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Maersk’s Move to Integrated Reporting: A Look Back, a Nod Forward

If someone had told me a few years ago that a global shipping giant would be one of the big pioneers of integrated ESG reporting, I would have been politely skeptical. And yet, here we are. Maersk has steadily shifted from typical financial statements (with a separate ESG document on the side) to a fully consolidated annual report that weaves sustainability throughout. So how did that transformation unfold, and what does it mean for an industry that often seems to measure success by bigger ships and faster transit times?

Why Does This Matter?

The idea behind an integrated report is that finance and sustainability aren’t two separate stories: they’re one. Maersk’s 2024 Annual Report is a noteworthy example of this approach—especially when many of its biggest peers, such as CMA CGM, MSC, COSCO, and Hapag-Lloyd, still issue standalone sustainability reviews alongside their main annual documents. It’s not that these competitors lack ESG ambition—several have robust decarbonization initiatives or advanced technologies in the pipeline—but Maersk is among the first in this sector to put financials and ESG under one roof, so to speak.

A Quick Timeline of Maersk’s Evolution

This has been a multi-year process for Maersk.

1. 2019–2021: Separate Reports, Early ESG Mentions

Maersk offered traditional annual statements for financial performance and separate sustainability PDFs covering environmental and social programs. Anyone wanting the full picture had to juggle two documents.

2. 2022: Major Growth Meets Climate Goals

A spike in freight rates gave Maersk capital to invest in logistics expansions—warehousing, e-fulfillment, and alternative fuels like methanol-powered vessels. Sustainability gained prominence, but it still lived mostly in its own report.

3. 2023: More Double Materiality, Still Some Separation

As the market normalized, Maersk sharpened its references to “double materiality” (both how climate impacts the business and how the business impacts society). However, the main annual report and the sustainability report remained distinct, though more cross-referenced than before.

4. 2024: A Fully Integrated Annual Report

With the European Corporate Sustainability Reporting Directive (CSRD) taking effect, Maersk moved to a single, integrated Annual Report that handles everything from core financial data to climate disclosures. While some material is “incorporated by reference,” readers can see, in one place, how financial outcomes tie in with decarbonization targets, workforce well-being, and governance structures.

Where Maersk Stands Out

It’s no secret that ocean shipping has a massive environmental footprint, so integrating sustainability metrics with standard balance-sheet talk isn’t just a nice add-on—it’s central to the entire strategy. Maersk’s current approach offers a clearer sense of how alternative fuels, new vessel technology, and operational changes influence the bottom line (and vice versa). Put differently, you can see how climate considerations drive budgeting decisions in real time, not as an afterthought.

Competitors like CMA CGM, MSC, COSCO, and Hapag-Lloyd—giants in their own right—are also making strides in greener operations. MSC is investing in biofuel trials; CMA CGM has been vocal about LNG; COSCO has discussed electrification in port operations; and Hapag-Lloyd references climate initiatives in annual updates. But as of now, the majority haven’t converged it all into one integrated publication. Maersk’s approach, therefore, feels a bit like they’re inviting stakeholders into a single auditorium rather than multiple breakout rooms.

Congratulations to Maersk

Achieving a fully integrated report isn’t as simple as stapling two PDFs together. It means revisiting how the organization measures success, training teams to track and interpret new types of data, and structuring corporate governance to recognize sustainability metrics on par with revenue or EBITDA. Maersk has managed to align with the CSRD while conveying its operational and strategic narratives in one cohesive format. That is no small feat, and it sets a benchmark others might follow.

Looking Ahead to 2025

So what’s next? Well, for starters, the value of integrated reporting doesn’t just lie in merging documents—it also hinges on depth and clarity. Below are a few suggestions for the next iteration:

  • Showcase the Materiality Process More Plainly

Readers appreciate seeing how Maersk selects, prioritizes, and validates its environmental and social topics. Laying out that process in plain language (and maybe a concise graphic) would make double materiality feel less abstract.

  • Fine-Tune the “Incorporation by Reference”

Hunting through references can get cumbersome. A strong index or crosswalk table that shows exactly where each ESRS (European Sustainability Reporting Standards) requirement is met can help everyone from investors to civil society groups find what they need.

  • Deepen the Risk & Scenario Analyses

Maersk has addressed issues like climate risks and geopolitically affected shipping routes. In 2025, a more granular, data-driven look at multiple future scenarios—and their potential financial repercussions—would be invaluable.

  • Balance Environmental and Social Issues

Climate stands out in shipping, but the “S” in ESG deserves equal prominence. Clearer data on labor practices, diversity, and community engagement around port facilities could lend further insight into Maersk’s social footprint.

  • Reinforce Links Between ESG Targets and Executive Compensation

Although the current report mentions sustainability targets in pay structures, greater transparency around how these metrics actually influence performance-based incentives would boost stakeholder trust.

Final Thoughts

Maersk’s 2024 integrated report marks a significant turning point—one that bridges financial realities with the company’s impact on our planet and people. As the shipping industry continues to evolve, compliance standards evolve to require integrated reporting, and competitors weigh how (and whether) to follow suit, this integrated approach likely will become the standard rather than the exception. The challenge, for Maersk and the industry alike, will be ensuring that future disclosures remain as thorough and user-friendly as possible—without losing sight of the operational complexities that make global trade possible in the first place.

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USAID Shutdown: A Climate and Geopolitical Own Goal That Hurts American Business

The Trump administration’s decision to shut down the U.S. Agency for International Development (USAID) isn’t just an attack on foreign aid—it’s an own goal that hurts American businesses, weakens U.S. influence abroad, and hands a strategic advantage to rivals like China and Russia.

For decades, USAID has quietly helped American businesses expand into emerging markets, funding everything from renewable energy projects to climate-resilient infrastructure and agriculture innovation. Now, that funding is gone, and U.S. firms that relied on it will have to compete against state-backed Chinese and Russian companies that are eager to fill the void.

But the damage doesn’t stop there. The global supply chain, regulatory landscape, and geopolitical risk profile for American companies is about to get a lot more complicated.

Here’s what’s at stake—and what corporate boards should do about it.

What Happens to the Climate Work?

Short answer: nothing good.

USAID has been a major player in the global push for clean energy and climate adaptation, particularly in developing countries that lack the resources to transition away from fossil fuels. American companies have benefited, too—providing solar panels, wind turbines, climate data analytics, and infrastructure solutions to USAID-funded projects. USAID had two initiatives that drive outcomes here — annual budget allocations to climate adaptation, clean energy and sustainable landscapes ($579M allocated in 2023) and the Climate Finance for Development Accelerator ($250M). Between 2022 an 2030, the objective was to mobilize $150B from both public and private sector players – a planned 30:1 ROI on the money USAID spends.

With the agency shut down, that pipeline of projects vanishes. This means less demand for U.S. solar, wind, and battery storage technology, pushing countries toward Chinese alternatives. It also means less demand for engineering services from American companies who are engaged in these large scale projects.

In addition, it means:

  • More deforestation as conservation efforts collapse, increasing carbon emissions and worsening climate change.
  • Greater vulnerability to extreme weather events, leading to humanitarian crises that strain global supply chains.

Companies that have built sustainability commitments into their business models will feel the hit—not just from lost contracts, but from increased environmental risks that drive up operational costs.

American Businesses Are About to Feel the Pain

USAID’s shutdown is now a business problem—especially for industries that have depended on USAID projects for growth.

Who’s at Risk?

Renewable Energy Companies (e.g., First Solar, NextEra, Tesla)

  • USAID has been a huge funder of clean energy transitions in emerging markets. With that funding gone, demand for      American solar, wind, and battery technology could shrink, leaving China to dominate.

Engineering & Infrastructure Firms (e.g., Bechtel, AECOM, Fluor)

  • USAID-backed projects fund everything from climate-resilient roads to flood defenses. Without them, U.S. engineering and construction firms lose out on lucrative contracts abroad.

Agriculture & AgTech Companies (e.g., Corteva, John Deere)

  • Many developing countries rely on USAID-funded initiatives for climate-smart farming, irrigation, and soil restoration. The shutdown puts those efforts at risk, reducing demand for U.S. agricultural technology and equipment.
  • American agriculture is also a major beneficiary of USAID funding. Hundreds of thousands of tons of US Government Food Aid is now stuck in port and risks going to waste. Annually, America purchases $2B in basic commodities like wheat, rice, soy and corn from American farmers for distribution as food aid. American agriculture is also at risk.

Technology & Telecommunications (e.g., Microsoft, Cisco, IBM)

  • USAID has supported digital infrastructure, cybersecurity, and data analytics for environmental and humanitarian programs. Now, developing nations may turn to Chinese and Russian tech providers instead.

Consulting & Professional Services (e.g., McKinsey, Deloitte)

  • USAID has been a major client for firms providing policy advice, impact assessments, and project management. Losing those      contracts will hurt U.S.-based international development consultancies.

Defense & Security Contractors

  • USAID has funded stabilization efforts in fragile regions, reducing the need for military intervention. Without those programs,      instability rises, and American companies operating abroad face higher security risks.

China and Russia: The Real Winners Here

With the U.S. retreating from development aid, China and Russia are more than happy to fill the gap.

  • China’s Belt and Road Initiative (BRI), already a dominant force in global infrastructure investment, will expand into areas   once supported by USAID, locking nations into Chinese-built roads, power plants, and data networks.
  • Russia benefits from prolonged fossil fuel dependence, as many USAID projects focused on transitioning developing countries   away from coal, oil, and gas. Without that funding, demand for Russian energy exports remains high.
  • Both countries use foreign investment as a political tool, pushing nations away from democratic governance models and toward   authoritarian-friendly policies.

For U.S. companies, this means increased competition, tougher trade conditions, and a shifting regulatory landscape in many of the world’s fastest-growing markets.

What Should Boards Be Doing Right Now?

Corporate boards cannot afford to ignore this shift. Here’s how they should respond:

1. Assess Exposure to USAID-Backed Markets

  • Identify which parts of the business relied on USAID funding—either directly through contracts or indirectly through supply chains.
  • Determine if competitors (especially from China) are poised to replace lost revenue streams.

2. Monitor Geopolitical & Regulatory Risks

  • Watch for new sanctions, trade restrictions, or regulatory changes as China and Russia expand their influence in emerging markets.
  • Engage government affairs teams to track potential alternative funding mechanisms.

3. Strengthen Global Business Resilience

  • Diversify international partnerships beyond government-funded projects, exploring private-sector partnerships and impact investors.
  • Reevaluate supply chain vulnerabilities, particularly in climate-sensitive regions.

4. Double Down on ESG & Sustainability Strategy  

  • If USAID-backed sustainability initiatives disappear, companies may need to step in with their own funding. There are two kinds of risks that will need to be evaluated – supply chain risk and reputational risk.
  • Consider investing in climate adaptation measures independently to mitigate long-term business risks.

5. Prepare for Increased Competition from China and Russia   – Expect Chinese and Russian firms to aggressively pursue markets where USAID once operated.

  • If expansion into certain regions becomes riskier due to geopolitical shifts, companies should consider alternative growth strategies.

Final Thought: USAID’s Shutdown Is a Global Business Risk

The closure of USAID isn’t just about humanitarian aid—it’s about economic influence, market access, and business risk.

For American companies that operate internationally, the disappearance of USAID funding means more uncertainty, more competition, and fewer opportunities in emerging markets. Boards that fail to recognize this shift will find themselves caught off guard as China and Russia consolidate their economic and political dominance in regions that once looked to the U.S. for support.

If the U.S. wants to remain a global leader—not just on climate, but in business and diplomacy—corporate leaders should be asking “How do we adapt?” Because right now, standing still isn’t an option.

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Vanguard’s 2025 Policy: A New Direction for Board Diversity

Vanguard’s 2025 Proxy Guidelines came out last week, prompting coverage of their softening of ESG and DEI language from both Reuters and ESG Dive.  Reuters described it as “dialing back diversity language”, and ESG Dive as “diluting board composition recommendations on diversity”.  Vanguard’s response was to state that the changes weren’t significant, and that they were simply part of their annual review process.

These changes are a shift toward a more neutral, case-by-case approach that prioritizes “market norms” over global governance frameworks. It’s hard not to conclude that “market norms” is simply code for shifting in the face of pressure from government, whether at the State or Federal level.

Here are the key changes that Vanguard made.

1. Board Composition and Diversity

2024 Policy

  • Emphasized board diversity, stating that boards should reflect “diversity of attributes including tenure, skills, and experience” and represent “diversity of personal characteristics, inclusive of at least diversity in gender, race, and ethnicity.”
  • Expected companies to disclose their approach to board composition, including the process for evaluating effectiveness, addressing gaps, and evolving board membership.
  • Vanguard’s funds would vote against nominating/governance committee chairs or other board members if a company failed to take action on board diversity.

2025 Policy

  • Softened the language on diversity, now emphasizing “diversity of thought, background, and experience, as well as personal characteristics (such as age, gender, and/or race/ethnicity),” but without setting explicit expectations for representation.
  • Board diversity expectations are now more market-specific, meaning Vanguard will assess board diversity based on local listing standards and governance frameworks rather than a global standard.
  • Instead of outright voting against nominating/governance chairs for failing to address diversity, Vanguard now considers market norms and corporate explanations before taking action.

Key Change:

Vanguard is stepping back from an explicit commitment to gender and racial diversity as a key voting criterion and shifting towards a broader, more flexible approach focused on market norms.

2. Environmental & Social Shareholder Proposals

2024 Policy

  • Vanguard was willing to support shareholder proposals if:
    1. They addressed a shortcoming in a company’s disclosure relative to market norms.
    2. They reflected an industry-specific, materiality-driven approach.
    3. They were not overly prescriptive about how a company should act.
  • Climate risk disclosure expectations: Vanguard could vote against boards that failed to disclose material climate risks, particularly if they were misaligned with frameworks such as the Paris Agreement.
  • Supported workforce demographic disclosures, including publishing EEO-1 reports, where relevant.

2025 Policy

  • Less emphasis on ESG-related disclosures: The 2025 policy still evaluates environmental and social shareholder proposals but weakened its criteria for supporting them.
  • Climate risk oversight changes:
    • Removed reference to alignment with the Paris Agreement as a factor in assessing risk management failures.
    • The language around voting against directors for failing to oversee climate risks has been diluted to focus more on “company-specific context” rather than alignment with global standards.
  • Social Risk & DEI Reporting:
    • Explicit support for workforce demographic disclosures (e.g., EEO-1 reports) has been softened.
    • The policy does not explicitly mention diversity, equity, and inclusion (DEI) oversight as a voting criterion, whereas it did in 2024.

Key Change:

Vanguard has scaled back its willingness to support ESG and DEI-related shareholder proposals, particularly on climate disclosures and workforce diversity reporting. The 2025 policy is more company-specific and market-based, rather than aligned with global frameworks like the Paris Agreement.

3. Executive Compensation (ESG Metrics in Pay)

2024 Policy

  • Vanguard stated that it did not expect ESG (environmental, social, governance) metrics to be a “standard component” of all executive compensation plans.
  • However, if a company chose to include ESG metrics, Vanguard would evaluate them based on rigor, disclosure, and alignment with key strategic goals.

2025 Policy

  • The stance remains similar: Vanguard does not require companies to include ESG metrics in executive pay.
  • However, the 2025 guidance removes direct references to ESG as a consideration in performance-linked compensation decisions.

Key Change:

While Vanguard already had a neutral stance on ESG-linked compensation, the 2025 policy makes an effort to further de-emphasize the relevance of ESG incentives.

Overall Takeaways:

1. Shift Away from Explicit Diversity Expectations

  • 2024 emphasized gender, racial, and ethnic diversity in board composition.
  • 2025 softens this to a broader “diversity of thought and background” approach.
  • Voting enforcement for diversity-related shortcomings is now more flexible and market-dependent.

2. Weaker Support for ESG & DEI Shareholder Proposals

  • 2025 moves away from references to the Paris Agreement and broad climate risk disclosure requirements.
  • Vanguard is less likely to support shareholder resolutions demanding climate action or DEI-related reporting.

3. Decreased Focus on ESG Metrics in Executive Pay

  • 2024 allowed for the evaluation of ESG-linked compensation where relevant.
  • 2025 removes direct mention of ESG factors in pay evaluation.

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Nine Climate-Driven Migration Risks That Boards and Management Teams Should Consider

In early October, while the United States was still reeling from the impact of Hurricane Helene, Abrahm Lustgarten wrote that people fleeing climate disasters will change the American south (Propublica and NYTimes). This isn’t new news. NGOs have been forecasting massive population displacement due to climate change for some time now. For example, in 2021 the World Bank forecast over 200M persons could be displaced, most within their own countries, by 2050. In the United States, estimates are that as many as 13M people will be displaced by the end of the century, primarily from the south.

Lustgarten’s article focused on the social costs of this migration. He made it personal by talking about the follow-on impacts that the hollowing out of the south would set in motion. But what about the risks to business? After all, the southern United States is home to key players in Energy and Oil (45% of US refining capacity is on the Gulf Coast), Retail and Consumer Goods (Walmart, Home Depot, Lowes), Technology and Communications (AT&T, Dell), and Logistics and Transportation (UPS and Fedex). Some estimates are that 30 to 40% of the Fortune 100 will be impacted by changing weather patterns in the South.

Many boards and management teams are already considering the physical risks extreme climate brings. Depending on the business, any or all of these risks must also be considered:

1. Labor Market Disruption: Businesses in coastal areas like Florida and Texas will face labor shortages as younger, skilled workers relocate inland. The remaining population will primarily consist of older individuals with limited capacity for employment, exacerbating productivity issues.

2. Supply Chain Disruptions: Frequent extreme weather events, such as hurricanes, may disrupt supply chains by damaging infrastructure, reducing access to essential goods and inputs. This will increase operational complexity and costs, especially in regions prone to storms and flooding.

3. Market Demand Shifts: As populations move inland, consumer demand will decline in vulnerable coastal areas. Businesses dependent on local markets will experience a reduction in revenue, necessitating adaptation to shifting demographic patterns and potentially moving operations to inland, safer regions.

4. Regulatory and Legal Risks: Businesses in affected regions may face new government regulations regarding disaster preparedness, land use, and environmental protection. The financial burden of complying with these regulations could increase as local governments seek to address the effects of climate migration.

5. Property and Asset Risks: Coastal properties and physical assets in regions identified as “abandonment zones” will likely decrease in value as residents leave. Businesses may find it increasingly difficult to sell or maintain properties in high-risk areas, leading to potential losses and higher insurance costs.

6. Social and Political Instability: As communities age and face greater economic decline, social services will become strained, and political instability may arise. Businesses may encounter a more challenging operational environment with reduced government support and rising tensions in affected communities.

7. Brand and Reputation Risks: Businesses that fail to act on climate risks or support local adaptation efforts may face reputational damage, especially in regions where migration pressures are mounting. Proactive strategies to assist displaced populations or support sustainability could enhance brand image.

8. Financial Risks: Investors may reassess the viability of businesses operating in vulnerable coastal areas. Access to credit may tighten for firms seen as overexposed to climate-related risks, particularly if asset values decline and revenue forecasts are uncertain.

9. Operational Adaptation: Businesses will need to adapt operational models to serve a changing demographic, including older, less mobile populations. This may involve investing in new products, services, or technologies that cater to an aging customer base or relocating operations to safer areas.

Which of these enterprise risks are material to your business? How does your company assess these risks? How frequently? What is your near-term extreme weather mitigation strategy, and your long-term sustainable business strategy?

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How About Axing the Fossil Fuel Subsidies?

a graphic that visualizes the concepts of “axe” and “tax” in the context of cutting fossil fuel subsidies (the axe) and implementing carbon pricing (the tax).

Last night Justin Trudeau’s beleaguered Liberal Party government survived a non-confidence vote in the Canadian parliament. Conservative Party leader Pierre Poilievre had been campaigning for a vote all summer on the premise that Canadians can’t afford to pay Canada’s carbon tax. Despite the lack of substance in Poilievre’s message, his campaign has had an impact. It seems inevitable that there will be an election fought on the issue of climate policy within the next year.

Andrew Coyne’s editorial earlier this week points out the delicious irony of Poilievre (as a nominal conservative) opposing market force mechanisms to achieve Canada’s greenhouse gas reduction targets. Not only is carbon pricing the most conservative policy choice, it is also the most efficient and fairest way to reduce emissions.

There are a range of ways for Poilievre’s “government in waiting” to reduce emissions, however. The question Canadians should be asking Poilievre is which does he support? What will his policy be, if not a carbon pricing mechanism? How will a Conservative Party government make good on Canada’s international commitments?

Here are some approaches that he could choose.

1. Emissions Pricing: Proven & Effective

Poilievre hates it, but one of the most effective ways to reduce emissions is by putting a price on them, either through a carbon tax or a cap-and-trade system. Both mechanisms create a financial incentive to reduce pollution. Carbon taxes tax emissions directly, while cap-and-trade systems operate auctions allowing large emitters to bid on carbon allowances in accordance with their needs.

  • Carbon Tax Success: Sweden introduced a carbon tax in 1991, and the results speak for themselves. Since then, Sweden has reduced its emissions by 80%, all while growing real GDP by 100%. By contrast, Canada has grown real GDP by 107% over the same period which tells you that carbon pricing can be implemented without impacting economic growth. (src: World Bank)
  • Cap-and-Trade in Action: The European Union’s Emissions Trading System (EU ETS), established in 2005, has contributed to a 47% reduction in emissions across covered sectors. The U.S. Regional Greenhouse Gas Initiative (RGGI) has also been highly effective, reducing power sector emissions by 50% between 2009 and 2020, while the region’s economy grew by nearly the same margin.

Carbon pricing is not only an effective emissions reducer, but it can also generate revenue for governments to reinvest in clean technologies.

2. Subsidies and Incentives: Accelerating the Clean Energy Transition

While carbon pricing penalizes pollution, subsidies and incentives reward clean energy solutions. Clean energy solutions have higher up-front costs than fossil solutions, but dramatically lower usage costs and emissions impact. Countries that support renewable energy projects, electric vehicles (EVs), and energy efficiency programs are seeing rapid reductions in emissions as a result.

  • Renewable Energy Growth: Electricity generation accounts for about 9% of all emissions in Canada. Incentives to drive emissions out of electricity generation, and to build out infrastructure to handle greater demand due to the electrification of the rest of the economy make sense and can have a big impact. Electricity generated from natural gas is responsible for 450 to 550 grams of CO2e/kWh over the lifetime of the plant, versus 20 to 60 grams for solar, and 10 to 20 grams for wind. Fortunately, solar and wind are very affordable now. According to the International Renewable Energy Association (IRENA), since 2021, the weighted average LCOE (levelized cost of energy) for new solar installations in Canada has been lower than the weighted average LCOE of added fossil fuel generation capacity. Onshore wind passed natural gas and goal in 2015 in the Canadian market. Today the LCOE for natural gas-fired power plants in Canada is between $0.07 and $0.14 CAD per kWh, versus $0.03 to $0.06 per kWh for wind and $0.05 and $0.10 for solar.
  • EV Adoption: In the U.S., tax credits for electric vehicles have been instrumental in increasing EV sales by 50%. This shift toward electric mobility is a key factor in reducing transportation-related emissions. In Canada, transportation is the second largest source of emissions, responsible for 24% of greenhouse gas emissions. Incentives to encourage the electrification of the transportation sector make sense when you consider that total product lifecycle emissions for gasoline powered vehicles are 250 to 300 grams for CO2e per kilometer, versus 50 to 150 grams for electric vehicles.

Subsidies and incentives help buyers overcome cost barriers, making it easier for businesses and consumers to transition to a low-carbon future.

3. Regulatory: Setting Standards for a Cleaner Future

Market mechanisms like emissions pricing and subsidies are powerful, but regulations can enforce emissions reductions at scale. Governments can implement standards for energy production, transportation, and construction to ensure that businesses and individuals meet specific emissions targets.

  • Renewable Portfolio Standards (RPS): In the U.S., states with RPS policies have seen far greater renewable energy deployment than those without, leading to substantial emissions reductions. Nationwide, Canada performs well, with over 80% of electricity coming from non-emitting sources. However three provinces account for the bulk of emissions from electricity generation — Alberta (41%), Saskatchewan (28%) and Nova Scotia (8.5%). Alberta has a stated goal of 30% of generation from renewables, Saskatchewan 50%, and Nova Scotia 80%, all by 2030.
  • Fuel Efficiency Standards: Data for Canada are not available, but data from the U.S. Environmental Protection Agency (EPA) reveals that fuel efficiency standards have prevented an estimated emission of 6 billion metric tons of CO₂ since 1975, highlighting the long-term benefits of such policies. The transition to a Zero Emissions Vehicle economy will continue this trend.
  • Building Codes: Countries that enforce strict energy-efficient building codes, such as Germany, have significantly lowered energy consumption in homes and offices, contributing to nationwide emissions reductions. Canada has energy efficiency measures built into the building code, but not with the same teeth that German regulations have. Given that buildings contribute 13% of Canada’s emissions footprint, strong regulations to drive construction of new low / zero emissions buildings combined with rigorous retrofit requirements for existing buildings could be a possible solution.

Regulations ensure that emissions reductions happen across industries, even in sectors where market forces alone may not be enough to drive change.

4. Public Investment: Building a Sustainable Infrastructure

Governments also play a crucial role in directly investing in public infrastructure and green technologies. Strategic investments can help shift national economies away from fossil fuels and toward renewable energy and electrification.

  • Renewable Energy Investment: In addition to the investments Canada is making in renewable generation, Canada’s grid is estimated to need a minimum of $400B in upgrades (some estimates are over $1T) to support the country’s 2050 goal. The grid itself is owned by a mixture of public and private entities, varying from province to province. Investment to accelerate the update of the national grid is an important step.
  • Public Transport: Electrifying public transport can make a significant dent in urban emissions. According to Translink Vancouver, each electric bus in the Vancouver fleet reduces emissions by 100 tons of CO2e annually. Nationally, electrifying public transport would account for 1% to 2% of emissions country-wide.

Public investment in infrastructure is a win-win—it not only reduces emissions but also creates jobs and stimulates economic growth.

5. Phasing Out Fossil Fuel Subsidies

Despite the global push toward clean energy, and Canada’s own 2050 net zero targets, the country still provides between $5B and $20B (depending on what you count as a subsidy) in annual subsidies to the fossil fuel industry. However, phasing out these subsidies can lead to emissions reductions as prices will increase for consumers. Estimates from the International Institute for Sustainable Development (IISD) suggest that prices might rise by 5 to 10 cents per liter.

A 2021 study by IISD found that removing fossil fuel subsidies could reduce emissions by 10% by 2030. By leveling the playing field, governments can help renewables compete more fairly with fossil fuels.

In addition, redirecting subsidies from fossil fuels to clean energy initiatives might accelerate the transition to a low-carbon economy.

Poilievre could consider many other policies as well. For example:

  • Incentives to encourage regenerative agriculture. The agriculture sector is responsible for 10% of Canadian emissions.
  • Incentives and regulations to drive more circularity into the Canadian economy. Waste accounts for about 3% of Canadian emissions.
  • Incentives to decarbonize heavy industry. The cement, steel, chemical and mining industries are responsible for 14% of Canadian emissions.

The key point, however, is that the member from Carleton needs to put some flesh on the bones. “Axe the tax” just isn’t enough.

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Do Electric Vehicles Really Emit more CO2 than Fossil Fuel Burners?

Electric Car Charging At Power Station

What if electric vehicles were actually worse for the environment than old-fashioned gas burners? What if, somehow, we have all been deceived by the diabolical Elon Musk and his minions in Fremont California… and hidden pollution costs associated with electric vehicles are actually making global warming worse?

This story, unfortunately, keeps cropping up in corners of the internet. How can we determine what the truth is?

To address this question requires us to consider two parts:

  • The fuel cycle. What is the “well to wheel” cost associated with operating the vehicle? Depending on the power source, that may include the cost of extraction, refinement, distribution and/or generation.
  • The vehicle cycle. What is the cost to manufacture, maintain, recycle and/or dispose of the vehicle.

The discipline that answers these types of questions generally, for all types of products (not just automobiles), is called life cycle assessment. In the case of automobiles life cycle assessment is complex. Fortunately, there is a generally accepted methodology and set of models for performing this analysis. Argonne National Labs in Illinois has been working on the Greenhouse gases, Regulated Emissions, and Energy use in Technologies Model (otherwise known as GREET) since the late 1990’s. For a given vehicle and fuel system, GREET allows you to calculate:

  • Consumption of total energy (energy in non-renewable and renewable sources), fossil fuels (petroleum, fossil natural gas, and coal together), petroleum, coal and natural gas;
  • Emissions of CO2-equivalent greenhouse gases – primarily carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O); and
  • Emissions of six criteria pollutants: volatile organic compounds (VOCs), carbon monoxide (CO), nitrogen oxide (NOx), airborne particulate matter with sizes smaller than 10 micrometre (PM10]), particulate matter with sizes smaller than 2.5 micrometre (PM2.5), and sulfur oxides (SOx).

In the latest iteration, GREET now includes more than 100 fuel production pathways, and more than 70 vehicle and fuel systems.

You could easily drive yourself mad thinking about this. To keep it simple, GREET’s output is expressed simply as emissions per distance travelled. In the United States this is expressed as grams CO2e / mile, and in the rest of the world as grams CO2e / kilometre. The vehicle cycle emissions (those produced during manufacturing) are distributed over the expected lifetime of the vehicle, and then added to the fuel cycle emissions to produce a single aggregate number.

You can see examples how this works on Tesla’s 2020 Impact Report, beginning at page 13. They compare a Tesla Model 3 charged at home using their solar and powerwall product (zero cost electricity) to grid charged. They also compare personal use scenarios with ridesharing scenarios. And finally, they compare those scenarios to an average mid-size gasoline powered vehicle.

Comparison of Tesla Model 3 emissions

The Tesla graphic shows us some interesting facts.

  • Notice that the manufacturing produced emissions for personal use vehicles seems to be dramatically higher than for vehicles used for ridesharing. The emissions are in fact identical, but because the rideshare scenario presumes a million miles travelled, when expressed in grams of CO2e/mile, the graph appears to show lower manufacturing emissions.
  • Notice also that the emissions associated with charging from the grid are dramatically higher than for solar. There is an emissions footprint for purchased electricity, that will vary depending on the utility’s generation mix, and depending on where you live. In fact, Tesla shows this in multiple graphics depicting various geographies in their report. But when you generate your own electricity from the sun, you don’t produce emissions.
  • And finally, notice that the emissions from manufacturing for the solar scenario seem higher than for the grid scenario. They are, in fact, higher. That’s because Tesla adds the emissions associated with manufacturing the solar panel and storage battery into the scenario.

You can see from Tesla’s graphic that emissions associated with using a Tesla Model 3 are dramatically lower than with the average internal combustion engine vehicle they’ve depicted. However, scenarios will vary depending on where the vehicle is manufactured, and where you live. In 2017, the 2 Degrees Institute quantified this difference for the United States and Canada. The study is old, and the underlying assumptions have improved since then, but it still illustrates this point very well. In 2017, driving just 9,000 miles in California would fully offset the embodied emissions in the electric vehicles they studied. To offset those same emissions in Michigan would take over 17,000 miles…. and 38,000 km / 23,600 miles in Alberta Canada.

So yes, electric vehicles have a higher embodied carbon footprint than internal combustion vehicles. However, the difference isn’t significant enough to warrant not switching. Whether you live in LA or Calgary, within less than 2 years that embodied CO2e difference will be erased as you power your vehicle with clean efficient electricity.

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Is energy access simply modern colonialism?

Small Guatemalan village

770 million people globally lack access to electricity. They’re predominantly in developing nations. Despite international commitments to energy equity, like the UN Sustainable Development Goals, the dominant view is that electricity access for these folks will be a slow and expensive process.

On July 14th, the Carbon Tracker Initiative published a report titled Reach for the Sun, which challenges this view. They forecast that 88% of the growth in global electricity demand between 2019 and 2040 will come from emerging markets. Moreover, demand for fossil fuel generation in those markets has already, or is about to, peak. Those countries are investing in renewables.

They divide the emerging markets up into four groups:

  1. China, which is nearly half the demand for electricity, and 39% of the expected growth.
  2. Coal and gas importers, such as India or Vietnam, which account for 1/3 of the demand for electricity, and nearly half of the growth.
  3. Coal and gas exporters, like Russia and Indonesia, which are 16% of the electricity demand, but only 10% of the forecast growth.
  4. Fragile states, like Nigeria and Iraq, which account for 3% of demand, and about the same percentage of growth.

Carbon Tracker makes the case that emerging markets will leapfrog developed nations in renewable energy deployment as they modernize their economies. With little to no legacy generation infrastructure in place, it makes sense to build out with renewables. Moreover, the added attraction of energy independence makes this a strongly preferable path.

Developed nations in North America and Europe have the disadvantages of:

  1. Sunk costs in the form of coal and gas generation infrastructure.
  2. Political headwinds as vested interests in fossil fuel industry players work against renewables.
  3. Economic headwinds slowing down deployment of renewables as comparitively low growth in demand makes financial cases difficult.

The report is tremendously detailed. There is much to digest here.

The most extraordinary takeaway for me, though, was the similarity between 19th century colonialism, and today’s oligarchy of fossil fuel producing businesses and nations. Colonialism is the control of one group of people by another, generally by establishing colonies of settlers, for the purpose of economic exploitation. Developing nations export raw materials, and in some cases finished goods to the West. Energy independence is an inarguable benefit for them. Yet Western interests have actively sought to thwart renewable deployment in developing nations in order to continue to extract energy “rents” from these economies.

Is this modern colonialism? You tell me.

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Emissions Trading and Border “Adjustments”

Emissions trading schemes were in the news last week, and China was at the center of the news.

China’s long awaited ETS went live on Friday, after operating seven pilot programs since 2011. It covers 2,225 power plants, responsible for over 40% of China’s national emissions, and is being called the world’s biggest carbon market. Certainly in terms of sheer coverage it is. The 4,000 megatonnes of carbon encompassed in the scheme represents about 12.4% of the global total of 32,300 reported by BP in last week’s Statistical Review of World Energy.

Critics are already pointing out the holes in the scheme.

  • The maximum penalty under the scheme is around $4,600. It’s not a meaningful deterrent.
  • The scheme is unlike other “cap and trade” systems which use a declining cap to drive down emissions annually. Instead, permits are allocated on the basis of plant size and carbon intensity, and given out freely. If a plant exceeds its emissions cap then it needs to go to the market to buy additional permits. However, in practice the quantity of permits issued means that any plant operating at below 85% capacity will have excess allowances.
  • The maximum number of allowances that any non-compliant plant will be required to buy is up to 20% of their allocation. Even if operating at 50% above the allocation, they are only required to buy 20% more. It’s a free pass for the dirtiest of plants.
  • Gas plants are effectively exempt from the scheme. Analysts expect that they will always be net sellers of allowances. Some are even calling the scheme a subsidy for gas power.
  • The market price per ton is set at about $7, far below global averages.

Carbon Brief has a detailed Q&A, with many more data points. Bottom line is that “The ETS in its current form will likely have no impact” (Transition Zero, “Turning the Supertanker”, page 4). China says it’s in a preliminary benchmarking phase. Much will depend on how China enlarges it, and how carbon is priced in the future.

Separately, last week the EU released more details on it’s proposed “Carbon Border Adjustment Mechanism” (CBAM) as part of it’s “Fit for 55” initiative. The Europeans are careful to call this an adjustment mechanism, and not a border tariff. They claim that it’s neutral and will comply with current WTO rules. Essentially, CBAM requires that products imported into the EU have to meet the same emissions criteria as products produced in the EU. Imports will have to be accompanied by emissions certificates, and if they don’t comply they will have to purchase emissions credits on the open market in order to bring them into compliance. The goals are to both prevent European companies from relocating manufacturing to less stringent countries, and to encourage manufacturers in foreign countries to produce clean products for export to Europe.

CBAM is being received by European partners as a tax, and potentially an illegal tax under the terms of the WTO. It’s a headache for the US which has no emissions trading scheme in place. It’s also a headache for China, which will face (potentially) steep tariffs unless it gets its own house in order. Some believe that CBAM could be a forcing function to get global agreements on emissions trading, as it will put exporters at a disadvantage competing in large markets unless they’re willing to comply.

And that brings us back to China. The world has legitimate complaints about China. It is the world’s largest emitter. China also exports more CO2e than any other economy in the world. As the dominant manufacturing country in the world, China’s dirty power makes its way to the shores of every other nation in the world not just as air pollution, but also as scope 3 emissions in the form of the products we buy and use.

Src: WEF Net Zero Challenge: The Supply Chain Opportunity

Bottom line: CBAM, and schemes like it, are the medicine needed to clean up global supply chains, and to force emitters to mend their ways.

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“Green ammonia” for energy storage.

solar and wind farm

Yesterday a massive new wind and solar powered hydrogen generation plant was announced in Western Australia. The Western Green Energy Hub will produce up to 3.5 million tons of green hydrogen, or 20 million tons of green ammonia in a year, powered by 50GW of hybrid solar and wind. For context, according to the Australian Energy Regulator, the entire country has just over 50GW of total capacity today. This is truly a massive plant.

Why produce all that electricity, only to convert it into hydrogen or ammonia? And why ammonia?

Hydrogen is an efficient means to store energy, but with many drawbacks. Transporting liquid hydrogen directly, for example, requires storing the gas at -233C. It turns out that ammonia is also a very efficient means to store energy. Ammonia’s energy density by volume is 1.7x that of liquid hydrogen, and it’s more easily stored and transported as well. Japan intends to use hydrogen and ammonia fired systems for power generation. Mitsubishi is also developing 100% ammonia fired turbines intended for deployment in 2025.

The big drawback to ammonia is the Haber-Bosch process used to produce it at industrial scale today. We use vast amounts of ammonia globally, mostly for fertilizer. Indeed, we could not feed the planet without the Haber-Bosch process. However, the Haber-Bosch process consumes large amounts of energy (1-2% of world energy), takes natural gas as an input to generate hydrogen (3-5% of global production), and emits CO2 directly as a byproduct. “Green ammonia” production uses water electrolysis to generate hydrogen instead of natural gas, which eliminates the emission of CO2, and powers the Haber-Bosch process by renewable electricity. It still consumes large amounts of electricity, but generated from renewable sources instead. Hence the need for a power generation plant capable of powering the entire continent of Australia!

Green ammonia seems promising, although not implemented at scale yet. Multiple energy storage projects are in progress globally. Yesterday’s Western Green Energy Hub announcement from Australia only adds to the momentum.

Lastly, there are still many possible efficiencies around the production of ammonia. For example, promising work is underway to produce ammonia using reverse fuel-cell processes directly from water and nitrogen gas. No electrolysis, no Haber-Bosch process, very low energy requirements.

Perhaps one day ammonia will help us to both power and feed the planet, without the emissions downside it creates today.

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Fossil fuel lobbyists fight city natural gas bans.

A gas and electric cooker ring on full power
A gas and electric cooker ring on full power

In 1969 I went to kindergarten at Central Public School in Ontario. It was built in 1882 at a cost of $12,000. Today it’s the oldest remaining building in the city with its original design.

View 2 of Central Public School
Credit: Orillia Matters

Central was heated with coal. I remember the coal chute at the back of the building, and the dust that seemed to always be present, but especially when a delivery came. My parents homes were all heated with oil, and I can still conjure up the smell of the fumes on the days when the oil truck would arrive with a delivery. The first home I purchased was also heated with oil, but since then my homes have been gas or electric. My experience is common, as energy source shifts have occurred throughout the 20th century.

Credit: RMI

Cleantechnica published a reference last week to a June RMI brief on how state politicians are moving to block local governments from adopting clean energy requirements for new home builds. Cities in many parts of the United States are simply stepping up and mandating clean air requirements. Berkley CA has banned natural gas in new construction, as have Seattle WA, Norman OK, Brookline MA and at least 45 other cities. Recently, 19 states have passed laws prohibiting these bans. The states use “consumer choice” as the justification, but RMI claims that these efforts are thinly disguised lobbying efforts by the fossil fuel industry.

RMI makes the point that “consumer choice” is a disingenuous argument, since gas companies won’t run a pipeline for just one home. Energy choice is a decision that is made collectively by a group of homeowners at a neighborhood, or even potentially at a municipal level. More importantly, though, the decision to hamstring regulatory efforts is a set-back for net-zero commitments nationwide. Just as cities are now able to require EV charge capacity in all new builds, they should also be able to prohibit gas in new builds.

There will no doubt be legal challenges as cities have the right to enact all kinds of regulation that state level governments shouldn’t be meddling with. It’s also worth noting precedents dating back centuries that cities can enact these bans. The City of London, for example, banned the burning of coal over air quality concerns in the year 1306.