For Climate Endowment, the march towards NetZero cannot be based solely on reducing emissions, even if it is on this that our efforts must be focused.
The “removal” of emissions (carbon sequestration) will be part of the arsenal of means mobilized to achieve the objectives of the Paris Agreement. That is the reason why we are convinced that – next to the Climate Endowment Hydropower Fund (CE Hydro) – the Climate Endowment Forestry Fund (CE FF), for the reasons set out below and in particular because of the option to make it a 100% greenfield fund (i.e., delivering 100% additional impact), will arouse the interest of a wide circle of investors.
In this regard, we see that very large high-emitting companies are developing strategies to capture their emissions or even to suppress them. Microsoft Corporation has launched an RFP which is part of their plan to “withdraw” all emissions for which the company has been responsible since it started its activity.
Investors and asset managers are starting to notice the strong and relentless increase in European compliance certificate prices (EU ETS) which just last week reached a price of nearly € 60/t from a level of ca. € 30/t, just 12 months ago. This will accelerate the pace of the green transformation and we can observe some early movers.
At last, investors are waking up to the long-term outlook for CO2 prices. Forest’s contribution to decarbonise portfolios is recognized as one of the most efficient. McKinsey has recently released a report that highlights their role. “Many negative emissions solutions exist today; examples include bioenergy with carbon capture and storage (BECCS), direct air capture and storage (DACS), and natural climate solutions (NCS) such as reforestation”. What differentiates Reforestation from other negative emissions solutions is that it is bringing additional co-benefits: “These can also include other environmental co-benefits, such as biodiversity benefits”. So, it is no wonder that for example, AXA IM acquired 24,000 hectares of standing forest in New Zealand for NZ$ 775m (~€467) and JPM AM acquired forestry manager Campbell Global. The race towards NetZero is on and Climate Endowment is proposing two funds to reduce emissions or capture emissions that are good investment vehicles to get a sound sustainable return and deliver double impact on CO2 and Biodiversity/SDGs.