Welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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SEC’s big delay
It looks like investors will have to wait until next year for the SEC's long-delayed climate risk disclosure rule. After releasing its year-end meeting agenda that did not include the proposal, the commission is now likely targeting the first quarter of 2024 for release. By operating at the slowest regulatory pace in decades, the SEC will continue to play catchup to other jurisdictions on climate risks. The continued delays are the direct result of the coordinated political pushback and specter of legal challenges by the U.S. Chamber, state Republican attorneys general, and carbon-intensive industry trade groups. By letting the clock continue to tick, the Congressional Review Act becomes another political dynamic to watch.
Emissions reporting, specifically upstream and downstream scope 3 emissions, continues to be the major sticking point despite the more than 3,330 companies globally that are already voluntarily reporting. While opponents push scope 3 myths, most investors say it’s a fundamental requirement of the rule.
ESG for critical minerals?
As the race to extract critical minerals for electric car batteries and other elements of the energy transition intensifies, business leaders and associations are calling for mining to be governed by environmental, social, and governance investing principles. The primary U.S. mining law has not been meaningfully updated since 1872, and the Reconstruction Era law does not contain rules for royalties or any environmental or community protections. While the Biden Administration released a plan for updating the law, congressional support for the reforms is uncertain.
The question remains, though, given responsible investing is often poorly defined and there is currently no single ESG standard for mining, with even oil companies pitching their extraction processes as responsible under ESG metrics, will this investing strategy be enough to protect natural environments and local communities – especially Indigenous communities – from the harmful effects of pollution from mining?
Can carbon offsets fund the global energy transition?
Africa’s lead negotiator at the UN climate change conference in Dubai has noted slow progress on climate adaptation goals there, with no agreement on measurable targets and guidelines, let alone a “workable framework and finance agreements that fairly reflect the burden on developing countries especially in Africa,” the Guardian reports.
Stepping into that financing role, at least for a few nations – Chile, Dominican Republic, and Nigeria, for starters – is the Energy Transition Accelerator (ETA), a new carbon offset management program announced by the U.S. government, Bezos Earth Fund, and Rockefeller Foundation.
The ETA aims to help scrape together the trillions needed for energy transition costs by allowing developing countries to sell carbon offsets for activities like planting trees or protecting existing forests, according to the AP. The credits will be guaranteed “high-integrity,” the project’s leaders say, by giving governments a bigger role to ensure safeguards are built in.
We’ve written before how high interest rates and inflation are hurting clean energy – everything from wind farms to nuclear plants to heat pumps are feeling the pinch. Sunrise Project’s Justin Guay offered a solution last week – getting central banks to offer special low-interest loans for clean energy projects, and he details a number of paths to get cheaper money out the door through existing programs.
Others have offered the concept of two-tier rates before, mostly in Europe. And, while the idea may have some worrying about the slippery slope of offering preferential rates to a particular sector, is there really any other that offers a solution to what scientists say is an existential threat to humanity?