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HSBC oil block opens climate divide where Wall Street banks fear to tread

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Source: KenCanning / Getty Images

It was only seven months ago that global banking giant HSBC Plc $HSBC was a poster child for climate irresponsibility after its head of responsible investment mouthed off about why banks and investors shouldn’t worry about climate risk.

And only two months ago that a British advertising standards board banned the company’s ads for greenwashing. This week, rather than lick its wounds, the bank stuck its neck clearly out across the financial and cultural divide on ESG investing and said it would no longer finance new oil and gas projects.

Astute readers of Callaway Climate Insights will recognize HSBC from a list we published last week of the top five largest banks who have reduced their greenhouse gas emissions the most since 2017, so it appears HSBC’s problems may be more public relations than environmental, social and governance related.

In pledging to abandon new fossil fuel financing, HSBC becomes the largest of a growing group of fund managers and pension funds who are unwilling to keep pumping money into oil and gas and transitioning to renewable investments. We expect that dividing line among banks to grow stronger in 2023, especially as European banks can avoid the backlash in the U.S. currently reserved for only Wall Street institutions focused on ESG. Banks such as Paribas and Barclays are also expanding their green credentials.

We wonder how all this must look to Larry Fink at BlackRock $BLK , who was first out of the gate with climate investing enthusiasm three years ago and who now has to watch his competitors steal a march on him while he’s under siege from politicians in Florida, Texas and Washington D.C. for similar intentions.

No one ever said the renewable transition wouldn’t be messy.

More insights below . . . .

Zeus: These will be the six biggest climate stories for investors next year

. . . . From anti-ESG backlash in Washington and beyond to the SEC’s controversial new climate reporting rules, to a Green Marshall Plan for Ukraine, 2023 is shaping up to be a pivotal year in climate finance, writes David Callaway. How an expected global recession hits renewable investment and job growth will in many ways determine if the world can make its important 2030 climate targets, he writes in his outlook for the New Year. The good news is that renewable investment remained strong this year despite a shaky market, and next year’s biggest investments just might come from one area you don’t expect. . . .

This week’s subscriber only insights

. . . . What do you do when you are the continent that has done the most to reduce pollution while the world’s worst polluter continues to open coal mines and coal-fired power plants? In Europe’s case you hit back at China — whose economy is already shaky and therefore less immune to pressure — by imposing selective import taxes on highly polluting products. Will the U.S. follow? Read more here. . . .

. . . . Confused about all those tax credits in the climate-focused Inflation Reduction Act? You can get some clarity now that the Biden administration is going to release detailed guidance on how Americans can take advantage of the incentives, a boon to carmakers and installers of energy efficient heating and cooling. Read more here. . . .

Editor’s picks: Let those buffalo roam

Green buffalo?

About 200 years ago, an estimated 30 million plains bison roamed North America from Central Canada to Mexico. It was an ecological keystone species. Due to hunting, commercial slaughter, and systematic extermination in the 1800s, there were only about two dozen animals left by 1902. But now, the population in the U.S. is estimated to be about 365,000 and there’s hope of even greater recovery. Could buffalo become a climate-friendly commodity? It’s at the heart of one of more than a hundred projects to promote so-called “climate-smart commodities.” The White House this week announced the U.S. Department of Agriculture is investing an additional $325 million for 71 projects under the second funding pool of the Partnerships for Climate-Smart Commodities effort, bringing the total investment from both funding pools to over $3.1 billion for 141 tentatively selected projects. The project is designed to expand markets for American producers who produce climate-smart commodities, leverage greenhouse gas benefits of climate-smart production, and provide meaningful benefits to producers, including small and underserved producers. The “climate-smart” projects being developed include working with 76 tribes to incentivize their use of climate-smart practices related to buffalo herds. The Tribal Buffalo Market Initiative, or TBMI, will help tribes in marketing their buffalo as a climate-smart commodity, develop sustainable programs for historically underserved tribal buffalo producers and create a tribally-led national strategy for education and outreach of buffalo as a climate-smart agricultural product. Proposals for the 141 selected projects include plans to match on average 50% of the federal investment with non-federal funds, the USDA says.

Can the EU avoid a natural gas shortage in 2023?

European and global natural gas markets are not yet out of the danger created by Russia’s cuts to pipeline deliveries of gas, the IEA says in a new report. “If gas exports from Russia drop to zero and China’s LNG imports rebound to 2021 levels, there is a risk of a shortfall in gas supplies in 2023,” the report says, adding that despite efforts to improve efficiency, “the EU’s potential gas supply-demand gap could reach 27 billion cubic meters in 2023.” The new report sets out key actions to close potential the supply-demand gap if Russian pipeline deliveries fall to zero, including more rapid deployments of energy efficiency and renewables. “We have managed to withstand Russia’s energy blackmail,” said European Commission President Ursula von der Leyen. “With our REPowerEU plan to reduce demand for Russian gas by two-thirds before the end of the year, with a mobilization of up to €300 billion of investments. The result of all this is that we are safe for this winter,” she said. “So we are now turning our focus to preparing for 2023, and the next winter. For this, Europe needs to step up its efforts in several fields, from international outreach to joint purchasing of gas and scaling up and speeding up renewables, and reducing demand.”

The carrot and the stock

Financial markets can support the transition to a low-carbon economy by redirecting funds from highly emissive to clean investments, write the authors of the IMF working paper titled The Carrot and the Stock: In Search of Stock-Market Incentives for Decarbonization. From the abstract: The authors study whether European stock markets take carbon prices into account in company valuations and to what degree they discriminate between firms with different carbon intensities. Using a novel dataset containing stock prices and carbon intensities of 338 European publicly traded companies between 2013 and 2021, they find a strongly statistically significant relationship between weekly carbon price changes and stock returns. Crucially, this relationship depends on firms’ carbon intensity: The higher the carbon costs a firm faces, the poorer its stock performance during the periods of carbon price increases. Emissions that firms cover with free allowances however do not impact this relationship, illustrating how, in the absence of carbon pricing, data disclosure alone might not be sufficient for financial markets to support climate change mitigation. The relationship they identify can provide an incentive for firms to decarbonize. They argue in favor of more ambitious carbon pricing policies, as this would strengthen the stock-market incentive channel while causing only limited financial stability risk for stocks. Authors: Laurent Millischer, Joint Vienna Institute; Tatiana Evdokimova, Joint Vienna Institute; Oscar Fernandez, Vienna University of Economics and Business.

Words to live by . . . .

“If there’s no food, there’s no clean air to breathe in, there’s no water, there are no medicines which are dependent on biodiversity resources, where are we? What are we? It means we will perish just as the animals and plants.” — Elizabeth Maruma Mrema, executive secretary of the UN Convention on Biological Diversity.

By David Callaway

The Largest Deserts on Earth

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Source: Tiago_Fernandez / Getty Images

Earth contains a sizable amount of desert. While only 29% of our planet’s surface is composed of land, a third of that land exists in a state of moisture deficit – the condition that defines a desert. Any place that generally receives less than 10 inches of rain per year or that receives less precipitation than it gives up through evaporation is considered a desert. (These are the driest places on Earth.)

To compile a list of the largest deserts in the world, 24/7 Tempo reviewed information on Geology.com, a website devoted to geoscience. Deserts in all four different categories – subtropical, cold winter, cool coastal, and polar – were included.

Subtropical deserts, found on either side of the Tropic of Cancer and Tropic of Capricorn, are the hottest kind, the ones we picture when we think of deserts; cold winter deserts (also called semi-arid deserts) have long, dry summers and cold, dry winters; cool coastal deserts, those on the west coasts of continents between 20º and 30º latitude, are defined by winters that are cool but not frigid and warm summers. polar deserts are very cold and dry, with a high mean temperature of less than 10º C (50º F) and a low mean temperature of around -30º C (-22º F). 

Click here to see the world’s largest deserts

One characteristic of all deserts is a relative lack of vegetation. While some, such as the Sonoran, can support a wide variety of cacti and other shrubs, these plants provide only a modicum of ground cover. Drier deserts, including Chile’s coastal Atacama Desert – the driest place on Earth – contain large swaths of completely barren sand and rock. (Despite being barren, deserts still contain some of the 50 natural wonders everyone should see at least once.)

Although the iconic desert is hot and sandy like the African Sahara, only about 20% of deserts are actually covered in sand. Many consist of rock or mountains, and there are, of course, ice deserts as well. In fact, the two biggest deserts on earth are largely covered in ice and snow – the largest of them being the continent of Antarctica, which covers 5.5 million square miles and gets only about two inches of rain a year.

Zeus: These will be the six biggest climate stories for investors next year

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Source: Maxiphoto / iStock via Getty Images

(David Callaway is founder and Editor-in-Chief of Callaway Climate Insights. He is the former president of the World Editors Forum, Editor-in-Chief of USA Today and MarketWatch, and CEO of TheStreet Inc. His climate columns have appeared in USA Today, The Independent, Bloomberg Law, the San Francisco Examiner, and New Thinking magazine, among others).

SAN FRANCISCO (Callaway Climate Insights) — Scott Tew has been going to the United Nations global climate summits for more than a decade, but he noticed something different in Glasgow last year and it became more apparent in Egypt last month at the COP27 summit. The crowd had been overtaken by business people.

Not just CEOs of renewable energy firms, but investors, venture capitalists, investment bankers. And oil executives. Lots of oil executives. More than 600 in fact. To Tew, head of sustainability at Trane Technologies $TT , a major manufacturer of heating and cooling systems, the shift took the meeting from one of science and international diplomacy to a major business opportunity.

“We’ve not really seen this before,” Tew said. “Most of them were there trying to show solutions in the market that are working.”

The nascent world of climate finance is moving from one of pledges, promises and greenwashing to one of actual investments, products, and dealmaking, with 2023 a pivotal year. After a honeymoon period from 2018 through 2021, the bottom fell out of the stock market in 2022 and took environmental, social and governance (ESG) stocks with it on concerns about war, inflation and broken supply chains. …

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By David Callaway

The 21 Largest Glaciers and Icefields in the US

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Source: Don Mennig / Getty Images

Glaciers cover about 35,000 square miles in the U.S. Of that, 34,000 square miles are in Alaska, according to the National Snow and Ice Center at the University of Colorado in Boulder. Glaciers also dot the landscapes of Washington state, Oregon, California, Montana, Wyoming, Colorado, and Nevada (Wheeler Peak Glacier in Great Basin National Park).

In areas of persistent freezing temperatures, perennial snowfalls on land, in addition to crystalline ice, rock, sediment, and often liquid water, eventually turn into a glacier. As the layers of ice pile up, a glacier rises and the density of the snow increases. But it takes a long time. The process of snow forming into a glacier can take more than a hundred years. Glaciers move downslope under the influence of their own weight and gravity. 

To find the 21 largest glaciers and icefields in the U.S., 24/7 Wall St. reviewed 2022 data from the Census Bureau’s Tigerweb database. The glaciers are ranked by coverage area, and represent every glacier and icefield with area of more than 100 square miles. Nearly all of the 21 glaciers on the list are in Alaska. (Also see, the most beautiful natural wonder in every state.)

Strikingly beautiful to look at, glaciers headline many of our national parks. They also provide a glimpse into the effects of global warming as rising temperatures melt the ice. Researchers at the University of Washington studied 19 glaciers in the Kenai Fjords National Park, about two hours south of Anchorage. By pouring over 38 years of images, they were able to see how much the glaciers’ edges had shrunk. One of those glaciers, Bear Glacier (No. 44), retreated by 3 miles between 1984 and 2021.

At around 41 square miles, Bear Glacier is miniscule compared to the Bagley Icefield in Cordova, Alaska. Bagley stretches over 863 miles. Made of connecting mountain glaciers, an icefield is notable for rock ridges or summits protruding above the icy terrain.

Glaciers continually shed ice, providing much needed water for plants and wildlife. But if all glaciers across the world disappeared, the effect would be catastrophic. The U.S. Geological  Survey estimates that if all glaciers and ice caps melted, global sea levels would rise by 230 feet. Such an enormous amount of water would flood all coastal cities. (See how abnormal the world’s temperature was every year since 1950.)

Click here to see the 21 largest glaciers and icefields in the US.

Investing in nuclear fusion is only slightly less difficult than nuclear fusion itself

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Source: sakkmesterke / Getty Images
— There are no publicly traded fusion companies — yet. But there are ways to invest in the coming technology
— As exciting as fusion energy sounds, solar and wind companies aren’t sweating the competition in the near term
— Carbon price era moves closer as EU finally approves controversial border tariffs
— Portugal, Spain and France announce massive undersea hydrogen pipeline in Mediterranean

The chorus of enthusiasm around today’s announcement of a successful test of nuclear fusion in a U.S. government lab is sure to send investors running to their online brokers to speculate on fusion plays. Turns out, investing in fusion is only slightly less difficult than creating energy from fusion itself.

There are about three dozen companies out there working on some form of nuclear fusion, which is the fusing of two atoms to create energy, which is what the sun does. Traditional nuclear energy, which is easy to invest in, is created by splitting atoms, or fission. Because new energy through fusion was, at least until today, unable to be created by technology, there is no startup mature enough to have a business plan around it. All we know is that it has unlimited potential. Wait, like crypto?

Some well-known companies in the nascent market are Helion Energy, Commonwealth Fusion Systems, and Marvel Fusion in Germany. Most have raised funds for their research from venture capital firms and even from big tech names such as Bill Gates or Jeff Bezos. So going through a private equity fund or venture fund, if you are an accredited investor, is one way to do it.

Other ways open to investors are the materials plays, such as makers of lithium or deuterium, which are used in the fusion process. Those include Albemarle Corp. $ALB and Piedmont Lithium $PLL . Or the usage plays, which banks on the theory that the big data center companies such as Google $GOOGL and Amazon $AMZN will be the primary customers for renewable fusion energy once it is commercially available, saving billions in energy costs.

Like carbon storage and removal companies, which were some of the hottest investments on Wall Street last year, nuclear fusion is still an unproven technology without a business model. And if anything ever fell into the controversial scientific sphere of geoengineering, it’s fusion. But for investors who are convinced new technologies will help us fight global warming, these are exciting times.

More insights below . . . .

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By David Callaway

13 of the Highest Volcanoes in the World

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Source: Susana Gonzalez / Hulton Archive via Getty Images

Mauna Loa, on the Big Island of Hawaii – the largest active volcano on earth – recently erupted for the first time in nearly 40 years. The volcano had been showing signs of activity since September. Luckily, the location of the lava flow currently poses no threat to nearby communities. (Not all eruptions are so innocuous. Here are the most devastating volcanic eruptions in history.)

Although Mauna Loa measures 30,085 feet from its underwater base, only 13,680 feet of this massive mountain rise above sea level. This means that despite its size, its summit is nowhere near as high as the tallest volcanoes on earth when measured from sea level. For example, Mauna Loa’s peak is nearly 9,000 feet lower than that of the Andean mountain Ojos del Salado, which is the tallest volcano on earth when measured from sea level. 

To compile a selection of 13 of the tallest volcanoes on the planet, 24/7 Tempo reviewed a list created by Statista, a consumer data site, and ESRI, a geographic information system software company, as well as information from Geology.com and the United States Geological Survey. The list is representative, not exhaustive. Heights are measurements above sea level.

Click here to see 13 of the tallest volcanoes in the world

There are 20 volcanoes on earth with summits that exceed 20,000 feet, all in the Andes. Created around 50 million years ago by a collision of two tectonic plates, this emblematic South American mountain range is known for its dramatic peaks and volcanic activity. The only mountains higher than the Andes are the Himalayas, which lack volcanic activity. (Here are the tallest mountains in the world.)

While the tallest volcanoes are all in the Andes, there are volcanoes over 10,000 feet high on every continent, whether they are active, dormant (potentially active), or extinct. While the tallest volcanoes in the United States are in the Hawaiian islands, there are also volcanoes in Alaska and the continental U.S., some still active. Here are the most dangerous volcanoes in the United States.

Don’t get fooled by greenwashing; vote with your wallet: Ken LaRoe

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Source: imagedepotpro / iStock via Getty Images

SPONSORED COMMENTARY

By Ken LaRoe

(Ken LaRoe is founder, chairman, and CEO of Climate First Bank. He is a serial values-based bank entrepreneur and a leader in ethical banking. Ken sold his first bank, Florida Choice Bank in 2006 after growing it to seven locations and over $400 million in assets. In 2009, Ken started First Green Bank, the first bank in the United States with a stated environmental mission. First Green Bank grew to seven locations with over $800 million in assets before its sale in 2018. In 2021, Ken started Climate First Bank, which has a stated vision to meaningfully contribute to the drawdown of atmospheric CO₂.)

ST. PETERSBURG, Fla. (Callaway Climate Insights) — The 27th Conference of the Parties (COP 27) took place last month in Egypt amid record climate challenges in 2022, including flooding, drought, hurricanes, and earthquakes. These disasters continue to keep the climate crisis at the forefront of the media and emphasize the urgency of climate action.

This sentiment was felt throughout the talks and resulted in historic progress on issues, including the creation of a Loss and Damage Fund. After a decade of debate and resistance, the world’s wealthy industrialized nations have finally agreed to provide funding to vulnerable nations hit by disasters which have been intensified by climate change.

In a historic step forward, a resolution passed entrenching the concept of “loss and damage” — the idea that vulnerable nations are entitled to compensation for damages due to climate change related disasters. This historic shift in perspective will hopefully lead to greater progress in ensuring that even the most vulnerable people on this planet receive access to food, water, heat, and shelter as we work to reverse the disastrous effects of climate change.

However, while some issues saw historic progress, others took center stage for different reasons. Greenwashing was a spotlight issue at COP 27, with the UN Expert Group and COP 27 protests calling for change.

UN Report on greenwashing

A report released at COP 27 focused on organizations’ net zero commitments. This report not only outlined the rampant greenwashing seen by corporations across the globe but aimed to draw a “red line” around companies’ false environmental commitments. The report lays out a clear list of recommendations that should be followed to ensure that only responsible and credible claims are made.

Fossil-fuel lobbyists

Major fossil fuel organizations using COP 27 as a vehicle for greenwashing were rampant at this year’s summit. According to Corporate Accountability, 636 fossil-fuel lobbyists registered for COP27. By Carbon Brief’s math, if the fossil fuel faction formed a country delegation, it would have made them the second-largest delegation at this year’s talks.

COP27 sponsors

Leading up to COP 27, activists worldwide protested the talks over the issues of greenwashing. Premium sponsorships like that of Coca-Cola, the world’s largest plastic polluter, raised alarm bells. However, the problem was more pronounced than that; according to Corporate Accountability, 18 out of 20 corporate sponsors of the talks directly support or partner with the fossil fuel industry.

Voting with your wallet

The prevalence of greenwashing, as a main topic and controversy of COP 27, is a reminder to stay vigilant of where you shop and spend your money. Banking and financial institutions, for instance, are often thought about as a vehicle for driving climate action.

According to Banktrack.org, since the Paris Climate Agreement in 2015, the world’s 60 largest banks have dumped $4.6 trillion into the fossil fuel industry. Thus, although more and more banks message themselves as environmentally friendly and increasingly talk about sustainability, it is essential to check what the bank is doing through its actions. To help understand your bank’s impact, below are a few recommendations on how to tell if your bank is greenwashing:

  • Find your bank’s sustainability report. Reading your bank’s sustainability report can tell you a lot. Learning about the organization’s products and services can also teach you the strategic importance of sustainability to the organization.  Generally speaking, the more sustainability is integrated into the business strategy, the more important sustainability is to the bank.
  • Check your bank’s partnerships, pledges, and certifications. Often, genuinely committed banks have partnered with credible organizations and signed onto science-based pledges, including Fossil Free Certified, Race to Zero, B Corp, and Partnership for Carbon Accounting Financials (PCAF).
  • Check your bank’s investment and lending policies. Lending is where most banks make their money. The surest way to learn about your bank’s commitment to sustainability is to investigate its lending policies. Banks genuinely committed to sustainability often limit or do not lend to extractive and environmentally harmful industries.

Climate First Bank: Bank like tomorrow depends on it. . .

. . . Because it truly does. Climate First Bank is America’s only FDIC insured bank focused on environmental sustainability. As a values-based bank offering a complete, full-service portfolio of simple and easy-to-use traditional banking products, we focus on offering products that enable us to use finance as a force for good.

To ensure that we stay true to this philosophy, we have signed on to science-based pledges and partnerships including Fossil Free Certified, the Net-Zero Banking Alliance, Partnership for Carbon Accounting Financials (PCAF), 1% for the Planet, and B Corp. We have also published our first ESG Report and implemented a contra-mission screening list to ensure we are not financing environmentally harmful projects. To learn more, visit our website or call our Florida-based team at 727-335-0500.

By David Callaway

How investors profit from companies reporting Scope 3 emissions

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Source: baona / Getty Images

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — A new study shows how investors can prod companies to get their Scope 3 greenhouse gas emissions under control.

Reducing those emissions is a crucial part of fighting climate change. Scope 3 emissions, which are what is produced by the supply chains a company uses, represent the lion’s share of all corporate greenhouse gas emissions—75%, according to a World Resources Institute estimate. They are to be distinguished from Scope 1 emissions (those a company produces directly from its operations) and Scope 2 emissions (those produced by the electricity a company has purchased).

Despite Scope 3’s crucial importance, most companies only report emissions in Scopes 1 and 2. And those that nevertheless do report their Scope 3 emissions do not always report the data in a standardized and consistent way. As a result, investors are largely in the dark as to which companies are the biggest contributors to global warming.

In fact, as I pointed out in this space earlier this year, investors actually are being misled: That’s because companies with the highest ESG ratings based on their Scope 1 and 2 emissions tend also to be the biggest offenders when it comes to Scope 3 emissions. So, without taking Scope 3 emissions into account, climate-friendly investors may actually be investing in climate-unfriendly ways…

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By David Callaway

Deadliest Natural Disasters of the Past 50 Years

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Source: Uriel Sinai / Getty Images News via Getty Images

In October, tens of millions were left homeless and more than 1,700 people were killed in Pakistan during intense rainfall and runoff from melting glaciers that overflowed the banks of the 1,900-mile-long Indus River, inundating a third of the world’s fifth-most-populous country.

UNICEF warned that 16 million children in Pakistan are now facing acute malnutrition and disease as the country cleans up from what Prime Minister Shehbaz Sharif described as the country’s worst flooding since its foundation in 1947. The World Bank estimates the country faces $30 billion in damages and economic losses from the deluge.

The 2022 Pakistan floods may be considered one of the worst natural disasters ever, but they pale in comparison to some other catastrophes of the past half-century, including the 2005 earthquake that rattled the Kashmir region of Pakistan and India, killing about 88,000 people and toppling tens of thousands of buildings, leaving millions homeless.

But that disaster isn’t one of the deadliest to strike over the past half-century, either. To compile a list of the 10 deadliest natural disasters since 1970, 24/7 Tempo reviewed a list compiled by the Insurance Information Institute, an insurance industry association. The list excludes natural disasters caused by a drought or heatwave events. 

Click here to see the deadliest natural disasters of the past half-century

It turns out that nine of the world’s 10 deadliest natural catastrophes have struck in Asia. In the 1970s, China was hit by a devastating super typhoon and, a year later, an earthquake that together killed more than 470,000 people. In 2008, China was hit again, when the Sichuan quake claimed nearly 90,000 lives. (Read about the most powerful earthquakes ever recorded.)

The deadliest natural disaster of all pummeled Bangladesh in 1970, when Cyclone Bhola slammed into the country’s low-lying coastal areas, lobbing 20-foot-tall storm surges into impoverished communities whose inhabitants had no escape. The tempest killed 300,000 people. (These are the countries where the most people have died in natural disasters.)

Only a third of large banks have cut emissions since 2017. These five stood out.

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Source: Victorburnside / iStock via Getty Images

Despite a surge in interest in the financial world in climate change in the past five years, only about a third of the world’s largest financial institutions have cut their greenhouse gas emissions, according to data provided to Callaway Climate Insights from Physis Investments in Boston.

Among the 110 largest global financial institutions ranked by market value, just 35 have recorded emissions cuts since 2017, with the biggest success stories being HSBC Plc $HSBC , Commonwealth Bank of Australia, National Australia Bank, Japan’s Mizuho Financial, and … wait for it … Goldman Sachs Group $GS , according to the data.

Among some of the biggest polluters during that time have been the Canadian banks, and some of the Chinese financial institutions, in particular China Life Insurance, according to the data, which is available on the Physis platform.

Physis, founded five years ago by Stefania di Bartolomeo, is an online data company that allows investors to track just how sustainable their assets are performing across several categories, such as emissions, renewable energy, water security, or diversity data such as women in management numbers.

As billions of dollars in public and private investment in renewable energy and de-carbonization plays materialize in coming years, this type of data will become more high profile as investors want to see who is putting their climate money where their mouths are. This simple slice above illustrates that in the banking sector, there is still a long way to go.

More insights below . . . .

Can the EPA really build a $27 billion green bank next year? An interview with Reed Hundt

. . . . One of the most overlooked big-ticket items in President Joe Biden’s recent climate law provides for the creation of a $27 billion government climate fund to invest in renewable energy projects, which many hope will lead to the first U.S. green national bank next year. But how, or whether, a national bank is created depends on the Environmental Protection Agency, and there are still many hurdles. In an exclusive interview with Callaway Climate Insights’ Bill Sternberg, Reed Hundt, the CEO for Coalition for Green Capital, walks investors through what needs to happen. . . .

Read the full interview

Subscriber-only insights samples: Two bumps in the road that could hamper the U.S.’s EV charging network

. . . . The numbers from Ford $F were amazing. Last month, the company reported sales of its U.S. EVs were up 102.6% over November 2021. And overall American electric vehicle sales reached 6% by the end of Q3, with a 7% market share predicted by the end of the year. Great. But it’s not all great news in the EV arena. In particular, the U.S., because of its large size compared with most other countries and greater distances often traveled, is a place of bigger “range anxiety” than, say, Europe. And that means that the charging network needs to be extensive, comprehensive and robust, which at present it is not.

You can add a couple of pieces of bad news to that. First up, reports E&E News, is that construction of a national web of electric vehicle charging stations could be delayed if the Biden administration enforces a January deadline to manufacture the chargers domestically, according to industry officials. In particular, state transportation agencies, along with manufacturers and operators of electric vehicle chargers, say “Buy America” rules in the $7.5 billion charger network unleashed by the Inflation Reduction Act could derail their planning processes if they are implemented too quickly.

Brendan Jones, president of Blink Charging $BLNK , which manufactures and operates charging stations across the country, said his company is not yet able to produce Level 3 chargers — which will be the pillars of the charger network — at scale, he told the website. And then, further in the future, is the issue of America’s transmission grid. As we have reported, much of the current system is inadequately prepared for the growing proportion of renewables, with their ebbs and flows of energy. And now you can add growing demand for EV charging. For instance, a new report from clean-transport advocacy organization CalStart, finds that in two states, Massachusetts and New York, that have committed to selling only zero-emissions cars by 2035, the current transmission systems are woefully inadequate, something also faced in EV-heavy California.

“Right now, when people are talking about capacity” for EV charging, ​“they’re asking which distribution transformer has capacity, or which feeder, or even a substation,” report co-author Dave Mullaney told Canary Media. “But when you start to throw tens of megawatts on a distribution system, you’re quickly overloading it.”

Decisions are going to have to be made. And quickly. . . . — Matthew Diebel.

Vanguard’s climate alliances withdrawal exposes greenwashing

. . . . Vanguard’s withdrawal from two prominent fund groups dedicated to fighting climate change this week wasn’t the first and won’t be the last as Wall Street pulls back on its climate commitments in the face of attacks on its business by Republicans in red states and in Congress.

Membership in the Net Zero Asset Managers initiative (NZAM) and its umbrella group, the Glasgow Financial Alliance for Net Zero (GFANZ) was always just an exercise in greenwashing for many big fund managers, who wanted to attract money to their environmental, social and governance (ESG) funds in the last few years when the funds were hot.

In the face of a Republican backlash that includes lawsuits, hearings, and the withdrawal of real money from the fund managers’ pension products, the cost of losing business — any business — was quickly weighed against the marketing value of being associated with a green alliance and fighting climate change came up short.

It’s a slap in the face to all those, such as former Bank of England Gov. Mark Carney, who worked so hard to put the alliances together, but in the end, it will better serve investors by exposing those who are really serious about cutting greenhouse gas emissions and investing in the renewable transition and those who are just along for the ride. Vanguard, we now know, has made its choice. . . . — David Callaway

Editor’s picks: California offshore wind rights auction brings in $757 million

California’s first-ever offshore wind auction raises $757 million

The White House on Wednesday said $757 million in winning bids were received for its auction of offshore wind development rights in California. It’s the third offshore wind lease sale this year and the first for the Pacific region. The Biden Administration has said that as part of its goal to help in the clean-energy transition, it will deploy 30 gigawatts of offshore wind energy by 2030, enough to power 10 million homes. Cal Matters reports the auction includes five sites about 20 miles off Morro Bay and Humboldt County, totaling 583 square miles of deep ocean waters. The leases from the federal government are the first step in a years-long regulatory process that could produce the first commercial-scale floating wind turbines off the California coast.

UK approves new coal mine in Cumbria

UK officials have OK’d the first new coal mine there in 30 years, overriding concerns about climate impacts. The proposed mine in Cumbria would dig up coking coal for steel production in the UK and across the world, the BBC reports. According to the report, critics say the mine would undermine climate targets and demand for coking coal is declining. Yet supporters say the mine will create jobs and reduce the need to import coal. The BBC quotes Tony Bosworth, a Friends of the Earth campaigner, as saying the mine is unnecessary, “will add to global climate emissions, and won’t replace Russian coal.”

Investors will pay more for ESG value

Environmental, social, and governance (ESG) objectives have risen to near the top of the agenda for corporate executives and boards, driven in large part by their perceptions of shareholder interest, say the authors of a new National Bureau of Economic Research (NBER) working paper titled How Do Investors Value ESG? From the abstract: “We quantify the value that shareholders place on ESG using a revealed preference approach, where shareholders pay higher fees for ESG-oriented index funds in exchange for their financial and non-financial benefits. We find that investors are willing, on average, to pay 20 basis points more per annum for an investment in a fund with an ESG mandate as compared to an otherwise identical mutual fund without an ESG mandate, suggesting that investors as a group expect commensurately higher pre-fee, gross returns, either financial or non-financial, from an ESG mandate.” Authors: Malcolm P. Baker, Harvard Business School, NBER; Mark Egan, Harvard University Business School, NBER; Suproteem Sarkar, Harvard University.

Words to live by . . . .

“What good is the warmth of summer, without the cold of winter to give it sweetness?” — John Steinbeck.

By David Callaway

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