This week saw huge sums being earmarked for renewable energy projects by JPMorgan Chase and Norway’s sovereign wealth fund. The enormous amounts of energy used in the cryptocurrency industry also attracted a great deal of attention with an initiative being launched to solve the problem.
JPMorgan Pledges $1 Trillion to Finance Green Projects
JPMorgan Chase has pledged to put $2.5 trillion toward projects that do good for the environment and for disadvantaged communities. Of this sum, $1 trillion has been allocated for investments that will facilitate the energy transition, including projects in renewable energy.
The project will run until 2030 and is destined to tackle what the bank describes as the two most critical issues of our time: climate change and inequality.
The bank also expressed interest in the enormous opportunities the energy transition presents for investments in low-carbon technologies and businesses, saying such businesses would need capital to grow and become competitive.
In 2020, JP Morgan provided $55 billion in financing for green projects. But it also provided almost the same amount to the fossil fuel industry in that year.
The bank said while it acknowledges the need for the energy transition, there remains a need for fossil fuels until such time as suitable low-carbon alternatives can be developed to meet global energy needs.
Norway’s Sovereign Wealth Fund Invests in Renewables
Norway’s sovereign wealth investment fund has announced its first investment in renewable energy, worth more than $1.5 billion.
The Norwegian fund is acquiring 50% ownership of the world’s second-largest operational offshore wind farm, operated by the energy company Orsted off the coast of the Netherlands. The wind farm is said to provide enough renewable energy for 1 million Dutch households annually.
Under the terms of its agreement with Orsted, the latter will continue to be responsible for the wind farm’s operations and maintenance.
Norway’s sovereign wealth fund is the world’s largest and is worth more than $1.3 trillion. It was established by the Norwegian government with wealth from its vast North Sea oil and gas reserves.
Officially titled the Government Pension Fund Global, it was designed to make investments in sustainable sectors that would continue to create wealth for the country in the event revenues from the oil industry begin to fail. It has invested in 9,000 companies worldwide and owns about 1.5% of all shares in the world’s publicly listed companies.
Previously, the fund invested only in stocks, bonds, and real estate. However, it is now seeking investment opportunities in renewable energy projects in Europe and the U.S. But the fund reported that it has had difficulty finding attractive renewable projects to invest in.
Last year, the world’s sovereign wealth funds invested more than $10 billion in fossil fuels and slightly more than $1 billion in renewables.
China’s Bitcoin Industry Could Hamper Climate Goals
A recent study warns that China’s bitcoin industry could severely hamper its efforts to peak carbon dioxide emissions by 2030 and become carbon neutral by 2060.
The report in the peer-reviewed journal “Nature Communications” said by 2024 China’s bitcoin industry is expected to generate more than 130 million metric tons of carbon dioxide.
China is the epicenter globally for bitcoin, with 75% of the world’s bitcoins mined there. The cryptocurrency requires vast amounts of electricity to run the computers used for verifying bitcoin transactions that are recorded on a ledger called a blockchain.
The study estimates that mining bitcoins will consume as much energy annually as Saudi Arabia by 2024 and currently uses about 129 terawatt-hours per year of energy.
The industry’s energy consumption has moved China’s Inner Mongolia to take steps to shut down bitcoin mining in its territory, in response to criticism from the country’s central government over its energy use.
Though much of the energy used for bitcoins comes from renewable energy, a significant 40% comes from coal-fired power plants.
China does not permit trading in cryptocurrency because of concerns about money laundering but permits the mining of bitcoins.
The value of bitcoin rose from $7,000 last April to $60,000 in March of 2021.
Crypto Climate Accord to Cut Emissions
A group of private sector organizations have launched an initiative to reduce the excessive energy consumption of cryptocurrency. Labeled the Crypto Climate Accord, the group is receiving support from the United Nations Framework Convention on Climate Change Climate Champions.
It will provide a framework for decarbonization efforts in the cryptocurrency field. The group hopes to finalize three goals by the U.N. COP26 conference in 2021. These include having all the world’s blockchains use only renewable energy by 2025, developing an open source standard for measuring emissions in the industry, and achieving net-zero emissions for the entire industry, including all business operations, by 2040.
The growing popularity of cryptocurrency and the increasing application of the blockchain technology behind it in many different areas of business have made the need to reduce emissions more critical.
For this reason, the very popular cryptocurrency, Ethereum, is looking to shift its verification of bitcoins on the ledger from the proof-of-work method to the proof-of-stakes method, which requires far less computing energy. The Crypto Climate Accord is encouraging greater uptake of coins that use the proof-of-stakes mechanism for verification to facilitate lower carbon processing.
The accord encourages those that stick with proof-of-work to optimize the transparency inherent in blockchains to track the use of renewables in mining the coins.
Bill Seeks $8 Billion to Clean Up Abandoned Oil Wells
In an effort to eradicate emissions equivalent to 16 million barrels of oil a day, a U.S. House Democrat has introduced a bill to clean up abandoned oil and gas wells.
The bill would pay $8 billion for the cleaning or plugging of more than 3 million abandoned wells in the U.S., said to be leaking 281 kilotons of methane.
Oil and gas industry employees displaced by efforts to reduce dependence on fossil fuels are expected to benefit through employment in the cleanup effort. However, there has been criticism that the jobs will be only temporary.
Eligibility for receiving some of the $8 billion fund will depend on factors that include the likelihood of the cleanup projects creating jobs, the number of oil and gas job losses in a state, and efforts being made to reduce methane emissions.
The bill was introduced a week after the Biden administration’s $2 trillion infrastructure proposal that includes a call for $16 billion in investments to plug or clean up abandoned wells and mines.
Bank Hesitates Over Loan for Australian Coal Mine
The India-based Adani Enterprises has seen a $1 billion loan earmarked for its Australian coal mine held up over concerns about its environmental impact.
The State Bank of India (SBI) had entered into an in-principle agreement with Adani in 2014 for the loan and had created a consortium of banks from around the world to share the cost of the loan.
However, protests in Australia over the opening of the Carmichael coal mine, in northeastern Queensland, have proven to be a stumbling block. SBI shareholders have made known their objections to the loan, and one company divested itself of SBI’s green bonds in protest over the proposed deal.
Though the mine has been given environmental clearance by the Queensland government and the loan is subject to covenants that include environmental safeguards, the bank has still not made a final decision.
Adani issued a statement saying that construction of the mine is well underway and coal exports from it will begin this year.
African Development Bank Approves $530 Million for Hydropower
The African Development Bank has allocated $530 million to Angola that will fund a 385-kilometer long, 400-kilovolt transmission line between the south and north of that country.
The line will carry more than 2,200 megawatts of surplus renewable energy from hydroelectric power plants in Angola’s north to power grids in the country’s south where electricity generation relies mainly on diesel-powered generators.
The hydropower transmission project is a major component of the first phase of an Energy Sector Efficiency and Expansion Program for that country. It is expected to reduce southern Angola’s use of diesel by as much as 46 billion liters a year, eliminating 80 megatons of greenhouse gas emissions and saving more than $130 million a year.
The loan will also fund the connection of 400,000 Angolan households to the power grid, while also paying for 860,000 meters to be installed.
The vast majority of households with electricity in Angola are not metered, resulting in financial loss to the utility.
Angola also took steps to reform its power sector in 2015 with the aid of a $1 billion loan. Those reforms included separating the generation, transmission, and distribution suppliers into discrete companies.
France Prepares to Ban Short-Haul Flights
France has begun passage of a bill to end domestic flights that are under two and a half hours long when the same trip can be done by train.
The bill, which now has to pass the Senate, has been introduced as part of a broader climate bill to cut France’s emissions by 40% relative to the 1990s by the year 2030.
Proponents of the bill had initially called for an end to domestic flights that were under four hours long, but this received pushback from the country’s airline as well as from some regions that would have been affected.
Opinion writer: Jewel Fraser
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