The Impact of Carbon Removal Technologies
According to climate scientists worldwide, global warming and the inevitable climate change can lead to severe catastrophic disasters. The only way to avoid this is to reduce greenhouse gas and carbon dioxide (CO2) emissions.
According to the Intergovernmental Panel on Climate Change (IPCC), the global temperature rise must be limited to 1.5oC. To achieve this, current CO2 emissions must drop by 50% by 2030 and reach net-zero by 2050.
The following infographic by AFRY showcases how carbon removal technologies help facilitate the reduction of environmental CO2 emissions and the role companies play in helping achieve these goals.
How Carbon Offset Technologies Can Help
The most common way to reduce CO2 emissions is through carbon offset technologies, namely avoided emissions and carbon removal. Though they serve a similar purpose, these two methods are fundamentally different.
One metric ton of CO2 is reduced or avoided for every metric ton of CO2 emitted in avoided emissions. This still leads to a positive increase in emissions overall.
On the other hand, carbon removal technologies completely remove and store one metric ton of CO2 for every metric ton of CO2 emitted.
Carbon removal technologies have a distinct advantage over the avoided emissions. For this reason, they could be the future of CO2 emissions reduction. They are divided into short-term and long-term methods based on the CO2 emissions they can remove and store.
Short-term methods include soil carbon sequestration, reforestation, biochar, wooden buildings, and more. Direct Air Capture with Carbon Storage (DACCS), Bioenergy with Carbon Capture and Storage (BECCS) and enhanced weathering are considered long-term methods.
The Impact of DACCS vs BECCS
Carbon removal technologies are the best way forward to reduce CO2 emissions and limit global warming. DACCS and BECCS perform the best among these technologies and have the highest attractiveness.
|Description||A DACCS system removes CO2 from ambient air and stores it in geological storage mediums.||A BECCS system captures CO2 from biomass and stores it in geological reservoirs.|
|Advantage||It efficiently captures pre-released atmospheric greenhouse gases (GHG).||It efficiently produces energy from biomass before CO2 emission capture.|
|CO2 Removal (Gt/yr)||~1.4||~1.1|
|Removal Cost ($/t)||250-400$||100-150$|
|Storage Duration (years)||~10,000||~10,000|
Despite being promising solutions, limitations exist for both. BECCS is associated with increased fertilizer use that further stresses nitrogen-saturated ecosystems, while DACCS is associated with high energy requirements.
Accountability Messaging for Corporations
Companies worldwide are aggressively trying to tackle their climate change targets and reach net-zero emissions. Carbon removal technologies are already rapidly being implemented in many parts of the world.
At the same time, companies shouldn’t be able to get away with making false claims either. There should be strict guidelines in place for companies, and they should be accountable for the claims they make.
The guidelines should include measures such as:
- Focus on Rapid, Deep Emission Cuts: Rapid, deep cuts to value-chain emissions are the most effective and scientifically-sound way of limiting global temperature rise.
- Near and Long-Term Targets: This means making rapid emissions cuts now, halving emissions by 2030 and producing close to zero emissions by 2050.
- No Net-Zero Claims Until Targets Are Met: A company that has achieved its long-term science-based target of emission reductions of at least 90-95% by 2050 will be considered to have reached net-zero.
- Go Beyond the Value Chain: There is an urgent need to scale up near-term climate finance. Companies should be making investments outside their science-based targets to help mitigate climate change elsewhere.
AFRY is a thought leadership firm that provides companies with advisory services and sustainable solutions, in their efforts to fight climate change and lead them towards a greater future.
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ESG Data: The Four Motivations Driving Usage
ESG controversies can damage a company’s value, but ESG data may be able to help manage this risk. What are other reasons for using ESG data?
ESG Data: The Four Motivations Driving Usage
Data is key to the environmental, social, and governance (ESG) revolution. Access to granular ESG data can help boost transparency for market participants. Unfortunately, 63% of U.S. and European asset managers say a lack of quantitative data inhibits their ESG implementation.
Being clear on the potential application of this data is equally important.
- Investors and banks can use ESG data for risk assessment, to spot opportunities, and to push companies for change.
- Companies can publish their own ESG data, quantify progress on their ESG goals, and use data to inform decisions.
- Policymakers can use ESG data to inform regulatory frameworks and measure policy effectiveness.
This graphic from ICE, the second in a three part series on the ESG toolkit, explores four primary motivations of ESG data users.
1. Right Thing
The objective: Having a positive social or environmental impact.
For investors, this can involve screening out companies that conflict with their values and selecting companies that align with their ESG objectives.
As another example, it can involve comparing the social impact of municipal bonds. One way investors can measure social impact is through scores that quantify the potential socioeconomic need of an area, using metrics like poverty and education levels. Here are the social impact scores for three actual municipal bonds issued in Florida.
|State||Bond Issuer||Social Impact Score
(Higher = larger potential impact)
Issuer #1’s bond is projected to have a community impact that is nearly twice as high/positive as Issuer #3’s bond.
For companies, doing the right thing can include assessing their progress on ESG goals and benchmarking themselves to peers. For example, gender and racial representation is a growing area of focus.
The objective: Managing ESG risks, such as climate and reputational risks.
For investors, this can involve back-testing or analysis around specific risk events before they materialize. Here are the risk profiles of two actual municipal bonds in California. The shown bonds are practically identical in many ways, except their wildlife score.
|Issuer #1||Issuer #2|
|Current Coupon Rate||5.0%||5.0%|
|Maturity Date||Aug 01, 2048||August 01, 2048|
|Price to Date (Call Date)||Aug 01, 2027||Aug 01, 2027|
|Wildfire Score (Higher = more risk)||3.6||2.7|
Managing ESG risk can also involve analyzing a company’s policies and governance for weaknesses. This is important as an ESG controversy can have long-lasting effects on the valuation of a company.
In one study, companies with ESG controversies dropped more than 10% in value relative to the S&P 500. They hadn’t fully recovered a year after the incident.
The objective: Targeting outperformance through ESG analysis.
Selecting companies with strong ESG data can align with long-term growth trends and may help boost performance. For heavy emitting industries, research indicates that European companies with lower emissions trade at much higher valuations. The chart below shows companies’ price-to-book ratio relative to the Stoxx 600* sector median.
|Above Median Emission Intensity (Bad)||1.9||1.1||2.0|
|Below Median Emissions Intensity (Good)||2.7||1.9||2.1|
*The Stoxx 600 Index represents large, mid and small capitalization companies across 17 countries of the European region: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the United Kingdom.
Energy companies with low emissions trade at a valuation nearly two times higher than energy companies with high emissions.
The objective: Understanding and complying with relevant ESG regulation.
The International Sustainability Standards Board has announced a global reporting proposal aligned with the Task Force on Climate-related Financial Disclosures (TCFD). In addition, a growing number of jurisdictions will require organizational reporting that aligns with the TCFD.
- European Union
- Hong Kong
- New Zealand
Not only that, a European Union regulation known as Sustainable Finance Disclosure Regulation (SFDR) came into effect in 2021. It seeks greater transparency in disclosures from firms marketing investment products. Even firms located outside the EU could be impacted if they serve EU customers. In total, the market cap of these non-EU companies exposed to SFDR amounts to $3.2 trillion.
Matching ESG Data with Motivation
There will be growing demand for transparent data as ESG investing flourishes. To remain competitive, investors, policymakers, and companies need access to ESG data that meets their unique objectives.
In Part 3 of the ESG Toolkit series sponsored by ICE, we’ll look at key sustainability index types.
The Hierarchy of Zero Waste
In a world that generates 2 billion tonnes of waste every year, waste management has become a global concern. Here are some strategies to help guide zero waste policies.
The Hierarchy of Zero Waste
Many cities have set ambitious zero waste targets in the upcoming decades.
The idea is to have communities where waste generation is avoided, and products are shared, reused, or refurbished.
This graphic, sponsored by Northstar Clean Technologies, shows the main strategies and hierarchy to guide zero waste policies.
What is Zero Waste?
In a world that generates approximately 2 billion tons of waste every year, waste management has become a global concern. Thus, countries and cities are increasing efforts to reduce or even eliminate waste when possible.
The Zero Waste International Alliance defines zero waste as “the conservation of all resources by means of responsible production, consumption, reuse, and recovery of products, packaging, and materials without burning and with no discharges to land, water, or air that threaten the environment or human health.”
Becoming a zero waste community, however, is a complex task.
Currently, Sweden recycles 99% of locally-produced waste and is considered the best country in the world when it comes to recycling and reusing waste. However, such results only came after almost 40 years of recycling and reuse policies.
In line with this, here are seven commonly accepted steps you can use to achieve zero waste:
1. Rethink, Redesign Products
The global population consumes 110 billion tons of materials each year, but only 8.6% is reused or recycled. In a zero waste society, single-use products are avoided and products are designed with sustainable practices and materials.
Consumption must be planned carefully to reduce the unnecessary use of materials. Consumers must choose products that maximize the usable lifespan and opportunities for continuous reuse. Companies must minimize the quantity and toxicity of materials used.
The value of products is maintained by reusing, repairing, or refurbishing for alternative uses.
Products are diverted from waste streams and recirculated into use. Resilient local markets are developed, allowing the highest and best use of materials.
5. Material Recovery
Component materials like cement, metals, or asphalt are recovered from mixed waste and collected for other applications.
In the U.S. alone, around 12 million tons of asphalt shingle tear-off waste and installation scrap are generated from roof installation each year. Currently, more than 90% of this is discarded in landfills. This material can be repurposed to create new products like liquid asphalt, fiber, and aggregate.
6. Residuals Management
Waste is biologically stabilized and sent to responsibly managed landfills.
The production of materials that are not recoverable and can negatively impact the environment must be avoided.
Reducing our Climate Impact
Reducing, recycling, and recovering materials can be a key part of a climate change strategy to reduce our greenhouse gas emissions.
According to the U.S. Environmental Protection Agency, about 42% of all greenhouse gas emissions are caused by the production and use of goods, including food, products, and packaging.
Even though 100% zero waste may sound difficult to achieve in the near future, a zero waste approach is essential to reduce our impact on the environment.
Northstar Clean Technologies aims to become the leading recovery and reprocessing company for asphalt shingles in North America.
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