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SUSTAINABILITY & CLIMATE CHANGE

Gaining an EDGE in Financing Green Buildings

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The IFC’s EDGE program is at the forefront of developing green building certification and adapting to local construction needs from Colombia to Singapore and beyond.

Colombia is leading the way in Latin America on sustainable green building finance. International Finance Corporation’s (IFC) EDGE green building certification programme is fully aligned with Colombia’s sustainable construction policy. At an IFC event during COP26, the United Nations climate conference held this month in Glasgow, speakers including Colombian President Iván Duque Márquez and IFC Managing Director Makhtar Diop cited Colombia’s leadership in proving the viability of green building finance. With the use of EDGE certification, the country’s green building sector has grown from 0 to 20% market penetration in just the last four years.

“Colombia truly shows what is possible when committed public sector leadership, robust private sector investment and IFC expertise work together to pursue green solutions,” said Makhtar Diop, managing director of the IFC. “Perhaps no market has seen more market transformation than Colombia.”

That transformation has seen the Latin American country certify 6.1 million square metres of certified green space, having built almost 73,000 green homes, two thirds of which are affordable housing. The IFC estimates that over 20% of new buildings in the year to June 2021 in Colombia were EDGE certified, making it one of the highest rates of green building certification in an emerging country.

“Our country has the first green building code in Latin America and leads in EDGE certification of sustainable projects in the region for the number of projects and the number of floor space square metres certified,” said Iván Duque Márquez, President of Colombia.

The IFC was key to helping the Colombian government create the first green building code in Latin America. Later, the government encouraged green building through tax incentives. President Duque emphasises the role of different institutions coming together to achieve change. Indeed, following the IFC COP26 event, attendees including financiers, policymakers, and developers rated government procurement standards and tax breaks as the most effective policy tools for a zero carbon transition.

“Achieving the transition to a low-carbon economy is impossible if there’s no teamwork between the national government, developers, civil society and the financial sector,” explained President Duque on the role of Colombia’s Ministries of Environment, Finance, and Housing, City and Territory, the Chamber of Construction (CAMACOL), Colombian bank Bancolombia and the country’s Green Building Council all coming together with the EDGE certification to develop the green building industry in the country.

As a key part of that team in the financial sector, Bancolombia issued a green bond in late 2016, which the IFC invested in, as reported by Environmental Finance at the time. The proceeds then launched an aggressive green mortgages programme in 2017.

“With the support of the IFC we launched the first issuance. It was a big challenge as it was the first sustainable bond from a Colombian bank, but we wanted to reaffirm our responsibility of promoting well-being for all,” said Juan Carlos Mora Uribe, CEO of Bancolombia.

He affirms that not only has the bond been a financial and societal success for the bank, its clients and the environment, in having greener buildings, but that it has achieved its more important role in catalysing the market.

“We have seen others start to follow. We welcome our banking colleagues, not only in Colombia but in the world, to implement this strategy as a model of how to move towards the future with better performing buildings through green bonds,” added Mora Uribe.

Elsewhere on the continent, IFC has also helped several Peruvian municipalities incentivise green building by passing ordinances that offer incentives to developers like height bonuses if a residential property is certified green.

Latin America is far from the only part of the world to embrace green and sustainable building policy, with EDGE playing a prominent role. In the US, the government sponsored mortgage-backed securities provider Fannie Mae announced that EDGE will be the newest green building certification that it accepts for multifamily properties. Fannie Mae offers preferential pricing on loans secured by a multifamily property with a recognised green building certification.

Although a new adopter of EDGE, Fannie Mae isn’t a newcomer to green building finance, having launched its Multifamily Green Financing Business back in 2010.

This was followed with its first Multifamily Green Bond, issued in 2012.  “Fannie was in front of the green bond market when we started issuing them,” explained Dan Brown, vice President of Fannie Mae about why it took two years to issue its first green bond after launching its Green Bond Business. “It took a while to reach critical mass of interest,” he added.

The size of Fannie Mae in the real estate sector makes it a real mover in the market, particularly when it comes to green finance. It finances approximately 20% of the multi-family housing market and 30% of the single-family housing market in the US. In addition, Fannie Mae has issued $88 billion in green mortgage-backed securities since its first in 2012. The annual issuance of Fannie Mae’s green bond issues are estimated to save 9.5 billion kilo British Thermal Units (kBtu) of energy, 8.5 billion gallons of water and 634,000 tonnes of greenhouse gas emissions being emitted.

Not only do these figures speak for themselves but the sheer size of Fannie Mae means it is able to have a wider impact on green building certification.

“We have helped make green building certification space even greener,” claimed Brown. “There’s been three green building certifications that have raised their own standards so they can be part of our programme.”

“We structured the programme so almost any building can get the benefits of green financing, whether it’s a building that’s already green or making efficiency improvements at an existing property to turn a property green – that’s a large part of our success.”

Fannie Mae is not the only real estate company establishing themselves as a leader in green buildings. Ivanhoe Cambridge has set the target of achieving carbon neutrality in its operations by 2040, as it looks to advance meaningful environmental, social and governance (ESG) impacts in the real estate sector, which is responsible for approximately 30% of the world’s greenhouse gas emissions as well as 40% of the total global energy use.

The firm has an interim target of reducing operational emissions by 35% by 2025, compared with its 2017 baseline.

“We don’t have every answer to get us to 2040 yet, but we’re finding those answers,” said Rob Simpson, director of sustainability at Ivanhoe Cambridge, acknowledging again the journey that the industry is on in terms of green buildings and that the path to carbon neutrality is not yet fully laid down, though the effort must be made.

“We have a significant programme related to green buildings certification and the requirements to achieve certain levels,” he added about the importance of policy to achieve these aims.

In Singapore, Beh Siew Kim, CEO of real estate investor Ascott Residence Trust (ART), argued that the government, private investors, and regulatory authorities are working together to “transform Singapore into a global city of sustainability and working towards net zero emissions as much as we can.”

This is centred on the Green Plan 2030, which has an 80-80-80 policy for green buildings. This means by 2030 80% of all the city’s existing buildings, by gross floor area, need to be green, 80% of new developments need to be super low energy buildings and have an 80% improvement in energy efficiency for best in class green buildings. Currently best in class buildings are only 65% more efficient than 2005 levels.

“We are governed by the Stock Exchange and the Monetary Authority of Singapore, and they have both stepped up in terms of their regulatory efforts in sustainability of listed companies and from next year asset managers must assess the recent financial implications of climate change and make relevant disclosure in our portfolio,” said Beh.

As a business ART is certainly growing exponentially in the green building space, having increased its green certified buildings by close to four times in the last year. It is also part of the CapitaLand Group, the largest developer in Asia, which has set a group target to secure $6 billion in green finance by 2030.

Bancolombia’s Mora Uribe emphasized the importance of recognising regional differences when implementing standards for green building policy. “There are different ways to approaching the certification of projects and we need to be aware, particularly in developing countries, which we need to evolve to introduce new practices in a manner that makes economic sense. It’s important to standardise, we need participation of private entities to introduce best practices regarding construction,” he said.

From Colombia, to the US, Singapore and everywhere in between, it is clear that a partnership between all relevant bodies is needed to achieve the greening of the real estate sector. As the journey continues to 2030, 2040, and beyond, standardised policies that accommodate local differences will drive the biggest successes.

What is EDGE?

Excellence in Design for Greater Efficiencies (EDGE) “is a green building standard that can be tailored to local climates and customs,” explained Makhtar Diop, managing director of the IFC. “EDGE was designed by the IFC for banks. It focuses on quantified energy and water savings, embodied energy in materials, and greenhouse gas emission reductions. From large commercial complexes to small social housing units, EDGE is democratising certification by showing that a small upfront investment can pay off in a big way. EDGE now certifies well over $1 billion every month in green floor space. It helps capital flow to green projects and is changing markets around the world.”

EDGE’s aim was to prove the business case for building green and unlock financial investment by providing market leaders the opportunity to gain a competitive advantage by differentiating their products and adding value to the lives of their customers.

EDGE streamlines green building certification by having an achievable set of standards and focusing on energy, water consumption and embodied energy in materials. It is simple and affordable. It is being adopted for entire building portfolios to demonstrate the resource efficiency of buildings for those just beginning their efforts as much as for those who are already building to net zero carbon standards.

Three levels of certification support distinct levels of ambition:

  1. EDGE – New, existing or refurbished buildings must exceed business as usual efficiency by 20% in energy, water and embodied energy in materials for new construction.
  2. EDGE Advanced – An EDGE building which attains 40% energy efficiency.
  3. EDGE Zero Carbon – An EDGE Advanced building which uses 100% renewable energy or purchases carbon offsets.

Launched commercially in 2015, EDGE is now available everywhere by pulling together the biggest network of certifiers in the world with the collective ambition to mainstream green buildings and help fight climate change.

Courtesy: Environmental Finance


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SUSTAINABILITY & CLIMATE CHANGE

The Trillion-Dollar Question: Can Global Unity Find the Funds to Halt Climate Catastrophe?

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At the COP29, currently taking place from November 11 to November 22, 2024, in Baku, Azerbaijan, one is faced with a monumental question that frames every discussion: Can the world’s wealthiest nations truly unite to raise the trillion dollars a year needed to stop the climate crisis in its tracks? It’s a staggering figure, yet as floods, wildfires, and extreme weather ravage communities worldwide, it becomes clear this funding is no longer a distant aspiration but an urgent necessity. Baba Yunus Muhammad argues that the stakes are high, and time is running out – but the money exists. But the question is, will world leaders muster the political will to make it happen?

As the UN’s COP29 summit unfolds in the historic city of Baku, Azerbaijan, an imposing question looms over the gathering: Can the world’s wealthiest nations mobilize the staggering $1 trillion needed annually to address the climate crisis and prevent the most vulnerable from facing environmental disaster? With 198 nations represented, the summit is grappling with an urgent challenge: finding the financial resources to transition the world away from fossil fuels and toward a green, resilient future.

The stakes are high, as floods, droughts, and wildfires continue to devastate communities worldwide. Last week alone, torrential floods swept across Spain, wreaking havoc and claiming lives, a tragic reminder of the escalating risks of inaction. As Simon Stiell, the UN’s climate chief, aptly summarized: “It’s not a question of whether we can afford to tackle the climate crisis; it’s a matter of whether we can afford not to.”

A Trillion Dollars – A Bargain to Save Our Planet

A trillion dollars may sound astronomical, yet in the context of global economics, it is but a fraction of what is achievable. The global economy, which generated approximately $105 trillion in GDP last year, could feasibly absorb this cost, representing less than 1% of annual output. To put it in perspective, the world’s oil and gas industry has made a trillion dollars in profit every year for the past 50 years. These figures make a trillion-dollar climate fund appear not just possible, but economically viable – a bargain, even – if channeled toward building a sustainable world.

The United States, one of the wealthiest and most polluting nations, has already pledged $1 trillion over three years to domestic climate initiatives, showing that the funds exist and can be directed toward climate action. But this example highlights a major issue: while the money is there, it has yet to flow equitably to the countries that need it most.

Developing Nations in Crisis: The Case for Climate Reparations

For many developing countries, the climate crisis is not a future threat but a present-day reality, manifesting in deadly storms, rising sea levels, and crop failures. These nations, which have contributed the least to global emissions, are bearing the brunt of the crisis. The UN Environment Program estimates that adaptation costs alone could exceed $500 billion annually by 2050 in developing countries if current warming trends continue. Yet, these nations are expected to shoulder a disproportionate share of the economic burden, even as they spend over $1 trillion each year on their own climate mitigation and adaptation efforts.

This inequity has led poorer nations to call for the funds to be delivered as grants, rather than loans, which they argue would place them under additional financial strain. Currently, many of these nations are spending more on debt repayments than they receive in climate aid, a situation that risks deepening poverty and economic vulnerability in the Global South.

Financing the Future: Proposed Solutions

As negotiations continue in Baku, several financing options have emerged, each with its own set of challenges:

  1. International Aid and Development Bank Loans: Wealthier countries’ foreign aid budgets will contribute to the climate fund, though experts caution against merely rebranding existing aid as “green.” The World Bank and other development banks, meanwhile, could potentially offer low-interest loans, amounting to $200 billion to $400 billion per year. Yet, as seen at recent meetings in Washington, progress remains slow.
  2. Solidarity Taxes: Climate advocates are increasingly calling for global taxes, such as a 2% wealth tax on billionaires, estimated to raise as much as $250 billion in Brazil alone. Taxes on frequent flyers, international shipping, and financial transactions have also been suggested, but these measures would require unprecedented global cooperation.
  3. Ending Fossil Fuel Subsidies: Despite a climate emergency, fossil fuel subsidies persist globally, totaling a mind-boggling $600 billion annually. Cutting these subsidies could free up funds for climate action, though politically entrenched interests make this an uphill battle.
  4. Private Sector Investments: With the right incentives, private sector finance could help bridge the funding gap. Yet many view this as a means for rich countries to outsource their climate responsibilities, sparking debate on the balance of public and private contributions.

Global Disparities in Climate Responsibility

Another contentious issue is the classification of “developed” and “developing” nations under the UN’s climate treaty. Originally defined in 1992, this classification now excludes several major polluters who remain classified as “developing,” including China, South Korea, and the Gulf states. These emerging economies, once minor players, have become both economically powerful and significant carbon emitters. The EU, the largest provider of climate finance, argues that these countries must also step up and share the responsibility, especially the oil-rich Gulf states, which have reaped enormous profits from fossil fuels.

Saudi Arabia, for example, recently reaffirmed its commitment to extracting every ounce of its vast oil reserves. Prince Abdulaziz bin Salman al-Saud, the kingdom’s energy minister, stated at the Future Investment Initiative in Riyadh, “We will monetize every molecule of energy this land has, period.” This commitment stands in stark contrast to global climate goals and underscores the challenge of achieving universal cooperation on climate finance.

Time is Running Out

Despite these challenges, a potential solution is emerging from the negotiations: a core agreement around hundreds of billions in public finance, supplemented by private investments to reach the trillion-dollar goal. The question, however, is one of timing. The world’s previous climate finance target of $100 billion per year took over a decade to fulfill, and with climate disasters escalating, time is a luxury we no longer have.

The world has the means, the technology, and the funding to curb climate catastrophe – but without political will and coordinated action, even the best solutions remain theoretical. Ani Dasgupta, head of the World Resources Institute, reminded the summit’s attendees, “Ultimately, it’s a political decision to move the world forward to a safer place for our children and everyone else.”

The trillion-dollar climate fund is no longer a “nice-to-have”; it’s a necessity. COP29 represents a crucial juncture: the global community’s commitment today will define the fate of our planet tomorrow. As the summit presses on, the world watches – and waits – to see if global leaders will rise to the trillion-dollar challenge.


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AGRIBUSINESS & AGRICULTURE

Sweet Sorghum offers Solutions in Drought-hit Southern Africa

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By Hamond Motsi

The southern African region is battling with drought at present. This is the result of El Niño, a natural climate cycle characterised by changes in Pacific Ocean temperatures. It has effects on global weather patterns, particularly rainfall and temperature.

The drought has hit the region’s agricultural productivity hard. MalawiZambia and Zimbabwe have declared a state of disaster with respect to their current agricultural outputs. They are seeking humanitarian assistance in the form of food aid to feed their people. The downturn also has economic implications, since over 70% of people residing in the region’s rural areas rely on agriculture for their livelihoods.

The dire situation underscores how important it is for the agricultural sector to prevent, avoid or prepare for the impacts of climate change, which will also bring extremes of weather.

One measure the sector can take is to cultivate biofuel crops. These are crops rich in starch, sugar or oils that can be converted into bioethanol directly or through a fermentation process. Bioethanol, a type of ethanol produced from biological or plant based sources, emits fewer greenhouse gases compared to fossil fuels like petroleum, natural gas and coal. Commonly used biofuel crops include sugarcane, maize, grain sorghum, sugar beet, rapeseeds and sunflower.

These conventional biofuel crops do have drawbacks, however. They are highly susceptible to extreme weather events. They require high upfront investment for fertilisers, chemicals and irrigation. And they compete with food production – if they’re grown as biofuels they can’t also be used as food because of how they have to be processed.

So, researchers are always on the lookout for crops that might be good biofuels without those problems. Sweet sorghum, which is indigenous to the African continent, is one such crop. Unlike the better-known sorghum, it has sweet juice in its stems. In a recent study, I reviewed scientific literature to analyse the potential significance of sweet sorghum to African farmers because of its multipurpose nature and ability to adapt under harsh climatic conditions.

Multiple uses

Sweet sorghum has many uses. It can produce grains, animal feed and sugary juice, making it unique among crops. The grains from sweet sorghum are prepared as steamed bread or porridge malt for traditional beer, as well as in commercial beer production across the continent.

They’re nutritionally rich, with high energy values (342 calories/100 g), proteins (10g/100 grains), carbohydrates (72.7g/100 grains), and fibre (2.2g/100 grains) as well as essential minerals such as potassium (44mg/100 grains), calcium (22mg/100 grains), sodium (8mg/100 grains) and iron (3.8mg/100 grains).

The nutritional value of maize is fairly similar: proteins (8.84g/100 grains), carbohydrates (71.88g/100 grains), fibre (2.1g/100 grains), potassium (286mg/100 grains), calcium (10mg/100 grains), sodium (15.9mg/100 grains) and iron (2.3mg/100 grains).

What sets sweet sorghum apart from a crop like maize is that it’s also resilient in arid climates and has multiple other uses. For instance, it produces a lot of plant material (biomass) as it grows, which is left over after harvest. That’s why it’s useful as animal feed too.

Animal feed is made from what remains once the sweet sorghum crop has been harvested and its grains and stem juice stripped off. The residue is high in nutritional content, which can improve the quality of diets of animals, including cattle. The grains can also be used for animal feed.

The sweet juice in the crop’s stalks is what’s used to create bioethanol. Sweet sorghum contains sucrose, glucose and fructose, which are essential for bioethanol production. Of the conventional biofuel crops I’ve mentioned, only sugarcane yields more ethanol. Studies in the United States have shown that sweet sorghum far outstrips maize when it comes to bioethanol production: it yields 8,102 litres per hectare planted, while maize yields just 4,209 litres per hectare.

Resilient

Perhaps most importantly given the southern African region’s current drought struggles, sweet sorghum is well-suited for cultivation in the sorts of adverse conditions that are typically challenging for conventional biofuel crops.

One of the key characteristics of sweet sorghum varieties is their drought resistance. It allows them to enter a dormant state during extended periods of dryness and resume growth afterwards. Research has shown that, under intense water scarcity conditions, sweet sorghum makes use of its stalk juice to supplement its plant needs.

Sweet sorghum’s ability to withstand low water and nitrogen inputs, as well as its tolerance for salinity and drought stress, makes it an ideal crop for farmers in arid regions. This is why it’s widely used in other parts of the world, including the USBrazil and China.

Investing in sweet sorghum

The continent’s current agriculture value chain is dominated by major crops like maize, wheat and rice, which all originate from outside Africa. Not enough attention is given to crops of African origin, like sweet sorghum, even though it is a multipurpose, hardy crop with great potential for farmers. People are more familiar with sorghum, not the sweet variety, and it is also under-researched.

Governments should be using their agriculture extension services to raise awareness among farmers and consumers about the benefits and practical applications of sweet sorghum in people’s diets.

Developing recipes and secondary or industrial products can enhance the feasibility and awareness of sweet sorghum farming. By investing in research and development, the full potential of sweet sorghum cultivation can be unlocked through governments and the private sector.

Hamond Motsi is a PhD Student in Agriscience, Stellenbosch University

Courtesy: The Conversation


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SUSTAINABILITY & CLIMATE CHANGE

Lithium Boom: Zimbabwe Looks to China to Secure a Place in the EV Battery Supply Chain

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Chinese investors have flocked to Zimbabwe to secure lithium supplies, promising local development. But analysts warn Zimbabwe needs more robust governance for communities to reap the benefits. Reports Andrew Mambondiyani

Wonder Mushove stared blankly at plumes of red dust billowing into the sky as more than 30 trucks carrying loads of lithium ore rumbled past his newly-built house in Buhera, in eastern Zimbabwe.

The trucks drive by Mukwasi village on the dirt road linking the Chinese-owned Sabi Star lithium mine to the tarred highway. They travel through the border town of Mutare to the port of Beira in neighbouring Mozambique. From there, the lithium-containing minerals are loaded onto ships and exported to China – the world’s largest manufacturer of lithium-ion batteries.

The dust hung in the air after the trucks’ passage. Mushove and his family were among dozens of households displaced by the $130million-mining project, which began operating in May. They were relocated to new houses built by the mining company about a kilometre from their old homes.

And yet, Mushove is hopeful the mine could “uplift the area and put it on the world map,” he told Climate Home News. For decades, the vast, hard-rock lithium deposits buried under his home were of little interest to foreign investors. Now, Chinese companies are paying a high price to access Zimbabwe’s reserves – the largest in Africa and among the largest in the world.

A lightweight metal with the ability to store lots of energy, lithium is critical for the manufacture of batteries for electric cars. Global efforts to move away from combustion-engine vehicles have pushed demand for the silvery metal, also known as “white gold”, to soar.

Chinese companies have flocked to Zimbabwe’s untapped reserves of high-grade lithium to shore up the country’s supplies, benefiting from the Southern African nation’s cheap labour and deregulated mining sector. In the past two years, Chinese companies invested over $1.4 billion acquiring lithium projects in Zimbabwe.

And more money is on its way. Last year, Chinese companies were awarded licenses that could see $2.79 billion in investment flow into the country, mostly in the mining and energy sectors. These investments could turn Zimbabwe into a key player in the global lithium-ion battery supply chain. Chinese battery manufacturing giant BYD could source some of its lithium from Zimbabwe, after buying a stake in the Chinese owners of the Sabi Star mine.

But Zimbabwe’s poor progress on establishing robust resource governance threatens to keep communities like Mushove’s from seeing any of the benefits, analysts told Climate Home.

While endowed with vast mineral wealth, Zimbabwe has so far failed to turn its underground riches, including diamonds and gold, into revenues for development. Regulatory gapshuman rights abusesillegal trade, and alleged corruption have all been barriers.

recent investigation by NGO Global Witness in Zimbabwe, Namibia, and the Democratic Republic of Congo found that there is a danger of history repeating itself with lithium mining without rigorous screening for corruption and social and environmental harms.

But Zimbabwe’s president Emmerson Mnangagwa is betting on the lithium rush to catapult the country into an upper-middle-income economy by 2030. To achieve this, Mnangagwa aspires to turn Zimbabwe into a battery manufacturing hub.

China’s lithium rush

China towers over the lithium-ion battery supply chain. But its own lithium resources are limited and it has sought to secure access to deposits overseas.

Isolated by the West and slapped with 20 years of sanctions because of human rights violations, Zimbabwe has turned towards China, now the country’s largest foreign investor.

Since the 1950s, China’s foreign policy has been guided by “five principles of peaceful co-existence“, including a commitment not to interfere in another country’s internal affairs. This principle, which encapsulates China’s approach, has set it apart from western investors.

Zimbabwe’s “opacity and disregard for human rights has made it cheap for the Chinese to exploit minerals” in the country, said James Mupfumi, director of the Centre for Research and Development, a local NGO advocating for accountability in the natural resource sector.

Zimbabwean law vests all mineral rights to the president. With no requirements to disclose the beneficial owners of mining projects, “there is no due diligence and parliamentary oversight on Chinese investments,” Mupfumi explained.

“Above all, Zimbabwe requires a government that prioritises public accountability of mineral wealth, not the self-enrichment of a few political elites,” he added.

The ministry of mines did not respond to a request for comment.


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