Greenify #55: IPCC 6th assessment round-up
March 24, 2023
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📌 Fact of the week
After booming in 2022, almost all battery materials prices are now falling, especially Lithium, which is now c.15% cheaper than at the end of last year… Good news for EVs 👍
Hottest news of the week…
Regulation 🗃 – Russia-China, solid partnership
What happened: Earlier this week, Xi Jinping visited Moscow, where he met with Vladimir Putin to discuss war and… energy! According to Al Jazeera, Russia overtook Saudi Arabia as China’s top oil supplier in the first two months of the year; Russian imports into the Asian country have increased by about 25% vs. the equivalent period in 2022. Also natural gas was at the core of the discussion, with ongoing talks regarding the construction of Siberia-2 gas pipeline set to supply China via Mongolia 😳
Zoom out: Russia used to be Europe’s largest natural gas supplier and a significant oil supplier as well. Following Ukraine’s invasion, Europe tried to cut ties with Putin’s country by reducing its dependence on Russian fuels; a price cap was also imposed on seaborne Russian crude. To offset a reduction in Russian supplies, we’ve seen EU countries increase investments in own renewables as well as deals being struck to source supplies from African countries. 🤝
Business 💰 – UBS is acquiring some climate burden!
What happened: Although the transaction is known to everyone by now, we believe few of you are aware about the difference between the two banks on emissions related metrics. Bloomberg has outlined some of the biggest gaps in Credit Suisse with respect to its acquirer: 1) Since the 2015 Paris Agreement, Credit Suisse has provided $21.7B of loans to Oil&Gas, compared to $0.4B for UBS. 2) Regarding the other side of the coin, UBS has plans to allocate $400B in “sustainable investments” by 2025, compared to $325B by 2030 for Credit Suisse. 😮
Zoom out: It has to be said that the difference in emissions can be partially justified by the nature of the two banks, with Credit Suisse being a larger investment bank and therefore more engaged in financing activities, including fossil fuel financing. 😬Although having an investment bank may seem to create a climate burden nowadays, in reality it can be a sustainable asset: through its capital risky financing activities it can sustain projects promising to decarbonise our economies. Let’s hope this new Swiss banking group will improve Credit Suisse emissions metrics by providing capital to green energy projects! 💪
Innovation 💡 - Acquifer thermal energy storage ⁉️
What happened: Local authorities in Hamburg, Germany, are planning to shut down a coal power plant near the city, and have thought about a simple but innovative way to replace some of its lost power output: heating water with waste heat generated in steel mills and then store the hot water roughly 1.3km below the surface for when it will be needed. The process consists in taking acquifer water, heating it up to 90C, and storing it underground, where it should maintain c. 70C for months. This Acquifer thermal energy storage project could potentially provide heat to more than 13k households😮!
Zoom out: Acquifer thermal energy storage can play an important role thanks to its low cost, relatively quick set up, and little to none efficiency loss over time. However, the efficiency of these projects depend on how many cavities are present in the rock, and the quality of its material. Hence, acquifer thermal energy storage is not a solution that can work everywhere, but, if properly implemented, it can provide a large energy storage without needing any complex biochemistry! 💪
Deep dives of the week…
Chart of the week - Lithium demand for EVs
Lithium is a key component in battery manufacturing, hence a crucial piece to the EV equation. This chart by the IEA shows the potential uplift in lithium needs should the EV industry develop as desired. The question around the chance of EV industry development clearly rely on finding increased sources of this precious metal and developing technologies to extract it competitively.
Source: IEA
Company of the week - Ammonia in ships?
U.S. startup Amogy has raised $139m in a Series B round to scale ammonia technology for zero-emissions cargo ships. The company plans to use ammonia, traditionally employed in fertilizers and plastic, in place of burning fossil fuels. The marine shipping industry accounts for about 3% of global emissions. it is a considered a hard to abate industry as retrofitting existing ships is extremely complicated and lengthy: combining this to the ships’ long life (25/30 years average lifespan), the disruption might take a long time. Click the link to find out more about the process. 🛥️
Analysis of the week - IPCC’s gloomy report
What is the IPCC❓
The Intergovernmental Panel on Climate Change (IPCC) is the body of the UN responsible for assessing climate change, and is composed by hundreds of the world’s leading climate experts. They have produced 6 assessment cycles since the late 80s, and they are currently finishing up the last one, considered the most comprehensive scientific report about climate change ever produced 😮
Why should you care about the 6th report🤔 ?
The IPCC does not conduct its own climate research, instead it summarises everyone’s else, and when we say everyone we are not exaggerating! To give you an idea of the quality of the work, only the 1st part of the assessment was drafted by more than 234 scientists, was built on more than 14,000 scientific papers and was agreed line-by-line by 195 governments.😉
It is extremely holistic, comprising four different parts:
Working Group I, assessing the physical science of climate change (Aug 21)
Working Group II, assessing impacts, adaptation and vulnerability (Feb 2022)
Working Group III, assessing the mitigation of climate change (April 2022)
Synthesis report, waving together all the findings of this assessment cycle to combine the current situation and the necessary steps to avoid a disaster (March 2023)
Synthesis report
This week was time for the synthesis report, and here we summarise what we believe are the most important takeaways:
What's the situation like? 🤔
We are currently at 1.1C above pre-industrial level (1850-1900), and the gap with 1.5C, temperature above which we will see a substantial loss of biodiversity, is decreasing year on year.
Global emissions in 2030 implied by the various national plans announced by October 2021 make it likely that warming will exceed 1.5°C during the 21st century and make it harder to limit warming below 2°C.
Future Climate Change, Risks, and Long-Term Responses 😬
More climate-related risks assessed than ever: Climate risks are at their highest level and continue to escalate with every fractional increment in global temperatures. Climatic risk will worsen and further interact with non climatic risk, e.g. causing resources related conflicts.
As global temperatures rise, adaptation will not suffice: The more temperatures rise, the more situations will arise where human-made adaptation will become useless. Poor and useless adaptation must be avoided by planning flexible, multi-sectoral, and long-lasting solutions.
There are two main questions that will decide our achievement of max. +1.5C or not: 1) How much will be the total of cumulative emissions when we’ll reach net zero? 2) How quickly can we reduce emission in this decade? (The two points are highly interrelated 😉).
Responses in the Near Term 💪
Global efforts to finance mitigation and adaptation in most vulnerable countries: The IPCC is very confident that the window of opportunities to secure a liveable and sustainable future for all is closing, and therefore calls for immediate global cooperation, especially on providing adequate resources to most vulnerable regions.
Acting quickly: the quicker we can abate emissions the more we can reduce projected losses and damages for humans and ecosystems. If we act now we can see a tangible results on global temperatures in 2 decades and in atmospheric composition within a few years. Unfortunately, if we keep moving at this pace it will require a lot more effort to reduce the damages, if it will ever be possible.
Far reaching transition across all sectors: All sectors should upscale a wide
portfolio of mitigation and adaptation options, starting from the existing feasible and low cost options.
The synthesis report is a fake synthesis as it is 85 pages long, however there are various graphs and shorter summaries that we recommend exploring on their website!
👋 See you next Friday, for the best sum up of this coming week!
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