Carney concedes avoided emissions do not count toward science-based net zero targets, despite previously claiming asset manager Brookfield is ‘net zero today’ due to its investments in renewables
Mark Carney has responded to mounting criticism of his recent claim that Brookfield – the Canadian investment giant for which he is a board member – is “net zero today”, despite the fact it holds billions of dollars of fossil fuel infrastructure assets including coal and tar sands projects.
In a statement this afternoon, the former Bank of England Governor conceded that “avoided emissions do not count” towards science-based net zero targets, despite previously appearing to suggest that Brookfield’s significant holdings in renewable energy effectively cancelled out its fossil fuels assets and secured it “net zero” status.
In a recent interview, Carney – who is also the UN’s Special Envoy for Climate Action and Finance – had claimed Brookfield is net zero today “and that’s not net zero just in our operations – the buildings we have, and if we ever take flights again… but across the $575bn asset portfolio”.
But after a Greenpeace investigation earlier today found Brookfield still holds billions of dollars of assets in carbon-intensive fossil fuel projects and companies across Australia, India, Abu Dhabi and Canada, Carney’s net zero claims attracted widespread criticism from green figures across the spectrum.
Climate scientists, green groups, and leadingf business figures such as BNEF founder Michael Liebreich and UK Centre for Greening Finance director Ben Caldecott were all quick to weigh in on the row, broadly agreeing that “avoided emissions” from clean energy investments could should not allow a company that simultaneously holds fossil fuels in its portfolio to claim it has achieved net zero emissions.
It sparked fears that other major investors could follow Brookfield’s stance and claim to be net zero across their investment portfolios while continuing to support fossil fuel activities which drive up greenhouse gas emissions. If such a definition for ‘net zero’ were to be adopted widely, it could blow a hole in chances of limiting temperature rise to well below 2C by the end of the century, critics asserted.
In response to the growing criticism this afternoon, Carney released a statement conceding that “simply avoiding emissions in renewables at scale won’t be enough to win the race to a net zero global economy”.
“To be clear, I have always been – and will continue to be – a strong advocate for net zero science-based targets, and I recognise that avoided emissions do not count towards them,” his statement read.
More than 1,000 companies worldwide have signed up to the Science-Based Targets Initiative, an independent certification process which aligns corporate decarbonisation goals with climate science in support of the Paris Agreement. SBTi criteria do not allow companies’ investments in zero-carbon energy to effectively ‘offset’ emissions elsewhere, requiring firms to set emissions reduction targets for their operations and value chains that are in line with a warming trajectory that meets the Paris Agreement goals.
The group is also currently conducting a consultation on a new definition for net zero targets, which is expected to stress the need for net zero strategies to focus on delivering direct emissions reductions and only using credible carbon offsets to cover residual emissions that are genuinely unavoidable.
However, Carney – a hugely influential figure on the global stage in pushing for a greener financial system – did not row-back fully from his assertion that Brookfield is already today net zero across its $575bn asset portfolio.
He insisted the firm had committed “decades of experience and tens of billions of dollars to advance renewable energy across global electricity grids”, adding that the its 20GW of operational renewables assets “represents one of the largest private portfolios in the world”.
Moreover, Carney confirmed the firm planned to implement science-based emissions strategies across its portfolio, although he did reveal a timeframe.
“At Brookfield, we are committed to going further in supporting the transition to net zero, including by managing our energy infrastructure investments to be consistent with the transition to a net zero economy and we will implement science-based emissions-mitigation strategies across our portfolio companies and assets,” Carney’s statement read. “And we are rolling out one of the largest investment strategies to help companies accelerate the transition to net zero.”
As the UK Prime Minister Boris Johnson’s Finance Advisor for COP26, Carney is set to play a key role at the crucial UN climate summit in Glasgow later this year, at which he is expected to lead on the launch of a new cross-sectoral net zero finance initiative.
Speaking at the World Economic Forum’s annual summit last month, he asserted that the event will have net zero finance at its heart and stressed that all financial firms would have to respond to the net zero transition.
“If you’re in the private financial sector and you’re not part of the solution by Glasgow in November… you will have made a conscious decision not to be aligned to net zero,” he said. “It’s a net zero COP. That’s the objective. That’s the expectation.”
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