With less than two weeks until the United Nations Climate summit – COP 21 – kicks off in Paris, the country has declared the event will go ahead with reinforced security measures following the devastating terrorists attacks of last Friday in the French capital.
An increasing number of investors take account of the effect that global warming could have on their portfolios. Equity holdings may lose as much as 45% in value due to shifting investor sentiment about climate change, according to a report by Cambridge University. Concern about the short-term impact of rising temperatures is becoming more relevant, especially for sectors including real estate, energy and agriculture, the report said.
Global spending on projects to cut carbon emissions and increase climate change resilience surged 18% last year, as both public and private investors stepped up the ante. Total expenditure reached $391bn, from $331bn in 2013, with some 75% of the total funding renewable energy projects, according to US-based non-profit Climate Policy Initiative. These figures are similar, but not identical, to Bloomberg New Energy Finance’s own data, showing a 19% rise in clean energy investment last year, to $318bn.
In related news, the UK Department for Energy and Climate Change has formed a joint venture with the Green Investment Bank to channel GBP 200m ($304m) into clean energy and energy efficiency projects in developing nations. The fund – UK Climate Investments – will initially focus on India, South Africa, Kenya, Rwanda and Tanzania.
Meanwhile, France has been pressing for tougher climate pledges following the weekend’s G-20 gathering in Turkey, where leaders discussed issues of global importance, including the impending United Nations Climate Summit. Divisions are emerging over the way the burden of reducing carbon emissions is shared collectively worldwide — whether industrialised nations are prepared to shoulder responsibility for a greater proportion of emission cuts than developing countries.
Moody’s Investors Service expects the green bond market to pick up pace towards the end of 2015, tracking developments in climate policy. Germany’s KfW development bank sold a $1bn green bond last Tuesday to a range of investors including BlackRock and Nikko Asset Management. “The market is developing continually,” Petra Wehlert, head of bond issuance at KfW, said in an e-mail, “more and more asset managers are getting interested.”
HSBC also announced that it will commit $1bn to a green bond portfolio, which will fund renewable energy, climate adaptation, education and healthcare. As compliance and standardisation of the market evolve, it is possible that “these bonds will out-perform non-green paper” and become more attractively-priced, Spencer Lake, global head of equity financing at HSBC, said in an interview with Bloomberg.
India’s Yes Bank also announced it plans to list up to GBP 330m of green bonds on the London Stock Exchange, as part of the company’s GBP 650m equity capital raising push.
Also making headlines last week was Dong Energy’s announcement that it is planning an offshore wind development off the coast of Massachusetts with the potential to be the world’s largest yet. The project would be a trailblazer for the fledgling US offshore wind industry, with capacity of as much as 1GW – significantly larger than the 660MW Walney Extension project the Danish utility is developing in UK waters.
In Europe, EDP Renovaveis and partners have announced a consortium to build a floating offshore wind farm off the coast of Portugal with a total capacity of 25MW. Companies including Mitsubishi and Engie will also be involved, as the wind industry seeks to explore the profitability of offshore projects where turbines are not cemented to the sea bed. Statoil, Norway’s biggest oil company, is considering a similar pilot project off the coast of Scotland, while Tokyo-based Marubeni has built a floating offshore wind farm off the coast of Fukushima in Japan.
The challenges facing the offshore wind industry in its quest to compete with other forms of energy, are looked at in detail in the Research Note: Route to offshore wind 2020 LCOE target, published by Bloomberg New Energy Finance.
A host of companies in the clean energy space announced financial results last week, including Enel Green Power, whose revenue increased by roughly 8% to EUR 2.2bn ($2.3bn) in the first nine months of the year largely thanks to increased sales in North and South America. Solar projects in South Africa and Chile contributed significantly to its total capex of EUR 1.7bn – up EUR 637m on the same period last year, the Rome-based renewable energy developer said. Ongoing expansion into emerging markets remains on the company’s priority list – following its recent acquisition of a majority stake in India’s BLP Energy and tender to build 550MW of solar in Brazil.
Corporate purchasing of renewable energy was once again on the menu as Dominon Resources bought an 80MW solar farm in Maryland that will sell power to online retail giant Amazon, and Apple announced intentions to power its expanding Singapore operations with solar energy sourced from Sunseap Group rooftop solar systems. The California-based data-centre operator, Equinix, also agreed to buy 225MW of wind capacity from NextEra Energy and Invenergy – sufficient to power all of its North American operations.
Corporate backing of renewable energy is explored in the Research Note: US corporate PPAs: 40% of the market and growing, published by BNEF.
This is an excerpt from the Clean Energy & Carbon Brief published weekly by Bloomberg New Energy Finance. Republished with permission.