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Report sets out three overlooked opportunities to fund net zero transition

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Report sets out three overlooked opportunities to fund net zero transition


pollution
Credit: Pixabay/CC0 Public Domain

Governments, regulators and global financial institutions are overlooking major opportunities to unlock the estimated US$9.2 trillion worth of financing needed each year to fund the net zero transition, new research suggests.

To deliver the funding, a recent report from King’s College London argues for an urgent focus on three key areas of the financial system:

  • Governments should engage with the new forms of partnerships between banks and other financial institutions that free up their lending capabilities;
  • Multilateral development banks should make more use of their balance sheets to attract private sector funding through blended finance;
  • Regulators should develop global carbon markets with a focus on integrating national emissions trading systems and enhancing trust in voluntary markets.

The report highlights that the multilateral development banks alone could more than double their stock of lending to release a further $1.2 trillion of net zero financing without harming their AAA ratings and estimates that governments could release £8.5 billion of new bank lending through every £1 billion they invest in loans to decarbonization projects.

The report and its recommendations were developed by Professor David Aikman, a former Technical Head of the Bank of England’s Financial Stability Division, and Professor Raúl C. Rosales, a member of the Management Committee of the Singapore Green Finance Centre.

“Mobilizing enough finance to achieve our net zero goals is a major challenge, but our research highlights the potential of three avenues that should become a focus for policymakers in the run up to COP29 and beyond,” says Professor David Aikman, Director of the Qatar Centre for Global Banking and Finance at King’s Business School.

The banks’ role in financing the transition to net zero

The report outlines how, ahead of the full implementation of the Basel III capital adequacy rules, banks are increasingly partnering with non-bank players in innovative ways that allow them to de-risk in line with existing regulatory and supervisory frameworks.

These include strategic partnerships and new investment fund platforms with private credit, as well as the increased use of so-called “synthetic risk transfers” that move credit risk to third parties such as investment funds, freeing up funds for further lending. EU banks alone issued €102 billion in synthetic risk transfer securitizations in 2023 and 11% of these were linked to sustainability lending.

The authors argue that governments and policymakers can support this transfer of risk between the banks and other parts of the financial sector;

  • By fostering the globally harmonized regulation of de-risking mechanisms such significant risk transfers and synthetic securitizations
  • As investors: The authors estimate that a £1 billion government investment in the junior tranche of a pool of loans for decarbonization projects would generate additional bank lending capacity of around £8.5 billion. In the UK, the new National Wealth Fund could play a role both as a guarantor and coordinator of private sector lending for net zero technologies and projects.

Blended finance

Blended finance uses catalytic capital from public or philanthropic sources to mobilize private sector investment in sustainable development projects, primarily in developing countries. Public investment is led through Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs). While climate finance accounted for over half of the value of blended finance deals in 2023, the report highlights that at $15 billion of new transactions, the overall sector remained relatively small, and sets out how it could be expanded.

The authors calculate that MDBs and DFIs draw on private sector investors for only 11% of their annual overall financing commitments. Their analysis of credit rating agency reports suggests that there is significant potential for MDBs to increase their leverage while still maintaining their AAA credit ratings. They estimate that collectively, the 13 MDBs focused on developing countries could increase the stock of development assets they finance by around $1.2 trillion, a 2.5-fold increase, without harming their current credit ratings.

Furthermore, if MDBs operated under an AA rating instead of AAA, their financing capacity would increase by a further $1–1.2 trillion, significantly boosting their development and financial impact.

Carbon markets

By putting a price on carbon, carbon markets create economic incentives for businesses and governments to invest in clean technologies and implement carbon pricing policies. They are also a source of revenue for government investments in net zero projects: in 2023, Emissions Trading Systems generated $74 billion in government revenues. Alongside the ETSs are voluntary carbon markets offering trading in ‘carbon credits’ issued by the developers of carbon removal and reduction schemes.

The authors argue that these markets can be made more attractive through:

  • Linking the UK and EU ETSs as envisaged in the EU-UK Trade and Cooperation Agreement governing post-Brexit trade relations. This is also a necessary condition for exempting UK exports from the EU’s Carbon Border Adjustment Mechanism.
  • Stronger regulatory oversight, with clear rules on carbon credit usage, and a global standard for the financial accounting of certified carbon offset credits.
  • Further integration, for example integrating the voluntary carbon markets with the established emissions trading systems, which would provide a strong pricing signal.

“Partnerships between banks, investors, and regulators offer a critical opportunity to channel funds into low-carbon technologies by de-risking through regulated schemes. Multilateral development banks (MDBs) can amplify their impact by leveraging resources without straining government budgets, helping to establish sustainable infrastructure platforms in developing countries. Governments play a key role in integrating carbon markets through mechanisms like ETS and GGRs, enhancing transparency, and market efficiency, and sending a strong price signal for decarbonization,” says Professor Raúl C. Rosales, Professor of Practice in Net Zero Asset Management at King’s College London.

More information:
Policy paper: www.kcl.ac.uk/business/assets/ … act-policy-paper.pdf

Citation:
Report sets out three overlooked opportunities to fund net zero transition (2024, September 24)
retrieved 24 September 2024
from https://phys.org/news/2024-09-overlooked-opportunities-fund-net-transition.html

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part may be reproduced without the written permission. The content is provided for information purposes only.





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Mesoamerican oak tree species in urgent need of conservation, says report

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Mesoamerican oak tree species in urgent need of conservation, says report


Mesoamerican oak tree species in urgent need of conservation, according to milestone report by The Morton Arboretum
Encino arroyero (Quercus brandegeei) (endangered) in Baja California Sur, Mexico. Credit: The Morton Arboretum

Over a third of threatened or understudied oak tree species in Mesoamerica are not held in managed botanical collections anywhere in the world, and for many species, protection of their native habitats is lacking.

These are among the findings in a new Conservation Gap Analysis of Native Mesoamerican Oaks, published in English and Spanish, which was conducted by researchers at The Morton Arboretum. Researchers stress in the report being released during National Hispanic Heritage Month in the U.S. that it’s critically important to conserve these trees now before land-use conversion, climate change and other threats further alter their natural environments. Mesoamerica is the region extending from the U.S.-Mexico border through Panama.

Oaks are valuable keystone species that perform critical ecosystem functions and provide food and habitat for myriad animals.

“Mesoamerica is a global hotspot for oak biodiversity,” said report lead author Kate Good, the Arboretum’s global tree conservation research program manager. “In the face of climate change and habitat degradation, there is an urgent need to increase the number of Mesoamerican oaks in collections within their native country to help prevent further biodiversity loss.”

As of 2022, 22 species, or 37%, are not held in managed botanical collections anywhere in the world.

“We hope this report can help identify potential areas for collaboration and set conservation priorities, both in native habitats and managed botanical collections,” Good said.

Mesoamerican oak tree species in urgent need of conservation, according to milestone report by The Morton Arboretum
Silvia Alvarez-Clare (The Morton Arboretum) and Rodrigo Benavides (Osa Conservation) collecting data for a Q. insignis seedling at Asociación Ambiental Finca Cántaros in San Vito, Costa Rica. Credit: The Morton Arboretum

The report focuses on 59 species in the region on the International Union for Conservation of Nature (IUCN) Red List of Threatened Species assessed as either threatened or Data Deficient. The IUCN Red List is the globally recognized and standardized system for assessing the extinction risk of the world’s plant, animal and fungal species.

Climate change was identified as a threat for all 59 threatened or Data Deficient Mesoamerican oak species. Additionally, agriculture and residential or commercial development represented threats to 72% and 69% of the species, respectively.

Overall, the report indicates that 85% of the analyzed oak species are projected to see a decrease in the areas they are most commonly found under climate conditions predicted for the years 2061–2080. A decrease in a species’ preferred “life-zone area” does not necessarily mean it will no longer survive in the new environment, according to the report.

However, it does mean conservation activities are strongly needed to prevent potential biodiversity loss. Education, outreach, research and propagation or breeding programs were the most commonly cited priorities in the report for future conservation efforts.

The analysis also showed 16, or approximately one quarter, of the target species have less than 10% of their native range in protected areas. Among the 59 oaks analyzed for the report were the critically endangered Muller oak (Quercus mulleri), known to live in only two locations in Mexico; endangered Encino arroyero (Quercus brandegeei) native to southern Baja California Sur, Mexico; vulnerable oak species Quercus gulielmi-treleasei native to Costa Rica, Mexico and Panama; and data-deficient white oak Quercus deliquescens from Chihuahua, Mexico, to name a few.

“For many species, little is known regarding population size, distribution or threats,” said report co-author Silvia Alvarez-Clare, Ph.D., director of the Arboretum’s Global Tree Conservation Program. “This analysis helps to fill those knowledge gaps and is a crucial step toward facilitating partnerships and spurring conservation action to help protect threatened Mesoamerican oaks before time runs out.”

The report findings will be highlighted during the Arboretum’s National Hispanic Heritage Month programming.

More information:
Conservation Gap Analysis of Native Mesoamerican Oak, mortonarb.org/science/projects … e-mesoamerican-oaks/

A free presentation about conserving threatened cloud forests and some of the most important oak species from the analysis will be held Sept. 26 at the Arboretum with guest speaker Tarin Toledo Aceves, Ph.D. She is a researcher from Instituto de Ecología A.C. in Veracruz, Mexico and a collaborator with the Arboretum’s Global Tree Conservation Program.

Provided by
The Morton Arboretum

Citation:
Mesoamerican oak tree species in urgent need of conservation, says report (2024, September 24)
retrieved 24 September 2024
from https://phys.org/news/2024-09-mesoamerican-oak-tree-species-urgent.html

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part may be reproduced without the written permission. The content is provided for information purposes only.





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Study shows that AI investment plus a connected, skilled workforce is a winning combination

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Study shows that AI investment plus a connected, skilled workforce is a winning combination


Unlocking AI's full potential
Methodology flow chart. Credit: Decision Analytics Journal (2024). DOI: 10.1016/j.dajour.2024.100504

Countries that invest in artificial intelligence see a significant impact on their productivity and growth, but they should take a strategic approach, according to new University at Buffalo School of Management research.

Published in Decision Analytics Journal, the study found that AI innovation (as measured by the number of AI-related patents and capital investment) works best with the presence of a highly skilled labor force and the proper internet infrastructure to harness its full potential.

“AI innovation has the potential to transform economies, but our study shows that more patents and investments do not automatically translate into higher production efficiency,” says co-author Raj Sharman, Ph.D., professor of management science and systems in the UB School of Management. “A strategic approach that includes high-speed internet access and skilled labor is key to realizing AI’s full benefits.”

To study the impact of AI innovation, the researchers analyzed data for AI patents, capital and labor from 10 countries over an 11-year period. They used the stochastic production frontier model, employing both the Cobb-Douglas function and the Constant Elastic Substitution model, to evaluate the relationship between traditional economic inputs, such as capital and labor, and AI inputs to determine production efficiency.

The researchers found that while the U.S. leads in AI innovation with the highest number of patents, the U.K. has the highest production efficiency. Meanwhile, China ranks fourth in AI innovation, but has the lowest production efficiency among the countries studied.

“The U.S., with its long history and vast resources in AI research, does not show the best efficiency,” says Sharman. “The U.K. has performed better despite its lower investment in AI because they’ve used their resources better and have more effectively integrated AI into their work.”

Looking ahead, the researchers say that countries and businesses need to shift their focus from just increasing AI innovation to improving how efficiently they implement and use the technology. This means investing in internet bandwidth, upskilling the workforce and strategically optimizing resources to achieve the best results.

More information:
Ying-Chih Sun et al, A stochastic production frontier model for evaluating the performance efficiency of artificial intelligence investment worldwide, Decision Analytics Journal (2024). DOI: 10.1016/j.dajour.2024.100504

Citation:
Study shows that AI investment plus a connected, skilled workforce is a winning combination (2024, September 24)
retrieved 24 September 2024
from https://techxplore.com/news/2024-09-ai-investment-skilled-workforce-combination.html

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part may be reproduced without the written permission. The content is provided for information purposes only.





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Extinct volcanoes a ‘rich’ source of rare earth elements, research suggests

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Extinct volcanoes a ‘rich’ source of rare earth elements, research suggests


Extinct volcanoes a 'rich' source of rare earth elements
Dr. Michael Anenburg from ANU. Credit: Jamie Kidston/ANU.

A mysterious type of iron-rich magma entombed within extinct volcanoes is likely abundant with rare earth elements and could offer a new way to source these in-demand metals, according to new research from The Australian National University (ANU) and the University of the Chinese Academy of Sciences.

The research is published in Geochemical Perspectives Letters.

Rare earth elements are found in smartphones, flat screen TVs, magnets, and even trains and missiles. They are also vital to the development of electric vehicles and renewable energy technologies such as wind turbines.

Dr. Michael Anenburg from ANU said the iron-rich magma that solidified to form some extinct volcanoes is up to a hundred times more efficient at concentrating rare earth metals than the magmas that commonly erupt from active volcanoes.

“We have never seen an iron-rich magma erupt from an active volcano, but we know some extinct volcanoes, which are millions of years old, had this enigmatic type of eruption,” Dr. Anenburg said.

“Our findings suggest that these iron-rich extinct volcanoes across the globe, such as El Laco in Chile, could be studied for the presence of rare earth elements.”

The researchers simulated volcanic eruptions in the lab by sourcing rocks similar to those from iron-rich extinct volcanoes. They put these rocks into a pressurized furnace and heated them to extremely high temperatures to melt them and learn more about the minerals inside the rocks.

This is how they discovered the abundance of rare earth elements contained in iron-rich volcanic rocks.

With more countries investing heavily in renewable energy technologies, the demand for rare earth elements continues to skyrocket. In fact, demand for these elements is expected to increase fivefold by 2030.

Rare earth elements aren’t that rare. They are similar in abundance to lead and copper. But breaking down and extracting these metals from the minerals they reside in is challenging and expensive,” Dr. Anenburg said.

China has the biggest deposit of rare earth elements on the planet, while Europe’s largest deposit of rare earths is in Sweden. Australia has a world-class deposit at Mount Weld in Western Australia and others near Dubbo and Alice Springs.

According to Dr. Anenburg, Australia has an opportunity to become a major player in the clean energy space by capitalizing on its abundance of rare earth resources.

This work was led by Shengchao Yan from the University of the Chinese Academy of Sciences.

More information:
Silicate and iron phosphate melt immiscibility promotes REE enrichment, Geochemical Perspectives Letters (2024). DOI: 10.7185/geochemlet.2436

Citation:
Extinct volcanoes a ‘rich’ source of rare earth elements, research suggests (2024, September 24)
retrieved 24 September 2024
from https://phys.org/news/2024-09-extinct-volcanoes-rich-source-rare.html

This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no
part may be reproduced without the written permission. The content is provided for information purposes only.





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What’s good for pollinators is good for utility companies too

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What’s good for pollinators is good for utility companies too


Maintaining an essential habitat: What's good for pollinators is good for utility companies too
Utility companies maintain 5.5 million line-miles of land to create safe and efficient energy corridors. This also creates ideal spaces for wildflowers and pollinators. Credit: Florida Museum / Chase Kimmel

Electric power companies dedicate significant resources to clearing overgrown plants and debris from the area surrounding power lines. These areas are known as electric rights-of-way, and anything that obstructs access to them can threaten power outages, hinder public safety and make it harder for utility crews to perform necessary maintenance and repairs.

A new paper shows that appropriate vegetation management is beneficial not only to utility companies but to pollinating insects as well. In the largest scale study of its kind, covering the greatest number of sites and species, researchers from the Florida Museum of Natural History have surveyed 18 rights-of-way managed by Duke Energy. They found that sites being maintained on schedule, which kept woody vegetation to a minimum, had a greater quantity and diversity of flowering plants and pollinating insects.

The research is published in the journal PLOS ONE.

“It’s a win-win,” said Chase Kimmel, insect conservation biologist at the museum and first author of the study. “It’s exciting that the goals of promoting pollinator habitats are in line with how Duke Energy would like to manage that land.”

Many of Florida’s insect pollinators thrive in early successional habitats, which are created by occasional disturbances, such as fire. Historically, the Florida landscape was a patchwork of different habitat types. As fields grew into forests, the resulting wood provided kindling for fires that ignited naturally, often from lightning strikes. The blaze cleared the understory and opened the canopy, allowing sunlight to reach the newly bare forest floor and creating the perfect environment for wildflowers.

Human development, however, has disrupted this cycle. Wildfires are quickly put out, and many areas are too close to homes and businesses for prescribed burns to be safely conducted.

“It’s getting rare to find early successional habitats,” said Ivone de Bem Oliveira, a postdoctoral researcher at the Florida Museum and co-author of the paper. “So, under the electric transmission lines, we can mimic that environment.”

Utility crews use mechanical and chemical interventions to maintain a safe corridor for energy transmission. Such maintenance activities can act as proxies for the wildfires that historically created successional habitats in Florida. This combination of management tools allows for easier, safer access to electric lines for repairs, improves transmission reliability, reduces long-term vegetation management costs and ensures safety for the habitat and energy consumer.

Maintaining an essential habitat: What's good for pollinators is good for utility companies too
Clear, open spaces like this can make ideal habitat for wildflowers and pollinators. Credit: Florida Museum / Chase Kimmel

Methods include mowing, using selective herbicide applications to kill woody vegetation and using equipment to prune trees that get too tall or thick. This is particularly important in Florida, where weather events such as severe thunderstorms and hurricanes may briefly knock out power.

Although Duke Energy prefers to keep its rights-of-way free from coarse, woody debris, sites sometimes fall behind schedule. Curious about how this affected plant and insect diversity, the research team sorted their survey areas by classifying sites based upon measurements of bare ground and coarse, woody debris.

“In the higher intensity management locations, you could easily walk under the powerline, while at mid-intensity sites, one might find shrubs and various raspberry bushes, so you can’t walk in a straight line. In low-intensity sites, it’s hard to even get through the area,” Kimmel explained.

The researchers define the intensity of management not by how often the site is managed, but by what kind of habitat develops as a result. Some rights-of-way were considered high intensity while being managed only every year or two.

Across these sites, the researchers set a total of 2,376 pan traps to collect pollinating insects. These bowls, commonly used in insect diversity studies, are filled with soapy water and often come in bright blue, yellow and white colors. To insects, these colorful pan traps resemble flowers.

The researchers collected 11,361 flower-visiting insects in all, representing 33 families. Nearly half were bees, and a quarter were beetles. Flies, wasps, butterflies and moths made up most of the remainder.

Rights-of-way with high-intensity management had the highest abundance and diversity of these insects. These sites also had the greatest number and variety of flowering plants.

Maintaining an essential habitat: What's good for pollinators is good for utility companies too
Ageniella salti is a native wasp that creates its home using mud. It’s one of the many obscure but critically important pollinators in Florida. Credit: Jonathan Bremer

“In some of these environments, you often see a rich herbaceous understory because of regular disturbance,” said Jaret Daniels, senior author on the paper and curator at the museum’s McGuire Center for Lepidoptera and Biodiversity. “This also helps support rare plant communities.”

“The public might have a perception that a hands-off approach and letting nature do its thing is best,” Kimmel said. “But that’s not always the case.”

To support a rich and abundant pollinator community, the authors recommend high-intensity management in rights-of-way. This does not mean, as the name may suggest, constant mowing or indiscriminate herbicide applications, but a combination of strategies that target specific plants with the goal of maintaining a successional habitat.

Throughout much of North America, utility rights-of-way connect and bisect every type of landscape, from urban to rural. There are 180 million power lines in the U.S. alone and 5.5 million line-miles of land set aside for them. Using these areas as pollinator habitat could be a conservation game changer.

The long corridors can also help migrating species move more easily. They can help foraging insects travel large distances as they look for food, potentially bringing important pollination activity to neighboring conservation and agricultural lands.

More information:
Chase B. Kimmel et al, Integrated vegetation management within electrical transmission landscapes promotes floral resource and flower-visiting insect diversity, PLOS ONE (2024). DOI: 10.1371/journal.pone.0308263

Citation:
Maintaining an essential habitat: What’s good for pollinators is good for utility companies too (2024, September 24)
retrieved 24 September 2024
from https://phys.org/news/2024-09-essential-habitat-good-pollinators-companies.html

This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no
part may be reproduced without the written permission. The content is provided for information purposes only.





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