls on the world to protect Pacific islanders from the devastating effects of climate change 

• The Prime Minister of Samoa, Fiame Naomi Mata’afa, has issued a plea for global action to prevent the people of the Pacific from being obliterated by the climate crisis, warning especially about delocalization issues due to rising sea levels and loss of land.  
• Her statement comes on the eve of the release of the IPCC AR6 synthesis report. Mata’afa expressed hope that the IPCC’s work will support the decisions that need to be made to address the crisis. 

Read more about this story: The Guardian, Carbon Brief 

Codo’s comment: Climate change impact islands and vulnerable populations of the “Global South” significantly more than those of the “Global North” who are the main greenhouse gas emitters and largely drive climate change. Last year in COP 27, nations globally pledged to invest in a damages and loss fund. This fund is in recognition of the responsibility largely emitting nations have to support the often-times smaller nations significantly impacted by their actions. But sea level rise will not only affect small islands in the pacific. Any and all coastal communities are already feeling the effects. Boston has had to place water barriers on their subway stairs to prevent flooding due to rising tidal surge and Tokyo has pioneered flood walls and pumping and drainage systems to mitigate the effects. Rising sea levels are a risk for all in coastal areas. 

North America | Despite concerns over its climate impact, Biden supports $8 billion Alaska oil project 

• President Joe Biden has authorized ConocoPhillips’ oil project in northwest Alaska, which environmentalists argue does not respect climate engagements, as the President aimed to prohibit any upcoming drilling activities in the Arctic waters and lands of the United States. 
• Yet, the company will be permitted to drill from three locations across its Willow site in the National Petroleum Reserve-Alaska. The $8bn development is at the forefront of pending US oil projects.  
• It is estimated that over 30 years, it could yield some 240 million tons of carbon dioxide emissions. Environmentalists excoriated the approval of what is set to become one of the largest oil-and-gas-extraction projects on public lands and vowed to keep fighting it. 

Read more about this story: Bloomberg, Carbon Brief 

Codo’s comment: Fossil fuels are an inherently non-renewable resource. When we exhaust the supply in one location, we must find another source. That the longer our society is reliant upon fossil fuels, the more previously pristine landscapes and ecosystems will need to be disturbed in order to satiate our continued demand. Developing new oil wells (or coal mines, or fracking sites) is extremely cost and labor intensive, especially as we exhaust those readily available and are forced to go to more remote or much deeper areas to continue the supply of energy. The continued cost of fossil fuel supply development must be considered as companies weigh the risks of remaining dependent. In long term calculations, often currently available renewable energy supplies result in significant potential for return on investment (ROI). With significantly reduced demand, there will be no need to continue to develop oil supply, preventing the release of millions of tons of GHG to satiate our energy demands. 

Europe | European Commission proposes net-zero industry and critical raw materials acts to compete in clean technology production 

• Eight months after the passing of the US climate law, the European Commission announced its Net-Zero Industry Act and Critical Raw Materials Act in more details on Thursday, 16^th of March, as part of the Green Deal Industrial Plan to ensure the European Union (EU) remains competitive in the production of clean technology products and access to raw materials necessary for the green transition.  
• The new measures, which will be proposed later this week, build on the existing Green Deal roadmap and focus on accelerating permitting and production targets for green technologies, as the Commission aims to increase the region’s ability to mine 10% of its critical raw materials, including copper and nickel.  
• This also echoes the general EU production plan that aims to produce at least 40% of the products it requires for “net-zero” technologies by 2030. To reach this goal, the Commission would also undertake plans to mine or process raw materials as “strategic projects” to benefit from streamlined permits and financing access. 

Read more about this story: Reuters, Bloomberg 

Codo’s comment: Energy security is the backbone of national security. As nations continue to accelerate the development and deployment of renewable energy infrastructure, having domestically secured supply chains has become increasingly important. This is most true for the sourcing of rare materials that are critical to the low-carbon society transition. Many of these minerals come from nations that do not have the same environmental or political position as the EU. This Critical Raw Materials Act is one of many we already or expect to see from countries scrutinizing and developing internal sourcing mechanisms. Canada, the US, and Australia already have some form of legislation in place towards these ends. 

World | G7 Nations push back against Japan’s advocacy for fossil fuels use 

• Japan’s proposal to promote natural gas investment and use of fossil fuels for power generation as part of its G7 presidency is being resisted by member nations, including the US and UK. The initial draft communique which called for investment in LNG and natural gas has been questioned by officials. 
• Especially, the use of hydrogen and ammonia to curb emissions by Japan has raised concerns on environmental and economic grounds. 
• Other G7 countries emphasized the need to accelerate climate action and a more ambitious plan to eliminate all fossil fuels in the power sector.  
• The preliminary statement, dated February 22, has been under discussion and is anticipated to undergo revisions before the forthcoming energy, climate, and environment ministerial meetings scheduled on April 15-16 in Sapporo. 

Read more about this story: Bloomberg, Japan Times 

Codo’s comment: Japan deserves the criticism the international community is providing. Domestically, the Japanese government has been promoting itself as pursuing a “clean” energy future, using the term “clean” to hide the substantial and sustained investment in largely emitting energy sources. Ten years ago, natural gas was considered a “clean” alternative to coal or oil, but current understanding is clear that it is a non-renewable energy source that still releases substantial GHG emissions. As the global community reconciles with the damming IPCC 6 report, and the high costs of mitigation and recovery following climate-induced tragedies, there is no longer time for Japan to delay in updating their position towards energy supply.