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EU goes to battle on packaging...the plastic wars begin!
Companies in or importing into the EU produce over 100kg of waste packaging per per person per year, according to the EU. In his speech yesterday, Executive Vice-President Timmermans’ outlined three goals for new rules which, if implemented by 2030, would potentially drastically reduce packaging and plastic waste. These rules go much further than the rules put in place in 2019 to ban single use plastic items like cutlery. They would also change how many industries operate today, from food, to logistics, restaurants to cosmetics. The three stated goals are; Planet conscious consumers generally agree with the EU, but the big question for the rule makers is around the how these rules will be set, monitored and managed? Setting a rule for reducing the quantity of packaging around a certain product (how big should an Amazon box be vs. the product inside) are possible to set but will take time. We buy cosmetics marketed in sophisticated plastic bottles that are almost possible to recycle and rarely re-used, setting new rules for these will be more difficult, but not impossible as long as the industry co-operates. Metrics on how much plastic and waste a company produces are also possible, and under development as part of the work of the TNFD, this will also give financial investors better insight into practices which are becoming less financial let alone environmentally sustainable. You would hope these new rules also spur a new wave of innovation, as we have seen in energy production and transportation. To do so the rules also need to ensure this is permissible, hard when you are trying to future proof - where for example do the organic plant-based packaging materials produced for example by Tetra Pak sit within these rules? The company, one of many, has invested billions of Euros into packaging which both protects both the food product inside and the environment, and alone creates 200 billion packaging items a year. The answer to all of this requires industry not obstructing or fighting the rules but helping shape and inform them, taking into account new emerging technologies, business models and consumers, and most importantly protecting the planet from the millions of tonnes of waste we produce every day. David Craig, co-chair TNFD
Natural Capital Technologies Research
Dec 1, 2022 · 3 min read
Natural Capital News - 46 - Vertical Farming, Alternative Dairy Challenges
Oatley Shares fall on lower growth forecasts and higher costs Alternative dairy producer Oatley reported lower forecast revenues and profit in Q3 due to challenges in production, supply chain issues, COVID in Asia, and inflation. The Swedish headquartered company listed on Nasdaq revised revenue forecasts for 2022 downwards from $800 to $700-$720m (9-12% growth) for the full year sending shares falling. Investor confidence was impacted by high investment costs and lower operating margins. The company still committed to EBITDA positive by end of 2023. Oatley Investor Presentation Kalera doubles revenues as it exceeds target yields, focusing on profitability by end 2023 In its Q3 results, Nasdaq listed Kalera (KAL) one of dozens of vertical farming companies, announced revenues of $1.7m for Q3, doubling year on year vs Q3 2021. The management team stated a goal to achieve break-even cashflow by end of 2023, focusing on further cost reductions, operational enhancements and addressing capital needs. As a sign of growing investor concern, Kalera shares are trading at a fraction of the initial opening price. The company is operating this year with an expected $14m EBITDA loss. Nasdaq: Kalera Q3 Presentation Federated Hermes and Finance Earth launch Nature Fund with £30m UK Government Investment Finance Earth and Federated Hermes announced the UK Nature Impact Investment Strategy , a blended finance solution for the UK’s natural capital market aimed to support recovery of nature in the UK and provide return for investors. The strategy also included seed investment of £30 million from the UK Department for Environment, Food and Rural Affairs (Defra) for England-based investments, which was announced by Therese Coffee alongside other nature restoration investments, at COP27 Finance Earth announcement AeroFarms to open in Qatar, expanding Middle East presence AeroFarms Vertical Farm operator, Qatar Free Zones Authority (QFZA) and Doha Venture Capital (DVC) announce partnership to build a new indoor vertical farm in the Qatar Free Zone (QFZ). This expands AeroFarms presence in the Middle-East, it previously launched in the UAE in 2021. This is just one of many Vertical Farms opening or operating across the Middle-East as countries look to the technology to improve food security and availability. Company News Announcement Global Biofuels Market set to exceed $200B by 2030 According to latest research by Precedence Research the global biofuels market could exceed $200B by 2030. These fuels are used in transportation and typically generated from biomass such as waste foods, food oil, agricultural products. Products such as bio-mass diesel, Sustainable Aviation Fuel (SAF) are made by mixing the fuel with petroleum products and can help decarbonize the transportation sector. As a sign of growing confidence in alternative sustainable fuels, the RAF (Royal Air Force) completed the world’s first large bodied 100% SAF (Sustainable Aviation Fuel) flight test using a converted A330 ‘Voyager’ aircraft. The fuel was provided by Air BP and the flight was conducted with Rolls Royce and Airbus Engineers Voyager 100% SAF Flight Market, Government and Regulatory “Brazil is Back” – President Lula vows to halt deforestation Of all the big announcements at COP27, maybe one of the most significant for the natural world was president elect Lula announcing in his speech to the conference that he would stop deforestation and strive undo some of the environmental degradation under the previous administration. Coverage by the Guardian Newspaper Verra launches Nature Advisory Group to support development of a biodiversity methodology Verra the climate offsets standard setter has launched the SD VISta Nature Framework Advisory Group (AG). The group will guide the development of a support the development of the biodiversity methodology for assessing and quantifying the benefits from conservation and restoration activities. FDA approves first pre-market consultation of lab-grown meat The U.S. Food and Drug Administration (FDA) agency evaluated the processes and approach proposed by UPSIDE Foods. The company plans to use animal cell culture technology to take living cells from chickens and grow the cells in a controlled environment to make food products. The agency stated it was willing to work with other companies, paving the way for more lab-grown meat Full FDA report CFA Publishes Recommendations on integrated Natural Capital into the core Investment Process A new report published by CFA Institute outlines key concepts for investment professionals to integrate natural capital and biodiversity in the investment process. CFA Report Canadian Prime Minister to attend UN Biodiversity Summit, COP15 According to Investing.com the Canadian Prime Minister will attend the December COP15 summit, moved to Canada this year from China due to the ongoing COVID pandemic. More business leaders are expected to attend this summit than for any previous UN bio-diversity summit as the UN backed programme focuses on countries agreeing the GBF (Global Biodiversity Framework), setting targets for nature preservation and conservation All Natural Capital Technology Articles for more information info@naturalcaptech.com
Natural Capital Technologies Research
Nov 21, 2022 · 4 min read
Natural Capital News - Indoor Wheat and the White House on Nature
First indoor wheat trial, further SAF deals, Bean-free coffee and chocolate, White House NBS report, Verra and IFC bio-diversity guides InFarm grows wheat indoors in first vertical farming trial Amongst the flurry of announcements at COP27 this week, Vertical farming company InFarm announced a successful trail growing wheat indoors. The Dutch headquartered company claims that the trial had a projected yield of 11.7 Kg per m2 per year, much higher than open-farming yields and using no soil, chemical pesticides and significantly lower amounts of water. Up to now, vertical farming has predominantly focused on the smaller leaf foods, such as lettuces and herbs. More airline operators announce SAF deals with fuel providers CargoAI, WestJet are among the companies announcing further SAF (Sustainable Aviation Fuel) arrangements this week with SAF producer Neste. With CargoAI the Neste deal allows customers to select an option to reduce carbon emissions of their Air Cargo transports. Avolon, aircraft leasing company, announced a feasibility study with Boeing and another SAF producer SkyNRG to produce SAF in Ireland. Hargreaves Landsdown, why biodiversity matters Marking the growing shift and awareness of natural capital, Hargreaves Landsdown, UK based Private Wealth Manager outlined the importance of stemming nature and bio-diversity loss. They listed several new and existing funds that are directing investments into nature positive areas Bean-free Coffee and Chocolate Reported by the FT, subscription required Start-up WNWN Food Labs based in London, making coca-free chocolate, is one of a number of new companies innovating with chocolate and coffee products to find alternatives (e.g. fermented barley and carob) which put less pressure on land use and deforestation. Google enhances its AI powered flood warning system for India and Pakistan Reported by Fortune Magazine, subscription required Google has enhanced its flood warning system offering increased warning of pending flood dangers, up to 7 days in advance. It has global coverage but particular focus and relevance in South East Asia, including India and Pakistan, due to increasing frequency and impact of flooding due to climate change. Market, Government and Regulatory Updates TNFD announces 6 new Task Force members across industries The market led TNFD (Taskforce on Nature-related Financial Disclosures) announced seven new Task Force design members to join the existing 33 members leading the design team and the 750 forum members. It also announced new funding partner, Macdoch Foundation, and two new knowledge partners, NatureFinance and the Center for Global Commons at the University of Tokyo Verra announces it is working on a biodiversity methodology In a welcome move, Verra is developing a biodiversity methodology in its Sustainable Development Verified Impact Standard (SD VISta) Program . This new methodology will enable the independent assessment and verification of the biodiversity benefits and certification of “nature-positive” investments. The development of this methodology will be supported by the SD VISta Nature Framework Advisory Group , which includes leading conservation NGOs and biodiversity experts motivated to close the biodiversity finance gap. In other reports, Verra is said to be facing an unprecedented backlog of project requests as it faces increasing demand for carbon offset projects The White House releases recommendations on NBS (Nature Based Solutions) Following the issue of the Presidential Executive order on Earth Day 2022, multiple US Federal Agencies submitted their recommendations and report on the use of Nature Based Solutions to meet climate and nature goals. Recommendations covered five areas including policy, funding, training of work forces, innovation across areas such as costal systems, urban trees, forests and grassland restoration, pollination improvement and flood management. IFC releases nature and bio-diversity guide The IFC (International Finance Corporation) working with The World Conservation Union and Fauna & Flora International has released its first working guidelines on nature and bio-diversity. The guide builds on the Green Bond Principles and Green Loan Principles, and is designed to provide a guide to the types of projects that can protect, maintain or enhance biodiversity and ecosystem services. All Natural Capital Technology Articles for more information info@naturalcaptech.com
Natural Capital Technologies Research
Nov 14, 2022 · 4 min read
Natural Capital News - Soil Carbon Credits, SAF and another Voluntary Carbon Market launch
First major UK soil credit deal, major SAF announcement with Air-France-KLM, another VCM launched, Robeco Asset management launches dedicated bio diversity fund and investment strategy Respira International announce UK’s first major soil carbon credit deal The first major carbon credit deal in the UK, covering an initial area of around 230 hectares, was announced this week. The UK is following the US, Australia and other European countries and firms in financing fathers to use regenerative agricultural techniques that also capture carbon in soil. For a view of the potential of the soil carbon credit (or “Carbon Farming”) market see our Carbon Farming Grows Up article published earlier in the week. Air France KLM announce major SAF programme The Air France-KLM SAF (Sustainable Aviation Fuel) announcement with SAF providers Neste and DG fuels, for a total volume of 1.6 million tonnes, is one of the largest SAF deals globally to date. SAF is typically made from waste oils, waste products and forest residues and whilst today it is more expensive that traditional aviation fuel, it reduces overall CO2 emissions over the full lifecycle of the fuel. The first deliveries are expected in 2023 and the group has estimated emissions reduction of 4.7 million tonnes of CO2. The aviation industry estimates the SAF market could be worth $15B by the end of the decade. Other leading providers include World Energy, Alder Fuels, SkyNG as well as BP and Shell. Hong Kong Exchange announces new Voluntary Carbon Market Following recent announcements at the LSE and the Saudi Stock Exchange , HKEX announced the launched of ‘Core Climate’, a voluntary Carbon Market supporting projects and clients in Hong Kong, mainland China and across Asia. The exchange did not publish much detail on how the exchange would operate, other than saying it will ensure that all carbon credits generated by projects listed on Core Climate are issued under international standards, such as Verified Carbon Standard under VERRA. Coca-cola (COP27 sponsor) increases plastic use, despite recycling efforts Ahead of COP27, research and data from the Ellen MacArthur foundation has claimed that despite recycling efforts, Coca-cola has increased the use of new produced plastic by 3.5% since 2019. They claim that Pepsico and Walmart also increased primary plastic use in 2021. Earlier in March this year, 175 nations signed up to the UN resolution to end plastic pollution and create a legally binding agreement by the end of 2024. Robeco launches RobecoSAM Biodiversity Equity Investments Strateg y Robeco announced the launch of a new Biodiversity Equities investment strategy. This is designed to invest in companies that support the sustainable use of natural resources and ecosystem services, as well as technologies, products and services that help to reduce biodiversity threats or restore natural habitats. The fund is specifically targeting nature positive investments, a rapidly growing investment theme. British Volt secures short term funding, reduces staff pay in financial crunch The UK based battery company backed by Glencore, Ashtead and to some extent the UK Government is still yet to build it’s planned giga factory on the site in Blythe. The company has this week said it continues to seek new investors whilst securing short term funding (from Glencore) and implement cost savings, including an agreement with staff to reduce wages. Regulatory, Market and Government Updates TNFD launches V0.3 BETA ahead of COP 27 The Taskforce on Nature-related Financial Risks issued it’s 3rd iterative release this week. This version includes: There are now over 100 pilots underway and membership of the TNFD has exceeded 700 companies, financial institutions, civil society, science bodies and NGOs. The final production release of the TNFD framework is due in September 2023. ECB demands banks include nature-related risks on their balance sheets The European Central Bank published new requirements on environmental factors this week and included not just climate change but include the nature-related risks and environmental degradation that could impact banks’ balance sheets. The NGFS (Network for greening the financial system), which includes over 50 central banks, is also leading development of nature / climate scenarios All Natural Capital Technology Articles info@naturalcaptech.com
Natural Capital Technologies Research
Nov 6, 2022 · 4 min read
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Carbon Farming - Growing Up
Key points for investors and carbon credit buyers Globally, soils are estimated to contain about 1,500 Gt (1.5 Trillion Tonnes) of organic carbon to a depth of 1m and 2,400 GtC to 2m depth . Scientists have estimated that soils, in particular agricultural ones, could sequester over a billion tonnes of additional man-made carbon each year if farmers follow well understood farming and soil management practices such as reducing or eliminating tilling the soil, using cover crops, avoiding nitrogen fertilisers and crop rotation. These practices, commonly known as regenerative agriculture, bring many other environment and bio-diversity benefits and can also deliver higher yields. Several countries have already placed restrictions on ploughing carbon-rich land, including Australia, and others, including the Republic of Ireland are considering it. The largest trial of regenerative farming is in the state of Andhra Pradesh (known as the ‘rice bowl of India’) where 750,000 farmers have rolled out Natural Farming under a government supported scheme over the last 10 years, with noticeable benefit in yields and public health. These regenerative farming methods alongside receiving payments for soil carbon sequestration (sometimes called “carbon farming”) are set to grow from a cottage industry today (less than 1% of all carbon credits are based on agriculture today according to Berkeley University research , vs 46% on forestry) and become more widespread, the question is how significant could soil based credits become and what impact on farming economics and CO2 emissions could it have? Paying for better soil A number of companies in the US, Australia and Europe have launched soil-based carbon credits in the past two years. One of the largest issuers is Indigo Ag , based in Boston, which has now enrolled over 2,000 farmers, 5 million acres and are selling credits to the like of JPMorgan, Shopify, Barclays, BCG, IBM and Microsoft. Nori claim to have issued 117,000 tonnes of CO2 soil credits, worth over $1m and also sell directly to consumers as well as companies. Respira , an established mission-driven carbon finance company, specialised in nature-based solutions, is also entering the soil carbon market, and today announced the first UK carbon credit arrangement with Philipson Estates on Blaston Farm in Leicestershire UK involving 230 hectares (568 acres) and absorbing 5,000 tonnes of CO2 over an initial 12 month growing season (as well as increasing worm count by 7 times). The baseline and net measurement, carried out by Ecometric, includes the total CO2 sequestered, less greenhouse gas emissions from across the farm and its wider activities over the same period. Whilst much smaller than the US, if the Soil Carbon Code under development is progressed and government subsidies aligned to soil carbon, we could also see more such deals in the UK in future. Elsewhere in Europe a large ecosystem of issuers, measurement firms and assurance firms is also emerging with the likes of Soil Capital issuing credits across France, Belgium and the UK, and companies such as Downforce and Ecometric providing satellite and physical based soil health measurements including carbon density. Downforce pioneer the analysis of SOC (Soil Organic Carbon) by creating a ‘digital twin’ of the land in question looking at not just farming impacts and methods but natural changes such as rainfall. In Australia, the Australian Soil Carbon Accreditation Scheme (ASCAS) has been developed to pay farmers a credit of $25 per tonne for following soil carbon sequester practices. Downforce are also providing SOC measurement and verification across Australia as the practice grows The process for establishing and paying for these credits is becoming more standard. A baseline assessment is carried out either by the issuer directly or a 3rd party assessment firm. This baseline exercise assesses the level of carbon in the soil as of today based on the quality and amount of organic matter in the soil. It also estimates the potential for improvement, anywhere from 1-5 tonnes per acre. This is referred to as SOC potential. In order to achieve the SOC, the farmer has to commit to various best practices, in order to qualify and begin the process of capturing the carbon. A contract that provides cash for credits to the farmer, typically between 5 and 10 years, is then established. Typically 10-20% of the credits are withheld as an insurance policy in case practices are not followed or for other events (providers such as Indigo also take on the risk themselves). The issuer passes typically 70-80% of the value of the carbon credit to the farmer, some include the cost of monitoring and some do not – at present these costs can be significant. New technologies will address the challenge of measurement, confidence and costs No two soils are the same and whilst satellite imagery and monitoring has moved a long way, soil sampling at the baseline and through the duration is still essential, and relatively expensive. Leading companies such as Ecometric or Downforce are combining physical measurement from sampling, with satellite imagery and machine learning (using growing historical data sets) and ‘digital twins’. Ecometric claims 90% accuracy and the equivalent of 100 points per hectare of measured land. Despite these advances, costs for monitoring, verifying and reporting SOC changes can still be significant, in many cases even exceeding the SFI ( Sustainable Farming Incentive ) payments available. On top of this is the cost of new drilling and seeding equipment, to replace the old ploughing methods. As technology data improves, these costs should also reduce. There are many measurement standards! The question of which standards is not yet clear – there are various soil standards evolving and in use – initiatives such as the sustainable soils alliance in the UK, there is a European Database ( ESDAC ) that contains standard measures on soil qualities. Indigo in the US uses Verra (VM42 for soil), a well-known independent verification body, to certify the quality of the soil offsets, and there is also the ‘Gold Standard’ of SOC based on the UN’s SDGs which includes the SOC Framework Methodology and the Nori or Regen approaches in the US. These are just a few of the emerging standards broadly adopted for SOC measurements. The lack of clarity and on which standard might prevail or win in the standards race is an inhibitor today for the market, and a particular issue that holds back the UK market. Many industry experts argue that we need a ‘soil code’ similar to the Woodland Carbon Code (WCC) such as the Soil Carbon Code under development by the government backed Sustainable Soil Alliance. The economic case is growing, but a pricing gap remains The wide range of payments reflect both the difference in soils as well as the confidence and acceptance in this type of offset. Some schemes price per acre, some per tonne CO2eq – pricing can range from $7-$50 per acre depending on the initial soil carbon baseline and practices used (implying 3-30$/ Tonne Co2eq). This is low compared with carbon pricing in compliance markets. With more confidence in measurement and integrity, carbon pricing of today’s EU ETS price around €70 per tonne would imply a maximum of €140-$210 per year per acre. Indigo Ag have issued 20,000 credits now at $40 each, with total value of $800,000. This is an indication that the pricing gap of 2-3 times should close as confidence increases in practices and measurement increases and scale improves Compared with the estimated cost of soil degradation in the UK $1-1.5 Billion, the case for higher payments, at least at a macro level is clear. Based on a quarter of farms in the UK participating in Carbon Offsets, this would generate £100m of additional payments (around 5% additional income per average participating farm) and sequester approximately 7 M CO2 Tonnes per year, a significant part of the UK’s 2035 net zero target and twice as much as the planned carbon capture schemes committed in the UK’s industrial decarbonisation target The voluntary carbon market (VCM) is estimated to grow to $50B per annum, with nature based solutions such as forests, agriculture, land use representing a large proportion of the total. Soil credits in Europe, Australia and the US are probably no more than a few million outstanding today at best, so there is clearly a long way to go and a lot of demand. The other advantage of soil carbon capture credits, especially compared to other schemes such as forest restorations, are that financial, environmental and carbon benefits can be delivered within a year and there is almost no capital investment and small upfront costs. In particular with rising fuel and fertiliser costs, the cost advantages of avoiding ploughing and laying fertiliser are even better. With land essential for food production restored and regenerated, the natural capital benefits are also clear. With improved testing, assurance and confidence these benefits are likely to become clearer, and as pricing for each tonne of carbon continues to increase, we should see more widespread adoption in both the US and across Europe as soil credits become a multi-million business for credit providers, measurement companies and significant revenue earner for farmers. Fig 2. Soil Credit Issuers and Managers Fig 3. Measurement Firms For other Natural Capital Technology articles - main page Contact info@naturalcaptech.com
Natural Capital Technologies Research
Oct 31, 2022 · 8 min read