The Trillion Dollar Price of CO2 Emissions

October 15, 2022

The Trillion Dollar Price of CO2 Emissions

China’s net zero ambition calls for not only billions but $17 trillion while Brookfield will pour billions of its assets to help decarbonize the world. 

Both the London Stock Exchange and World Bank have new launches that are good news for the VCM.

This week of carbon news is full of big names and numbers, so here we go!

The Price that China has to Pay

As the largest emitter of CO2 in the world, generating around 27% of all global emissions, it's no wonder China has to do all it can to cut its carbon emissions. 

But that comes with a huge price worth $17 trillion as per the World Bank analysis. And that massive investment involves the power and transport sectors only for green infrastructure and technology.

Try factoring in funding needed by the other sectors like building, energy, and agriculture, and you'll get an idea of how expensive it will be for China to decarbonize. 

Brookfield's $2+ Billion Bet

One of the world's biggest investment management firms, Brookfield Asset Management is putting over $2 billion of its money into the carbon capture sector. All the while charging the energy transition with nuclear power.

The asset manager’s investment in 3 project developers in 2022 alone amounted to $1.3 billion - LanzaTech, Entropy, and California Resources Corporation. 

Though there are a lot of incentives pumping the growth of carbon capture, including the Inflation Reduction Act, few firms have outperformed Brookfield’s bet on the sector so far. 

Not to mention its recent acquisition of Westinghouse in partnership with Cameco. It marks the significant role of nuclear power in the clean energy transition.

LSE Opens A New VCM 

After almost a year of waiting, London Stock Exchange finally unveils its new VCM platform that will facilitate a deep, liquid venue for the listing of carbon funds. 

They will provide the VCM with a clear price signal and confidence that money can move in and out of pockets as needs change.

Better yet, LSE VCM design allows asset managers and owners to have a clearer picture of how effective climate action performs within their portfolio companies.

World Bank's "One-Stop-Shop"

The planet's biggest lender will launch a new trust fund to pool capital from around the world to provide grants for projects that cut carbon emissions.

The World Bank's new facility dubbed the “Scaling Climate Action by Lowering Emissions” or SCALE, will be a “one-stop shop” for all WB-administered Results-Based Climate Finance (RBCF). The goal is to provide grant payments for achieving pre-agreed climate-related results.

The World Bank said that they’re still in the process of capitalizing SCALE. And guess what event is perfect for its launch? the upcoming COP27 in Egypt next month.

Carbon Fact of the Week

The World Bank has provided over $30 billion in Results-Based Climate Finance (RBCF) as of June 2022.

Results in RBCF can be defined as any milestone that indicates progress toward reducing GHG emissions.

RBCF creates incentives for climate action by accelerating investments in climate change mitigation, such as planting trees on degraded land and expanding access to clean energy.

Critically, RBCF also helps build technical capacity in developing countries to participate in international carbon markets.