Credit where carbon’s due, making use of power and pausing for a rethink
Also: Major merger in the US power market, LA continues to burn, $500 million CIF bond issue and batteries are still getting cheaper
The first issue of this newsletter was published one week before the inauguration of Donald Trump as US president. This edition is scheduled to land in your inbox on the day his administration takes power.
Regardless of where you stand politically, most will agree that there will be lots of changes ahead for sustainability and finance, as well as the ways that these two worlds interact with each other.
My aim with Greener Returns is to follow this beat closely and keep you updated on how things move. We will cover the good and the bad, and try to make sense of what’s really going on behind the headlines and spin.
Thank you for subscribing and joining me on this journey. I hope you find reading the newsletter as helpful as I find writing it.
Credit where carbon’s due
💸 Shell was the biggest buyer of carbon credits in 2024, retiring 14.5 million credits, according to data released by Allied Offsets.
The company purchased almost three times as many as Microsoft, which came in second place at 5.5 million.
However, the companies chose different types of carbon credits, with Microsoft focusing on energy generation through burning biomass, and a majority of Shell’s focusing on projects that avoid emissions.
The report highlights that the number of carbon credit buyers continues to grow year on year, but at a slower rate than seen in the previous year.
Assembly Bill 1305, a new Californian law that came into effect on the 1st of January, forces companies to disclose details of carbon credits they purchase in the voluntary market.
The goal of the bill is to increase transparency and accountability in the voluntary carbon market. This is an area of sustainability where headline figures don’t always give you a clear picture. The law could have significant implications for companies operating in the state, which is home to some of the most valuable and influential companies in the world.
We demand more power
🔌 The rise in wind and solar power generation in the US wasn’t able to keep up with a simultaneous rise in electricity demand, the New York Times reports.
Last year’s spikes in demand were largely met by burning natural gas. But the US is successfully weaning itself off of coal power production, which last year hit its lowest level for over 50 years.
Major merger in the US power market
🤝 Constellation Energy has agreed to buy Calpine for $16.4 billion. The merger of two of the US’s largest power generators comes as data centres powering artificial intelligence demand a growing amount of energy.
Research published by the Lawrence Berkeley National Laboratory last month predicts that by 2028 data centres could use as much as 132 gigawatts per year in the US, representing 12% of the country's electricity use.
Constellation is the largest producer of nuclear power in the US.
Net Zero Asset Managers alliance puts things on hold
✋ As reported in this newsletter last week, net zero banking and asset management alliances have seen a sudden exodus of big-name supporters in the first weeks of the year.
BlackRock’s high-profile exit from the Net Zero Asset Managers (NZAM) alliance contributed to the group suspending its activities.
A statement published on the alliance’s website on the 13th of January says that “recent developments in the US and different regulatory and client expectations in investors’ respective jurisdictions have led to NZAM launching a review of the initiative to ensure NZAM remains fit for purpose in the new global context.”
Here’s a link to the group’s statement in full.
NZAM is separate from the Net Zero Banking Alliance which has seen several major American banks head for the exit so far this year.
Fires continue to hit Los Angeles
🧯 As I write, wildfires are still devastating LA.
The fires have burned over 40,000 acres of land and led to at least 25 deaths. The long-term impact on the region’s health and mortality will be difficult to comprehend and tricky to measure. The financial impact will also be severe.
The cause of the Santa Ana winds that helped fuel the flames has sparked scientific debate.
On a positive note...
The $12 billion CIF issued its first bond
💰 The Climate Investment Funds (CIF) Capital Markets Mechanism (CCMM) has launched its first bond, issuing $500m of three-year debt. Bids came in at over six times that amount.
The CIF provides financing from rich nations to help poorer nations mitigate the effects of climate change.
Battery prices continue going down
🔋 Lithium-ion battery prices are continuing to fall, although the pace of decline is decreasing.
Analysts at BloombergNEF forecast that prices will drop 3% this year, compared to 20% in 2024 and 13% in 2023. Global trade tensions and tariffs are expected to play a growing role in the flow of raw materials and batteries.
Among other things, lithium-ion batteries are used in electric cars as well as to help improve the effectiveness of power grids.