Natural Gas Prices Fall Despite Incoming Cold Fronts and Weekly Sustainability Reporting Updates

Weekly Energy Market Update:

The natural gas prompt month saw some downward movement this week, falling 13.6 cents on Wednesday to settle at $2.551/MMBtu. Currently, the Apr ‘23 natural gas contract is trading at $2.60. Freeport LNG announced this week that they got final approvals from the FERC (Federal Energy Regulatory Commission) needed to operate their Train 1 unit. Full production is expected across all three of Freeport's trains over the coming weeks. Colder weather forecasts continue to increase for the upcoming weeks across the majority of the country, confirming the recent jump in NYMEX pricing across the near-term calendar strips. The EIA reported a withdrawal of 84 Bcf out of underground storage for the week ending March 3, 2023. Inventories are 32.1% more than in the same period last year and 21.5% more than the 5-year average.

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

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

• NEW?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

• 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".
• A new change to?SBTis Commitment Compliance Policy ?states that if targets are not submitted within the 24-month commitment time frame, the commitment will be marked as ‘Removed’ on the SBTi Target Dashboard. This change will mean it is much easier to see which companies and financial institutions are sticking to their commitments and going on to set

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

Biden Announces $6 Billion Funding to Scale Industrial Decarbonization Projects , ESG Today. The Biden Administration unveiled a series of initiatives aimed at reducing greenhouse gas emissions from the industrial sector, including the announcement of a $6 billion Industrial Demonstrations Program to accelerate decarbonization projects.

A record share of US electricity comes from zero-carbon sources , World Economic Forum. Clean energy sources comprised almost 41% of the US electricity mix in 2022. Wind, hydroelectric and solar power were the biggest areas of growth, but more work is needed.

Why sustainable investing in emerging markets makes sense , GreenBiz. Asha Mehta, founder of investment firm Global Delta Capital, discusses the intersection of sustainable investing, ESG and emerging markets.

U.S. Corporate Boards Boosted Sustainability Experience , WSJ. After finding that many Fortune 500 companies are increasingly concerned about their lack of sustainability expertise, companies have appointed more board members with previous sustainability experience last year and have increasingly formed board-level sustainability committees.

Energy company announces world first as its tidal power project hits major output milestone , CNBC. An Edinburgh-headquartered firm said Monday that its project had achieved a world first by producing 50-gigawatt hours of electricity.

Why do methane emissions remain 'stubbornly high'? World Economic Forum. Methane emissions from the fossil fuel industry should be one of the easiest climate problems to fix. This article explores the findings of the IEA's new report.

Delta Airlines Outlines Decarbonization Plans, with Focus on Sustainable Aviation Fuel, ESG Today.

In Los Angeles, Vogue100 and Livia Firth Celebrated the Power of Women and Sustainability , Vogue. On International Women’s Day, Vogue100 and longtime activist Livia Firth hosted a speaker series to toast a group of women moving towards a more sustainable future.

House Republicans vote to overturn Biden rule on water protections , NBC News. The House voted to overturn the Biden administration’s?protections for thousands of small streams, wetlands and other waterways,?advancing long-held Republican arguments that the regulations are an environmental overreach and burden to business.

Insightful Reports

The State of Green Business 2023 , by GreenBiz

The Economic Impact of ESG Ratings , Massachusetts Institute of Technology (MIT)

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.?

Energy and Technology Perspective 2023 report ?by the International Energy Agency (IEA) explores the tremendous growth needed in clean technologies to align with our climate goals.?

Electricity Market Report 2023, ?International Energy Agency (IEA): This year's report offers a deep analysis of recent policies, trends, and market developments, including forecasts through 2025 for electricity demand, supply, and CO2 emissions?

S&P Look Forward Report

WatchWire Resources:

The retail industry plays a significant role in the global economy, providing consumers with access to a wide range of products and services. However, the industry's growth and success have come at a cost to the environment, contributing significantly to greenhouse gas emissions and environmental damage. In fact, the retail sector accounts for roughly 25% of global emissions. This guide explores what sustainability in the retail industry looks like, and how WatchWire can help guide your organization's implementation of these practices.

Learn more here>>

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