Weekly Roundup August 19

Invert is focused on providing clients and subscribers up-to-date news on net-zero developments, carbon markets, and how many sectors are evolving to meet climate change goals and ESG requirements.

Special Announcement

Biden Signs $437 Billion Tax-Climate Bill 

The Inflation Reduction Act was signed into law by President Biden this week, committing to $370 billion in federal decarbonization efforts throughout the decade. The US House of Representatives passed the bill on August 12th after the senate voted the prior week to approve it. The bill, which received no support from the Republicans, is viewed as a majority legislative victory ahead of the upcoming midterm elections.

Invert Insights: Addressing climate change has been a major focus of this administration and the signing of this bill represents a significant win for the democrats and the globe. As one of the largest emitters of greenhouse gas emissions, the passing of this bill signals to other nations that the US is taking measures to combat climate change and will hopefully encourage others to do the same.

Alphabet Deploys $5.7 Billion from Largest-Ever Corporate Sustainability Bond

Alphabet, the parent company of Google, has deployed the net proceeds from their 2020 $5.7 billion bond offering, the largest from a corporate issuer ever, into a number of projects to help them operate in an environmentally friendly and socially responsible way. The net proceeds will be used to fund the construction of green buildings, clean energy expenditures and contractual commitments, and numerous other energy efficiency projects across their facilities and infrastructure at four data centers.

Invert Insights: Google continues to accelerate their climate action through their efforts to source carbon-free energy every hour of every day, everywhere by 2030. Previously, Google would procure surplus renewable energy in regions where it was abundant to compensate for regions where it was unavailable. With the net proceeds of this latest issuance, they are seeking to ensure additionality (i.e. creation of more renewable power generation), through the signing of long-term power purchase agreements with renewable power project developers on the grids they utilize.

ACR Updates Program Rules for Tokenization of Carbon Credits

The American Carbon Registry (ACR) has released new program rules that prohibit the tokenization of ACR carbon offset credits without their explicit authorization. The step was taken in order to protect market integrity amidst the emergence of a crypto carbon market at a time when scale and transparency in the carbon markets is needed most. The ACR is currently working on establishing an implementation roadmap for the integration of carbon markets with digital technologies, which includes establishing rules to authorize the tokenization of credits and developing the required registry infrastructure to ensure market integrity.

Invert Insights: Verra, the world’s largest carbon registry, also stated earlier this year that it would not allow its retired credits to be tokenized and, earlier this month, launched a public consultation seeking information and views on appropriate guardrails to identify and prevent fraud associated with creating third-party crypto instruments and tokens with Verified Carbon Units. While they have not yet made any conclusive decisions on their usage, the public consultation and ongoing work by the ACR highlight the recognized value potential digital tools such as distributed ledger technology and/or tokenization could bring by improving market efficiency and broadening market access. 

World Bank's IFC Taps Blockchain for Carbon Offsets 

World Bank affiliate International Finance Corp (IFC) is backing a blockchain-enabled platform to trade carbon offsets and co-launching the Carbon Opportunities Fund that will provide the carbon offsets on the blockchain. The platform’s transparency will help companies and investors better assign value to the environmental projects which generate the carbon offsets, according to a senior investment officer at the IFC. The firm has already identified 250 to 300 thousand tonnes of unused credits to tokenize from an established registry that can be bought by year-end and tracked using the World Banks’ Climate Warehouse database as a proof-of-concept.

Invert Insights: The World Bank’s Climate Warehouse aims to address some of the aforementioned concerns from the ACR and Verra. The goal of the Climate Warehouse is to connect independent carbon registries and government systems to the Climate Warehouse through decentralized infrastructure, enabling the traceability of climate projects and verified carbon unit information through the creation of a global metadata layer. As more registries are connected to the warehouse, the amount of available information increases to support market activities, such as compliance reporting and auditing, which can reduce the risk of double counting between registries and thereby improve overall market integrity.

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