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P&G CSO Says Climate Plan Will Make Sustainable Options Mainstream
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Welcome back. Surging power prices in Europe due to natural-gas shortages and not enough wind could be causing some disquiet for European policy makers gearing up for the COP26 climate summit in Glasgow.
The U.K., which in its introduction as the meeting's host country mentions its promise to stop burning coal by 2024, had to fire up some emergency coal capacity to get through the crunch, even before a fire this week knocked out a grid connection to France, sending prices higher. Fixing the connection will take weeks.
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You could argue that the episode shows the need to accelerate the addition of renewable energy capacity—which, like pushing to phase out coal, is one of the U.K.’s objectives for the conference. But analysts say the power market could get tighter still heading into the winter, leading suppliers to raise consumer prices, and some critics of renewables are already saying the current pressure on the market highlights what they see as the folly of relying on the weather.
In the U.K., several smaller energy suppliers that were unable to absorb higher prices have gone out of business in recent weeks, but big players are better able to hedge their exposure. Many companies mention the possibility of costlier energy due to climate policy (not to mention price volatility due to extreme weather) in lists of risks associated with climate change; episodes such as this can shed light on how prepared they are.
There may be some winners, too, such as infrastructure operators that store the intermittent energy from renewables to sell when demand is high. Ben Guest, manager of the Gresham House Energy Storage Fund, which invests in grid-scale batteries, said the current market is a "favorable backdrop" for the fund because power-price volatility drives its revenues.
This week: Big oil's climate promises; data centers; low-carbon steel.
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Bottles of Tide detergent. P&G's sustainability chief says its plan to reduce its use of plastic and take other action on climate change will transform its wares. PHOTO: JOE RAEDLE/GETTY IMAGES
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P&G sets out climate plan. Procter and Gamble, the maker of Tide detergent, Pampers diapers and Head & Shoulders shampoo, this week committed to reach net-zero greenhouse-gas emissions by 2040 across both its own operations and its supply chain. P&G also set out interim targets for 2030. Chief Sustainability Officer Virginie Helias said the push will mean that sustainable options, such as products packaged in alternatives to plastic, become mainstream. Ms. Helias said P&G will work with suppliers to promote the use of sustainable materials and hire more sustainability experts to tally the emissions arising from its products.
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A TotalEnergies electric-vehicle charging station in Paris.
PHOTO: CHRISTOPHE ARCHAMBAULT/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Investor standard for net-zero plans. Several energy majors have committed to achieve net-zero carbon emissions at some point decades from now. Climate-conscious investors are keen to know more about how they plan to meet those goals. BP, Eni, Repsol, Shell and Total said this week they would trial new guidelines put together by energy companies and investors that require companies to disclose more information on their climate programs to enable fair comparisons.
Getting to net zero—which boils down to companies removing as much greenhouse gas from the atmosphere as their oil and gas add to it when burned—would involve scaling up as-yet unproven carbon-capture technology or moving into a new business. Adam Matthews, chief responsible investment officer of the Church of England Pensions Board, who chaired the initiative that drew up the guidelines, said the investors involved don't favor any particular strategy.
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Chevron to boost low-carbon investment. One company that hasn't set a net-zero target is Chevron. Chief Executive Officer Mike Wirth has said the company won’t set targets that it doesn’t have a plan to achieve. Still, Chevron this week said it plans to spend $10 billion through 2028 on biofuels, hydrogen production, carbon capture and other technologies. That is up from a prior commitment of around $3 billion, but just a fraction of Chevron's planned investment in oil and gas.
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"Higher returns, lower carbon."
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— Chevron CEO Mike Wirth's description of the company's strategy.
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U.K. energy giant hires renewables executive. Anja-Isabel Dotzenrath, the former chief executive of wind-power developer RWE Renewables, was hired to run BP's gas and low-carbon operations, marking the first appointment to BP's leadership team to have run a renewable energy business since it last year set out plans to shift to green energy.
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Methane in policy makers' sights. Officials in the U.S. and European Union are crafting a pledge to reduce global methane emissions by nearly a third by 2030, and pushing several of the world’s largest economies to join them. Policies aimed at cutting emissions of methane, a powerful but short-lived greenhouse gas, could fall the heaviest on oil-and-gas companies, because the gas can escape from leaks at drilling and storage sites or as it moves through pipelines.
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An Aligned Energy data center in Salt Lake City. PHOTO: ALIGNED ENERGY
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Demand is rising for data centers that don't rely on huge volumes of water to keep equipment from overheating, driven by customers' environmental targets and the drought conditions affecting Western states. Texas-based Aligned Energy, one of several data center operators that has developed cooling systems that require less water, just raised $1.25 billion in debt to fund its expansion.
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✍️ Feedback on this newsletter? We would love to hear from you, so please get in touch.
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Galvanized steel at a production line that will harness hydrogen instead of coal in Salzgitter, Germany. ROLF SCHULTEN/BLOOMBERG NEWS
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European car makers and steelmakers are moving to develop and use lower-carbon steel, pushed by a European Union climate plan that mandates that manufacturers—including their supply chains—become carbon-neutral by 2050. Daimler has struck supply deals for low-carbon steel, while its Mercedes-Benz unit in May bought a stake in H2 Green Steel, a Swedish steel supplier that uses hydrogen instead of coal to fuel the heat-intensive process of making steel. BMW recently said its venture arm would invest in Boston Metal, a U.S. startup that has developed a process to melt iron ore using electricity instead of by burning coke.
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TotalEnergies to Invest $27 Billion in Iraq
French energy giant TotalEnergies SE plans to invest $27 billion in Iraq in a 25-year deal, according to people familiar with the matter, boosting its position in the country at a time when other Western companies have been rethinking their exposure. TotalEnergies announced an initial $10 billion investment out of a planned $27 billion in the sustainable development of Iraq’s energy resources. Beyond its positive environmental impact, the move also carries positive social implications as it aims to improve the country’s electricity supply, a longstanding issue that has recently been aggravated by power shortages and an increase in demand. TotalEnergies will establish emissions-reduction practices such as
recovering flared gas to increase electricity production capacity, optimize the usage of natural resources such as water and build a 1 gigawatt solar photovoltaic power plant. The company will also build a large-scale seawater-treatment unit, aiming to increase water-injection capacities without increasing freshwater usage.
This is a sample of exclusive analysis of sustainability news from the Journal’s environment, social and governance (ESG) research analysts, whose work is primarily published by Dow Jones Newswires to help institutional investors and wealth managers integrate ESG factors into portfolio models, risk management programs and financial advice. The commentary by our research analysts is independent of the news coverage by reporters at the Journal. For more information about Dow Jones Newswires, click here.
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Catherine Howarth, the chief executive of ShareAction, an investor advocacy group, discussed pushing banks to stop funding coal power and taking other action on climate change. (Quartz)
Australian carbon-capture startup Calix is scaling up technology that can cut emissions from cement factories. (Bloomberg)
A U.K. company is pitching artificial reefs that spawn coral ecosystems as a form of sea defense. (Economist)
Amazon hired a Twitter executive as vice president of global diversity, equity and inclusion. (Reuters)
Vehicle makers are turning to more-easily-recyclable alternatives to leather and plastic. (New York Times)
Shares in the parent of fast-fashion chain Primark fell after it said a push to make its products more sustainable could push up costs. (Irish Times)
Spain-based renewables giant Iberdrola warned that clean-energy tax credits proposed in the Democrats' infrastructure plan that also promote the use of U.S. steel could stymie the growth of the wind-power sector. (FT)
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We would like to hear your tips, suggestions and feedback.
This newsletter was written by Ed Ballard.
Contact the WSJ ESG research team at ESGresearch@wsj.com
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