Each week we share the top sustainability news stories from around the world. Here’s this week’s round up:
This week we explore how the climate crisis could have a negative impact on a country’s credit scores, a national broadband plan that will increase sustainability in farming and controversy surrounding emissions of biomass and biofuel.
Climate Crisis Could Cut Credit Ratings for Nations
Sovereign debt downgrades are likely for the US and UK, along with many other countries around the world, unless they urgently step up their efforts to reduce greenhouse gas emissions, according to a study. A team of academics led by Cambridge University said failure to act would leave governments paying billions of dollars more when borrowing in the future.
The study used artificial intelligence to simulate the economic effects of climate change on the average credit rating for 108 countries over the next ten, 30 and 50 years, and by the end of the century. It found that the climate crisis has the potential to have a bigger impact on countries’ credit ratings than Covid-19. Assuming nothing was done and net zero targets that have been signed into law were scrapped, 63 nations would suffer a credit downgrade by 2030. Over the coming decades, some countries could experience more downgrades as the impact of the climate crisis on growth and the lack of renewable productivity becomes more severe.
Sovereign ratings assess a nation’s creditworthiness and are a key gauge for investors as they weigh up the riskiness of government debt. There are 20 grades, with an AAA rating being the best. Among the leading developed countries, very high ranking countries like Germany, Sweden who both have AAA ratings would slide down to AA- if renewable targets are not achieved. The UK which has a current credit rating of AA will slide down to AA-, while the US would decrease from AA+ to AA-. These countries will take the biggest hit as they have further to fall. The amount of extra money that would have to be spent could put a dent in how successful these economies are.
Pati Klusak of the Norwich Business School and the report’s lead author said: “Existing climate risk disclosure are typically voluntary, unregulated and disconnected from the latest science. But they don’t have to be. Regulators like the US Securities and Exchange Commission and ESMA should demand that rating agencies begin to reflect these near-term risks from climate change”.
First Farm in Ireland Connected Under National Broadband Plan
National Broadband Ireland (NBI) has connected a farm in Cavan, Ireland to its high-speed fibre home network for the first time. Tom Canning, Managing Director for the farm consultancy business and president of the Agricultural Consultants Association, said he believes he will “benefit hugely from a high-speed fibre connection”. He further stated that “The need for the farming community to be connected to a high-speed network is vital as administration and the day-to-day running of a farm has moved online”.
The Irish government is set to invest €65m in Cavan under the plan which will bring high-speed connectivity to more than 16,000 premises in the region. The Minister for the Environment in Ireland, Eamon Ryan said, “Now more than ever, we see how critical access to reliable high-speed connectivity is to our lives. Reliable access to high-speed broadband will help farmers as they use agricultural technology to maximise efficiencies, diversify into more sustainable forms of farming, produce energy and run their day-to-day business operations”.
These actions are all a part of a bigger plan the Irish government has in store to invest in the future of rural Ireland with the National Broadband Plan being highlighted as a key enabler of remote working going forward. The plan aims to connect more than 1.1m people across 544,000 homes, businesses farms and schools where commercial operators do not currently provide high-speed connectivity.
Drax to Double Wood Pellet Production with Biomass Firm Purchase
Drax, a wood pellet production company in Yorkshire England is moving ahead with a $652m deal to double its production after shareholders agreed to buy a Canadian biomass company. The plan will push Drax group to the forefront of biomass electricity generation. The company substitutes wood pellets in place of coal at its power plant.
However, many environmentalist groups have urged Drax against this deal, saying that burning more imported wood pellets could accelerate the climate crisis instead of benefitting it, as well as increased biodiversity loss. Drax claims burning wood pellets is carbon neutral because the emissions released by wood pellet combustion in a power plant are offset by the emissions that trees absorb while they grow, a claim that has been disputed.
The latest warning to Drax followed a separate open letter, signed by groups like Greenpeace and Friends of the Earth, which warned governments against relying too heavily on plans to capture carbon emissions from biomass plants to create “negative emissions”. While compared to fossil fuels, biomass is a better alternative, however, they won’t be as impactful if deforestation occurs to create it. Governments should still focus on other types of renewable energies to achieve net zero.
Tune in next week for another round of sustainability news from around the world.