Embodied Carbon, IPCC's Latest Report on Climate, & Heating Demand Expected to Stay Above Normal

Weekly Energy Market Update:

Prompt-month NYMEX natural gas was trading at $2.226/MMbtu in morning trading. Freeport LNG continues to ramp up its production as we continue to see more feed gas coming into their facility, but Freeport has canceled up to four shipments of LNG, because of restart difficulties following an outage that lasted eight months. The EIA reported a withdrawal of 72 Bcf out of underground storage for the week ending March 17, 2023, which is coming in higher than last week's reported withdrawal due to the increase in cooler weather driving up demand in the reporting week. Inventories are 36.1% more than in the same period last year and 22.7% more than the 5-year average. Meanwhile, temperatures will stay well below normal over the next week keeping heating demand above normal.

Natural gas pricing plays a key role in electricity power pricing due to the increasing reliance on natural gas-fired generators as nuclear, coal, and oil generation is retired and mothballed. As the marginal unit of generation, gas prices are directly correlated to power pricing (more so in some regions such as NYC vs. others such as parts of PJM). We keep an eye on natural gas market fundamentals in order to provide insights into forward power pricing for our clients. Gas production has grown and surpassed any speculation that production would not be able to keep up with demand due to LNG and Mexican exports

Sustainability

Embodied Emissions

You’ve heard about operational carbon – now get ready for embodied carbon. Embodied carbon refers to the total carbon emissions associated with the creation of a building, such as the production, transportation, and disposal of building materials. Like operational carbon, it adds to the building’s overall carbon footprint.

In a GRESB Insights blog, "Why Embodied Carbon Should Be Prioritized Alongside Operational Emissions in Sustainability Disclosure and Emission Reduction Efforts",?Caroline Pittard, Sustainability Content Specialist at?WatchWire, discusses the reason why we should all be prioritizing embodied carbon. The article also reveals the regulations that are evolving as a result of embodied carbon, and how places like California and New York are integrating it into their state policies.

Read More >>

What you need to know from IPCC's latest report on climate

After years of work, involving hundreds of researchers from around the world, the Intergovernmental Panel on Climate Change (IPCC), has published a synthesis report on the latest?Climate Change?science this week.

Intergovernmental Panel on Climate Change’s (IPCC)?Sixth Assessment Report (AR6)

World Resources Institute captures the takeaways:

1. Human-induced global warming of 1.1 degrees C has spurred changes to the Earth’s climate that are unprecedented in recent human history.
2. Climate impacts on people and ecosystems are more widespread and severe than expected, and future risks will escalate rapidly with every fraction of a degree of warming.
3. Adaptation measures can effectively build resilience, but more finance is needed to scale solutions.
4. Some climate impacts are already so severe they cannot be adapted to, leading to losses and damages.
5. Global GHG emissions peak before 2025 in 1.5 degrees C-aligned pathways.
6. The world must rapidly shift away from burning fossil fuels — the number one cause of the climate crisis.
7. We also need urgent, systemwide transformations to secure a net-zero, climate-resilient future.
8. Carbon removal is now essential to limit global temperature rise to 1.5 degrees C.
9. Climate finance for both mitigation and adaptation must increase dramatically this decade.
10. Climate change — as well as our collective efforts to adapt to and mitigate it — will exacerbate inequity should we fail to ensure a just transition.?

Updates to Sustainability Reporting?Regulations?and Moves for?Consolidation?of Standards:

SEC

• SEC claims they will finalize the climate disclosure rule by the?end of April.

ISSB?The?International Sustainability Standards Board

• Key dates for S1 General Sustainability-Related Disclosures and S2 Climate-Related Disclosures:
• Released by: end of June 2023
• Come into effect: start of Jan 2024
• Thirteen of fourteen members of ISSB’s board?agreed to reference both the Global Reporting Initiative (GRI) and the European Sustainability Reporting Standard (ESRS) frameworks in sources of guidance for IFRS S1.
• ISSB has just decided that its initial IFRS Sustainability Disclosure Standards, S1 (general sustainability) and S2 (climate-specific), will?become?effective starting January 2024, meaning that businesses can start collecting sustainability-related disclosure information for the 2024 period to publish reports in 2025.
• ISSB will be releasing the finalized versions of the first global standards for sustainability and climate-related reporting (IFRS S1 and IFRS S2) in?June?of this year or end of Q2 2023?—?according to the IFRS head, Erikki Liikanen?

From ISSB head Emmanuel Faber:

• "Now, we will work with regulators around the world as they play their part, creating the conditions within their markets for adoption so that investors can use comparable information about sustainability-related risks and opportunities in their investment decisions without delay. We will also actively engage with the many preparers who are considering voluntary adoption of S1 and S2, to better answer their investor needs."

CSRD

• ?EFRAG Update?for March 2023
• Europe’s three primary financial regulatory agencies, the European Supervisory Authorities (ESAs) each announced the?release of their opinions?on the first set of draft European Sustainability Reporting Standards.
• The?European Commission?re-confirmed that it will publish its regulatory proposal on ESG ratings on?June 13, 2023.
• European Financial Reporting Advisory Group (EFRAG) published its?update for January 2023, reporting on the work that has begun to develop the ESRS for listed small and medium enterprises (SME) and small and noncomplex financial institutions and captive insurances and re-insurances. CSRD and ESRS are aiming to bring smaller companies – both listed and private – into the fold, which is important to keep an eye on.

General?Corporate Reporting

SBTi?(Science Based Targets Initiative)

• The SBTI has launched?new guidance?for investors to support in identifying the overlaps of the SBTi Financial Institutions (FIs) framework, and Task Force on Climate-related Financial Disclosures (TCFD) recommendations. This will "support enhanced coordination between financial institutions science-based target setting and climate-related financial disclosures".

SASB

• Future of the SASB Standards: What you need to know for 2023 disclosure. The ISSB recently made several decisions that further clarify the role and evolution of the SASB Standards. The ISSB confirmed that industry-specific disclosures are required and, in the absence of specific IFRS Sustainability Disclosure Standards, companies must consider the SASB Standards to identify sustainability-related risks, opportunities, and appropriate metrics.

Notable News

Articles

What do green?subsidies mean for the future of climate and trade?, World Economic Forum. " Faced with the urgent challenge of climate change, the United States and the European Union (EU) are implementing their own subsidy schemes to boost private sector renewable investment. The US Inflation Reduction Act (IRA) has?committed?$400bn in investment and subsidies to cut the country’s greenhouse gas emissions and accelerate the adoption of renewable technologies."

Corporate greenwashing: The lawyers are coming, ECGI. "Greenwashing claims are likely to keep lawyers - and all of us - occupied for a long time. The areas that legal action might be directed at include carbon offsets, carbon capture, Net Zero pledges, natural gas, hydrogen, biofuels, and green branding."

Use Nature as Infrastructure, Scientific American. "In the climate crisis, wetlands have more economic value than new development. Wetlands, coastal plains, sand dunes, forests, and many other permeable surfaces do cheaply (or even for free) what engineered?levees,?seawalls,?and?pumps?do at a cost of billions of dollars. They protect the land around them from storm surge,?flooding?rains, erosion, and?pollution."

Biden Vetoes Anti-ESG Resolution, ESG Today. "President Biden issued the first veto of his presidency on Monday, defending a recently enacted Department of Labor rule allowing fund managers for ERISA plans to include ESG considerations in the investment process from Republican attempts to overturn the rule in Congress."

Biden announces $250 million funding to decarbonize federal buildings, ESG Today

IASB initiates project to consider climate-related risks in financial statements, IFRS.

A Clear Message From Science, NY Times. "An international panel offers a warning about the dangers of fossil fuels, and also a blueprint to change course."

Insightful Reports

The 2023 Climate Risk Landscape Report, by the UN Environment Program. It highlights the latest developments in the rapidly evolving climate tool marketplace, featuring over 3 dozen tools for physical and transition risk as well as climate alignment

CDPs latest?Non Disclosure Campaign: 2022 Results Report

Norton Rose Fulbright’s?2023 Annual Litigation Trends Survey?indicates that environmental, social, and governance (ESG) concerns are growing.?

WatchWire Resources:

Join WatchWire on Tuesday, March 28th, for our webinar, "GRESB: A Deep Dive Prior to Portal Opening". Our expert sustainability team will discuss all things?GRESB?prior to the portal for reporting opening - from how your scores are calculated to tactical ways to improve them. What we will learn:

- The Who, What, Why of GRESB

- How GRESB scores are calculated

- Advantages to participating in GRESB

- Sustainability reporting, specifically GRESB, best practices

- How WatchWire can simplify your reporting process and improve your scores

https://lnkd.in/gG5JArVj

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