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Your monthly update from the world of climate finance is back. |
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Race to Article 6.2 agreements: why India needs to move fast |
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What’s happening: Article 6.2 of the Paris Agreement allows countries to collaborate in achieving their climate targets. Through the use of internationally transferred mitigation outcomes (ITMOs), nations can trade emissions reductions to assist each other in lowering greenhouse gas emissions. India published its list of eligible activities for Article 6.2 under the Paris Agreement, marking a significant step in its climate action plan. Since then, however, India’s progress has been slow compared to other countries, which have signed over two dozen agreements since 2020. Notably, countries like Switzerland and South Korea are leading the way in establishing bilateral cooperation agreements under Article 6.2. |
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What’s the background: India aims to engage in bilateral agreements with developed nations to attract investments in removal and technology-heavy projects. This strategy is crucial for addressing the country’s climate financing needs. As a developing nation, India allocates substantial funds to adaptation activities in response to climate disasters, leaving limited resources for climate mitigation. By securing investments from developed nations, India can focus on high-investment projects such as CCUS, biochar, and advanced mobility solutions. These projects are essential for reducing emissions and enhancing emission intensity, thereby supporting India’s transition to a low-carbon economy. The delay in India’s participation in the Article 6.2 market highlights the need for immediate action to leverage international support and finance. |
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What demands attention: India must act swiftly to capitalise on removal technologies and meet its Nationally Determined Contributions (NDCs). The NDCs represent India’s commitment to reducing greenhouse gas emissions and increasing renewable energy capacity. Specifically, India’s NDCs include reducing the emissions intensity of its GDP by 33-35% by 2030 from 2005 levels, achieving about 40% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030, and creating an additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover by 2030. To achieve these ambitious targets, India needs to expedite its efforts in the Article 6.2 market, focusing on bilateral agreements that bring in advanced technologies and significant financial investments. The slow progress thus far could hinder India’s ability to meet its climate goals and capitalise on the global shift towards low-carbon solutions. |
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Exploring Article 6? Work with Neufin to identify investment opportunities across geographies. |
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Climate Finance Lead, Mumbai |
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Neufin is seeking a Climate Finance Lead to drive its green financing business (both the buy and sell side) and collaborate with the founders on investment strategy, deal sourcing, structuring, and stakeholder engagement. Extensive experience working on project finance or debt/equity deal syndication is desired. |
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The ideal candidate has 4-6 years of relevant experience in a similar role at an investment bank, financial institution, transaction advisory or consulting firm. |
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Rich countries fail to deliver on USD 100 bn climate finance pledge in 2022 |
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In May, the OECD claimed that developed nations provided nearly USD 116 billion in climate finance to developing nations in 2022. The USD 100 billion in financing goal was initially set for year 2020. However, Oxfam International reported that the actual support was not more than USD 35 billion. The analysis revealed that almost 70% of this amount was in the form of loans, many at profitable market rates. |
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Global renewable energy growth short of COP28 targets |
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The latest release of the Renewable Energy Statistics 2024 by the International Renewable Energy Agency (IRENA) highlights a stark reality: while renewables are the fastest-growing source of power worldwide, achieving the tripling target set at COP28 is increasingly uncertain. To meet the ambitious 1.5°C Scenario goal of reaching 11.2 Terawatts by 2030, annual growth must accelerate to at least 16.4%. |
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State of CDR report highlights slow progress. |
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According to the State of CDR report, 2 billion tonnes of CO2 is being removed using CDR projects (compared to the 40 billion tonnes of CO2 emitted per year), primarily using conventional tree planting activities. Early-stage or “novel” CDR methods such as biochar, CCUS, and enhanced rock weathering currently remove a much smaller 1.3 million tonnes of CO2 each year – less than 0.1% of total CDR. |
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Renewable Energy: The key to decarbonisation for Indian corporations |
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In the face of an urgent climate crisis, the corporate world must act decisively. The top 100 companies account for 71% of global greenhouse gas emissions. Scope 2 emissions, resulting from purchased electricity, pose significant risks but also present an opportunity for corporations to lead the way in sustainability. Our latest blog post explores how integrating renewable energy sources like solar and wind can drastically reduce these emissions, offering not only environmental benefits but also financial gains. We discuss policies, challenges, and strategies for corporate decarbonisation and scaled adoption of clean energy through green open access. |
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Carbon credit price for the past month |
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Price per credit: $4.12/tCO2e (21.89%MoM) |
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Based on top 500 projects globally by volume of credits retired. |
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The average price per credit has seen a slight increase, going up from last month’s $3.38 to $4.12. Nature-based solutions are now priced at $3.63 per credit, seeing an increase of 4.31% month on month. Household devices decreased by 3.6% compared to last month, currently at $4.61 per credit. Puro biochar projects witnessed a notable increase of 17.2%, now priced at $152.24 per credit. |
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We’ll be back with more interesting updates next month. Team Neufin |
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