4 key steps for finance to take to tackle the growing water crisis

Read the full story at GreenBiz.

Financial institutions must act now to boost water security and to protect themselves from the risks created by the water crisis.

What if carbon border taxes applied to all carbon – fossil fuels, too?

Most national carbon border adjustments being considered target only manufactured goods. Thatree Thitivongvaroon via Getty Images

by Joonha Kim, Rice University and Mark Finley, Rice University

The European Union is embarking on an experiment that will expand its climate policies to imports for the first time. It’s called a carbon border adjustment, and it aims to level the playing field for the EU’s domestic producers by taxing energy-intensive imports like steel and cement that are high in greenhouse gas emissions but aren’t already covered by climate policies in their home countries.

If the border adjustment works as planned, it could encourage the spread of climate policies around the world. But the EU plan, as well as most attempts to evaluate the impact of such policies, is missing an important source of cross-border carbon flows: trade in fossil fuels themselves.

As energy analysts, we decided to take a closer look at what including fossil fuels would mean.

In a newly released paper, we analyzed the impact and found that including fossil fuels in carbon border adjustments would significantly alter the balance of cross-border carbon flows.

For example, China is a major exporter of carbon-intensive manufactured goods, and its industries will face higher costs under the EU border adjustment if China doesn’t set sufficient climate policies for those industries. But when fossil fuels are considered, China becomes a net carbon importer, so setting its own comprehensive border adjustment could be to its energy producers’ benefit.

The U.S., on the other hand, could see harm to its domestic fuel producers if other countries imposed carbon border adjustments on fossil fuels. But the U.S. would still be a net carbon importer, and adding a border adjustment could help its domestic manufacturers.

What is a carbon border adjustment?

Carbon border adjustments are trade policies designed to avoid “carbon leakage” – the phenomenon in which manufacturers relocate their production to other countries to get around environmental regulations.

The idea is to impose a carbon “tax” on imports that is commensurate with the costs domestic companies face related to a country’s climate policy. The carbon border adjustment is imposed on imports from countries that do not have similar climate policies. In addition, countries can give rebates to exports to ensure domestic manufacturers remain competitive in the global market.

This is all still in the future. The EU plan phases in starting in 2023 but currently isn’t scheduled to fully go into effect until 2026. However, other countries are closely watching as they consider their own policies, including some members of the U.S. Congress who are considering carbon border adjustment legislation.

Capturing all cross-border carbon flows

One issue is that current discussions of carbon border taxes focus on “embodied” carbon – the carbon associated with the production of a good. For example, the EU proposal covers cement, aluminum, fertilizers, power generation, iron and steel.

But a comprehensive border adjustment, in theory, should seek to address all cross-border carbon flows. All the major analyses to date, however, leave out the carbon content of fossil fuels trade, which we refer to as “explicit” carbon.

In our analysis, we show that when only manufactured goods are considered, the U.S. and EU are portrayed as carbon importers because of their “embodied” carbon balance – they import a lot of high-carbon manufactured goods – while China is portrayed as a carbon exporter. That changes when fossil fuels are included.

The impact of including fossil fuels

By assessing the impact of a carbon border adjustment based only on embodied carbon flows, those involving manufactured goods, policymakers are missing a significant part of total carbon traded across their borders – in many cases, the largest part.

In the EU, our findings largely reinforce the current motivation behind a carbon border adjustment, since the bloc is an importer of both explicit carbon and embodied carbon. [view graph of EU carbon border adjustment data]

For the U.S., however, the results are mixed. A carbon border adjustment could protect domestic manufacturers but harm the international competitiveness of domestic fossil fuels, and at a time when Russia’s invasion of Ukraine is placing renewed importance on the U.S. as a global energy supplier. [view graph of U.S. carbon border adjustment data]

The Chinese economy, as an exporter of embodied carbon in manufactured goods, would suffer if its trading partners imposed a carbon border adjustment on China’s products. On the other hand, a Chinese domestic border adjustment could benefit Chinese domestic energy producers at the expense of foreign competitors who fail to adopt similar policies. [view graph of China carbon border adjustment data]

Interestingly, our analysis suggests that, by including explicit carbon flows, the U.S., EU and China are all net importers of carbon. All three key players could be on the same side of the discussion, which could improve the prospects for future climate negotiations – if all parties recognize their common interests.

Joonha Kim, Graduate fellow, Baker Institute, Rice University and Mark Finley, Fellow in Energy and Global Oil, Baker Institute for Public Policy, Rice University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

We need new corporate energy procurement standards to decarbonize the grid

Read the full story at GreenBiz.

The current standards have served their purpose, but we must evolve to Accounting 2.0 to account for siting and timing of clean energy.

SEC chair spars with senators over climate rules

Read the full story at The Hill.

Securities and Exchange Commission (SEC) Chairman Gary Gensler faced a grilling on Capitol Hill on Thursday, with the agency head defending the SEC’s approach to issues including climate disclosure and cryptocurrency regulation.

The SEC’s proposed climate disclosure rules — which it released in March — would require publicly traded companies to calculate and publish the risks that climate change poses to their operations and what they are doing to address it.

Republicans have criticized the rules as onerous, arguing they are an example of the SEC conducting policy beyond its mandate. Gensler joined two other Democratic commissioners in voting for the proposed rules in March, while the SEC’s lone Republican commissioner, Hester Peirce, voted no.

Patagonia’s billionaire owner gives away company to fight climate crisis

Read the full story in The Guardian.

Setting a new example in environmental corporate leadership, the billionaire owner of Patagonia is giving the entire company away to fight the Earth’s climate devastation, he announced on Wednesday.

Patagonia founder Yvon Chouinard, who turned his passion for rock climbing into one of the world’s most successful sportswear brands, is giving the entire company to a uniquely structured trust and non-profit, designed to pump all of the company’s profits into saving the planet.

Ceres launches initiative to showcase water risks

Read the full story at Environment + Energy Leader.

Ceres has launched the Valuing Water Finance Initiative, a way for 72 corporate water users and polluters to consider water as a financial risk and to better protect water systems. 

How ESG investing got tangled up in America’s culture wars

Read the full story from NPR.

Anti-ESG Republicans say big financial firms are abusing their power to advance a liberal agenda on issues like diversity, social justice and, especially, climate change.

Many experts disagree, saying Republicans are distorting the goals and strategies of ESG investing.

It’s hard for most people to get a clear read of what ESG is amid the overheated rhetoric. Is the idea to bring about social changes that couldn’t be achieved at the ballot box? And what does it mean for things like your 401K when investors follow ESG principles?

This FAQ is for anyone who wants to better understand an investing trend that is becoming core to global financial markets and a new battlefront in American politics — including, possibly, in your own state.

Small companies can make a big difference in reducing emissions for last-mile logistics

Read the full story in the American Journal of Transportation.

In North America, the transportation sector has been identified as the single largest contributor of greenhouse gas emissions, at 28%. The logistics sector impacts nearly every other business and industry, by means of supplying essential goods, transporting raw materials, storing goods, and providing last-mile delivery.

Logistics software provider CartonCloud’s CEO Vincent Fletcher said for companies wishing to reduce emissions and meet their own carbon targets, they must be able to show full visibility across their entire supply chain — including each touchpoint from various logistics providers— which means entering the world of digitalization for many smaller providers.

Most U.S. consumers don’t know what ‘carbon neutral’ means

Sweaters with carbon neutral CO2 neutral verified on the label.

Read the full story at Morning Consult.

When asked to select the correct definition of the term “carbon-neutral” from three options, roughly 3 in 5 U.S. adults either chose the incorrect definition or said they didn’t know what it meant, according to new Morning Consult data. 

PepsiCo Labs drives digital start-ups to unlock environmentally sustainability solutions

Read the full story at Food Ingredients 1st.

PepsiCo is on track to elevate its supply chain in Europe and collaborate with start-ups to pilot new technologies which will boost environmentally sustainable solutions.

Six start-ups have been selected through a program focused on engaging the start-up community to bring emerging technologies to the fore. Over the next 12 months, PepsiCo plans to foster further collaborations as part of the project.

The program is being led by PepsiCo Labs. The team identifies and collaborates with breakthrough tech companies to drive growth, unlock shared potential and develop solutions.

PepsiCo aims to scale the successful technologies across the supply chain during 2023 and beyond.