The UN Climate Change Conference, COP26, will begin in Glasgow next week. This conference has been described by John Kerry as the world’s last best hope to save the world and avoid irreversible climate catastrophe. COP26 is bringing governments from around the world together to address humanity’s biggest challenge of global warming.
The International Energy Agency (IEA) sees a $100 trillion investment opportunity in the Climate Transformation. What policies or catalysts should investors expect to come out of COP26? How do governments and companies move beyond headlines to achieve the Paris Agreement goals? What role can Space technologies play in the massive transition of every major industry of the global economy from fossil-fuel based to clean and sustainable markets?
At the last UN climate conference in 2015, more than 200 nations committed to the Paris Agreement to limit global warming to 1.5 degrees versus pre-industrial levels. Over the last few years, more frequent extreme weather events and growing investor and regulatory pressure have also driven many of the world’s largest publicly traded companies to voluntarily integrate ESG (Environmental, Social Governance) into their business strategy and reporting, committing to net zero carbon emissions by 2050. However, the world is still falling short on the target with global emissions continue to rise and current policies, regulations and technologies still need to fully develop.
One of the biggest challenges facing organizations in assessing and combating climate change is being able to measure its impacts and risks and then to benchmark them against standards. Policy makers and regulators can only assess the environmental impact of business activities and climate risk with reliable and measurable data. Such data are now collected on a voluntary basis, and they lack standards and comparability. Moreover, the scope of most current climate disclosure is limited to only emissions from the business’ own operations (Scope 1 and 2). This is not sufficient as emissions from some of the most polluting industries are indirect and come from their supply chain (Scope 3). Space tech can play a critical role with near real- time data. Global coverage and frequency revisits from Earth Observation satellites can provide the level of comprehensive coverage and insights at scale that organizations and regulators often require to make informed decisions. Comprehensive reporting on all corporate emissions is essential for investors, regulators and policy makers in order to quantify decarbonization progress.
In addition to governments’ needs to measure and report on their Nationally Determined Contributions (NDCs), we see progress in two areas as catalysts for new commercial market opportunities for the Space Earth Observation industry. First, mandatory climate risk disclosure by G20 countries would be the first step in providing consistent and useful information to organizations and policy makers to accelerate net zero goals. Consistent and reliable data would enable organizations and regulators to plan, assess for and enforce near-terms targets. This will in turn help mobilize private sector financing and reinforce government policy.
Corporate climate disclosure aligned with recommendations by the Task Force on Climate-related Financial Disclosure (TCFD) has accelerated over the past year as with several regulators in EU, Japan, UK and Brazil adopting the framework. The SEC in the US is likely to move in the same direction before year-end. Under the TCFD proposed guidance on climate related Metrics, Targets and Transition Plans for GHG emissions, organizations should provide at least Scope 1 and Scope 2 emissions and, if appropriate, Scope 3 emissions and related risks. For example, Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the reporting company and Scope 3 includes all other indirect emissions from a company’s supply chain, including upstream and downstream, which typically represent 70%-90% of an organization’s carbon footprint. For financial institutions, this includes emissions facilitated by financing or investment activities.
Highlighted below are examples from three industries on how space could help develop roadmaps and become essential tools to achieve carbon reduction plans. First, Royal Dutch Shell, the Oil & Gas giant, has introduced the most ambitious climate strategy with multi-layered targets. It is expanding beyond operational Scope 1 and 2 to Scope 3. This is important as Scope 3 indirect emissions account for 90% of Shell’s overall emissions. The company first needs to map its carbon footprint, introduce more measures to increase efficiency, and will likely use carbon capture or carbon trading for offsets. Shell is reducing carbon intensive oil exploration & production, while increasing natural gas, and investing in wind and solar. Space technologies from Earth Observation/remote sensing, communications, IoT to data analytics provide invaluable tools to accelerate this transformation.
While the banking sector has been leading the ESG movement, most banks have limited their disclosure to their own operations Scope 1 and 2. Scope 3 emissions include environment risk on the bank’s loan books, and typically represent more than 70% of a bank’s emissions due to financing industries with high carbon intensity (Energy, Utility and Materials). Like the energy industry, banks need better and more granular data to calculate and track their customer’s emissions. On the other hand, banks could use the information to reshape their loan portfolios and finance more green projects and cut back on polluting industries.
The tech industry, like banks, have large Scope 3 exposures. Tech giants Google has ambitious climate targets, but they are limited to Scope 1 and 2, which leaves out more than 90% of its total emissions. Google plans to run on 100% renewable energy everywhere 24/7 by 2030. Amazon has an even more ambitious target of net zero by 2040. It has included indirect emissions Scope 3 in its climate strategy, which include all of its supply chain such as the equipment in the data center and semi-conductors. The company is planning to use renewable energy by 2025 for all of its operations, a fleet of 100,000 Electric Vehicles by 2030 while driving fuel efficiency from their planes and ships and upgrading their buildings and data centers. In addition to better space data to map and measure their carbon footprint, Amazon could leverage Space innovations to identify buildings heat loss for retrofit or move power hungry data centers to space.
As mentioned above, the expansion of the global carbon market is another key area for space industry to play an important role. An agreement on emissions trading rules between countries would accelerate and operationalize international carbon markets through a compliance system (currently, most carbon credits are traded through voluntary markets). The use of carbon markets as a mechanism to reduce or compensate Greenhouse Gas (GHG) emissions supports every country’s NDCs under the Paris Agreement. Like mandatory climate disclosure, the expansion of global carbon markets would require better data and metrics in order for regulators and business owners to monitor and manage their exposure.
The idea of carbon market under the Paris Agreement is if one country pays for carbon emissions to be reduced in another country, the first country can count those reductions towards its own national target. If done right, this would create clear incentives for countries to cut their emissions fast and help funnel investment to the best projects for cutting emissions
It is clear that reliable consistent and measurable data, a significant portion of which can come from space-related technologies, will play a foundational role in this sustainable transformation.
Space startups involved in monitoring and measuring carbon dioxide, methane emissions and other environmental metrics include Planet Labs, GHGSat, Bluefield, Scepter Air, Kayrros, Aclima, Orbital Sidekick, Satellogic and SatelliteVu.
Join the Space and Geospatial Virtual Pavilion for COP26 from November 1- 11 for insights from industry and government experts on How Space and Geospatial Intelligence Can Help Industry and Government Tackle Climate Change.
The free-to-attend Space and Geospatial Virtual Pavilion for COP26, from KTN, will take place from 1-11 November 2021. The event will feature sessions from more than 30+ national and international partners including representatives from the UK’s Geospatial Commission and UK Space Agency, NASA, former Vice President of the United States, Al Gore, and Chief Executive of the Committee on Climate Change, Chris Stark. Businesses from all sectors, from maritime to built environment, and security to nature, will have the opportunity to understand how innovative geospatial technologies and data can benefit them, by supporting the building of more climate resilient infrastructure and adapting to increasing frequency of extreme weather events.