News November 2007

The following are summaries of news stories from the November 2007 print edition of Environmental Finance magazine

Commission delays climate, renewables plans

A European Commission blueprint of how the EU will reach its targets of sourcing 20% of energy from renewables by 2020, and reducing greenhouse gases by at least 20%, has been delayed until January. Suggestions that the plans could include trading to meet national renewables targets have generated controversy.

The Commission was to have published its proposals on 5 December, in the middle of the next round of UN climate change negotiations in Bali. But, on 25 October, Energy Commissioner Andris Piebalgs said that the release had been set back a month. More...

AEP coal settlement seen as ‘good business’

American Electric Power (AEP) has agreed to spend billions of dollars to settle what the Environmental Protection Agency (EPA) has described as “the single largest environmental enforcement settlement in history”. But observers say that AEP – the largest coal-burner in the US – has acted shrewdly in settling the case.

In the 9 October ‘consent decree’, the Columbus, Ohiobased company agreed to reduce sulphur dioxide and nitrogen oxides, settling an eight-year-old suit brought by the EPA, eight states and 14 environmental groups.The EPA estimates the cost at $4.6 billion, but AEP says the accord will add just $1.6 billion to the $5.1 billion it has already budgeted to meet the coming Clean Air Interstate Rule, involving many steps required under the settlement. More...

Landmark US climate bill clears first hurdle

Proponents of a mandatory carbon ‘cap-and-trade’ scheme in the US have hailed as “a turning point” a subcommittee vote on the Climate Security Act (S.2191). The bill, introduced last month by Independent-Democrat Joe Lieberman and Republican John Warner, aims to reduce US greenhouse gases by 63% below 2005 levels by 2050.

On 1 November, the bill was passed by the Senate subcommittee on the private sector and consumer solutions to global warming. That sent the bill to the Senate environment and public works committee, which must review it before the full Senate votes. More...

Exchanges target financials in carbon push

Competition in the exchange-traded carbon market is set to hot up, with two major exchange alliances announcing plans to launch suites of contracts, and target financial institutions. The initiatives – by derivatives giant Eurex in partnership with the European Energy Exchange, and NYSE Euronext in a tie-up with Powernext carbon – promise to broaden access to the carbon markets dramatically, the exchanges believe.

The moves will challenge the European Climate Exchange, the dominant exchange for futures on carbon dioxide allowances in the EU Emissions Trading Scheme, with an estimated 49% of market volumes in October (including the clearing of over-the-counter contracts). Around 45% goes through brokers, while other exchanges take 6%. More...

Insurance climate initiatives jump, but from low base

The number of climate change related products or services offered by the insurance sector has doubled in just 14 months, according to the latest report on the sector from Ceres.

However, while the US-based investor and NGO coalition identified 400 climaterelated insurance initiatives, only one-third of insurance companies featured in the report are offering such products, and only one in 10 “are working in a visible way to understand the mechanics or implications of climate change”. More...

FTSE takes over ET50 with plans to expand

The FTSE Group has taken over calculating and managing the Impax Environmental Technology Index (ET50).The move will also see the UK-based index provider partner with Impax Asset Management, which launched the index in 1999, to expand the ET50 series over the coming year.

The Impax ET50, rebranded as the FTSE ET50, is made up of the 50 largest environmental technology companies by market capitalisation.The biggest constituents of the index are Norwegian solar power firm REC, Danish wind turbine manufacturer Vestas and Indian wind firm Suzlon. More...

DTZ, Kenmore planning €750m green property fund

Real estate adviser DTZ and property investor Kenmore are looking to raise around €750 million ($1 billion) into an innovative sustainable property fund. The Sustento fund – developed in partnership with UK think-tank Forum for the Future – will invest in commercial property across Europe. But it will also attempt to align the interests of tenants and owners in sustainable building use.

“We’ll be looking at both the landlord and tenant side,” said Gareth Anderson, an associate director at DTZ in London. “The fund will aim to encourage tenants to occupy buildings in a sustainable fashion.” More...

Morgan Stanley sees $1 trillion clean energy market

The worldwide market for clean energy could reach $500 million by 2020 and $1 trillion by 2030, estimates investment bank Morgan Stanley.

"The drivers of spending and investment in clean energy are accelerating and durable (unlike the oil shock that spawned the first wave of alternative energy solutions in the 1970s),” the New York-based bank said on 16 October, upon initiating coverage of the US clean energy industry. More...

World Bank ups renewables funding; but slammed on dams

The World Bank has increased funding for renewable energy and energy efficiency by nearly 70% year on year, to $1.43 billion in 2007. However, an environmental campaign group has slammed the Bank for spending more on big hydropower projects than on all other renewables and efficiency projects combined.

In a preliminary report on its renewable energy and energy efficiency investments, released last month, the World Bank said it has increased its funding for such projects from $860 million in the 2006 fiscal year to $1.43 billion in fiscal 2007 (which runs to 30 June). Of this, the Bank says that $751 million went to hydropower projects with an electricity generating capacity of more than 10MW. A more detailed version of the report will be published by the end of the year. More...

PRI push by major South African pension fund

South Africa’s Government Employee Pension Fund has announced it will require its external investment managers and advisers to be signatories to the Principles for Responsible Investment.

The move, announced on 2 October, “is going to change the whole face of the debate” over responsible investment in South Africa, Justin Smith, head of governance and sustainability at South Africa’s Nedbank told Environmental Finance. More...

Pensions failing to consider ESG – studies

The UK pension sector is largely failing to consider the environmental, social and governance (ESG) issues that may affect the performance of its investments, according to reports by FairPensions and the UK Social Investment Forum.

“Some fund managers are already aware that engaging with investee companies on ESG issues is crucial for future-proofing companies against anything from the next million-barrel oilspill to the next Enron. However, all too many are either not considering ESG issues or are not reporting adequately on what they do,” said the campaign group FairPensions. More...

UNEP FI chief warns on PRI free-riders

UN scheme to encourage responsible investment must begin planning on how to deal with ‘free-riders’ that fail to live up to their commitments, according to the head of the UN Environment Programme Finance Initiative (UNEP FI), Paul Clements-Hunt.

The Principles for Responsible Investment (PRI) have been rapidly adopted by the finance industry, demonstrating that the “tectonic plates of investment and finance are shifting”, said Sylvie Lemmet, director of UNEP’s division of technology, industry and economics at the UNEP FI’s global roundtable meeting in Melbourne last month. More...

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