Peak Fossil Fuel?

2022 may have been the year that greenhouse gas emissions from electricity production peaked. This seismic news was the main takeaway from energy think tank Ember's Global Electricity Review 2023. Ember analyst and lead author of the report Malgorzata Wiatros-Motyka , said, “It is the beginning of the end of the fossil fuel age.”

The report analyzed electricity data from countries representing 93% of global power demand and found that electricity produced in 2022 was the cleanest ever. Solar and wind represented 12% of global electricity production, up from 10% in 2021, and all clean energy, including hydro and nuclear, made up a record 39%.?

Despite this, emissions still increased in 2022, as the rise in electricity demand could not be met entirely by clean energy. But, according to analysts, this may be the last year of emissions increases as the growth in wind and solar will be more than the increased demand.

The 0.3% reduction in emissions from electricity projected next year may seem small, but the analysis predicts that it will accelerate in subsequent years. Reducing emissions in electricity production - responsible for a third of global emissions, the most of any single sector - will have a considerable knock-on effect on other sectors like transport as it continues the electrification process.

While this is an epic milestone in the fight against climate change, the job is far from done. The report also revealed that coal-fired electricity generation was up by 1.1% last year, and another peer-reviewed study indicated that if more coal-fired power plants are not shut down over the next five years, warming will likely reach 3C by the end of the century.?

Turbocharged Electric Car Sales

The Environmental Protection Agency (EPA) proposed two new rules to ensure that two-thirds of all new car sales and a quarter of new buses and heavy trucks are electric by 2032. The rules don’t mandate the production of Electric Vehicles (EV) but limit the amount of tailpipe emissions new vehicles must have.

The proposals are some of the Biden administration's most stringent climate policies yet and are predicted to cut 10 billion tons of carbon dioxide through 2055, double the US emissions in 2022. EPA Administrator Michael S. Regan called the regulations “the strongest-ever federal pollution standards for cars and trucks.” However, the issue remains in convincing Americans to buy EVs. A recent Gallup poll suggested that most Americans are yet to be completely sold on EVs, with 41% of respondents claiming unequivocally that they would not buy one.

While the proposals will surely meet with some opposition, it wasn’t only environmental groups that backed the new rules. John Bozzella , CEO of the Alliance for Automotive Innovation, claimed that “The question isn’t can this be done, it’s how fast can it be done, [which] will depend on having the right policies and market conditions in place.”

Subsidized Emissions

The slow progress in reducing fossil fuel use is partly due to taxpayer subsidies. Countries subsidized fossil fuels to the tune of $1 trillion last year, double their contributions in 2021. Biden’s most recent budget looks to phase out fossil fuel subsidies. However, ending subsidies too quickly will accelerate inflation and can lead to social unrest. For example, when fossil fuel subsidies ended in Suriname, mass protests erupted, and an attempt was made to oust the president.?

The International Monetary Fund (IMF) and World Bank are discussing these issues in their ?ongoing spring meeting and issued a statement saying “clear communication, gradual phasing out, and mechanisms to compensate vulnerable groups” are key to ending subsidies and avoiding civil unrest. Ian Parry , an expert on fiscal and environmental policy at the IMF, said there is a slim window of opportunity while fossil fuel prices remain low to phase out subsidies without shocking consumers.?

Preparing for the Inevitable

Even with fossil-fueled power generation peaking, continued sea-level rises are inevitable. Two studies released this week revealed that cities across the Southern Atlantic and Gulf Coasts are under larger threat than previously thought.?

One study from the University of Arizona showed that sea levels have increased across the US south-eastern and Gulf of Mexico coastline by 5 inches since 2010, double the global average, and fueling more powerful hurricanes. Another study released in Nature on Monday mirrored those findings, adding that variabilities such as el Ni?o and ocean currents - could further accelerate sea level rise.

Necessity is the Mother of Invention

On the other hand, Bangladesh, long considered ground zero for sea level rises, is moving from climate victim to innovator.?

“You should send your skeptics to Bangladesh! The awareness of climate change here is the highest in the world,” says Saleemul Huq , director of the Bangladesh-based International Centre for Climate Change and Development, adding, “We have gone through the doom and gloom phase; now it’s all about the solutions.”

Bangladeshi communities now understand that flooding is inevitable, so they have adapted by raising their buildings, dividing their livelihoods between agriculture in the dry season and fishing in the wet season, and diversifying their crops. They combine high-tech weather predictions with “social capital,” a method of person-to-person information sharing without cell phones or radio to ensure safety and protect the livelihoods of rural communities from incoming floods.?

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Other Notable News:

• This year's Google Cloud Sustainability survey found that ESG went from the number 1 priority for executives to the third, with most claiming the macroeconomic situation is hampering progress.
• The UK launched its green finance strategy this week. The goal of the strategy is to raise more than ￡1 billion annually by 2030 to support its net zero by 2050 goals.
• The European Insurance and Occupational Pensions Authority released a staff paper this week. The report aims to be the first step in spelling out the authority’s supervisory expectations for managing nature-related risks and impacts in the insurance sector.
• In India, this week, the Securities and Exchange Board of India announced that limited assurance would be mandatory for some of the largest companies in its sustainability reporting scheme starting next year. It will also require its largest 250 companies to report on and audit their value chain.?
• At least 34 bitcoin mining operations across the US have been found to use more energy than towns of 30,000 people. One such operation was paid $18 million to shut down during the 2021 winter Texas storm at the expense of Texas residents.
• Climate change could be a performance enhancer for baseball batters. A study this week revealed that 1% of home runs between 2010-2019 resulted from higher-than-average temperatures causing thinner air. The number of home runs due to hotter temperatures could reach 10% by the end of the century if temperatures continue to climb.
• The European Commission this week called on the European Financial Reporting Advisory Group to provide support and guidance on its Corporate Sustainability Reporting Standards before releasing sector-specific standards.
• Austin-based company YvesBlue has created ChatGPT for sustainability. SustainableGPT has large language models trained in 26+ ESG and sustainability industry datasets to help companies make ESG investment decisions.

Notable Podcasts:?

• In the most recent episode of my company, BCG’s Climate Vision 2050 podcast, which explores a future world where we have radically reduced emissions and avoided a climate catastrophe, they take a retroactive look at the fashion industry. This episode, “Green is the New Black," explores how the reuse and rental of clothes drastically reduced waste in the industry.
• In this week’s episode of ESG Decoded, host Amanda Kuhl is joined by Rickard Nilsson , Head of Stewardship Success at Esgaia - an ESG engagement tracking software for investors. Together they discuss the basics of impact investing, the power of investor engagement, and trends in responsible investments.?