What Putin’s War Means For Energy Policy | Powering Community Solar Projects | The Green Engine Race

Plus: Why Supply Chain Transparency Is Key For Climate Targets

Hello and welcome to the latest edition of Current Climate.

A strong argument in support of switching from fossil fuels to renewable energy came from an unlikely source this week: Russian official Dmitry Medvedev.

His reaction to the news that Germany had halted the Nord Stream 2 gas pipeline project in response to Russia’s aggression towards Ukraine: “German Chancellor Olaf Scholz has issued an order to halt the process of certifying the Nord Stream 2 gas pipeline. Well. Welcome to the brave new world where Europeans are very soon going to pay €2.000 for 1.000 cubic meters of natural gas!”

First of all, Europeans weren’t paying much less than that already—in December, as reported by Russia’s own news agency Tass, gas prices reached a record high of $2,100 (around €1,850), per 1,000 cubic meters.

But Medvedev’s statement indicates Russia sees energy supply as a bargaining chip in Europe. No better case can be made for renewable energy transition than independence from global fossil fuel powers, for whom the war in Ukraine crisis provides a boon. Lauri Myllyvirta, an analyst at the Centre for Research on Energy and Clean Air, explains in a Twitter thread how Europe can tackle the challenge of moving away from Russia’s fossil fuels. Events in Europe will likely dominate headlines in the coming days, but do keep an eye out for a new IPCC report focusing on impact and adaptability to climate change, due for publication on February 28. 

Other stories I’m highlighting this week discuss the benefits of community solar projects, the race to power green engines for heavy-duty vehicles, and a call to focus more resources on preventing wildfires.

For Climate Talks, I spoke to Leonardo Bonanni, an MIT scholar and founder and CEO of Sourcemap, about how transparency in the supply chain is crucial for companies to achieve their carbon-emissions reduction targets—and how to achieve them.

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The Progress

A century-old maker of dirty diesel-powered engines is changing its focus to develop green hydrogen, heavy-duty batteries and cleaner fuels.

The IEA’s latest report on methane emissions shows a fall from 2019 levels—but more progress could be made if the energy sector finally plugged its leaks.

The Challenges

Facebook’s efforts to stem climate change misinformation on its platform fail to tackle nearly half of the posts from major, known deniers, according to new analysis from the Center for Countering Digital Hate (CCDH).

A new report from the United Nations Environment Program called on governments to revise their strategies and boost their budgets to prevent wildfires, whose destructive power is expected to grow as a consequence of climate change.

Climate Talks

The European Union is considering a new due diligence law that would hold large companies based in or doing business with the bloc accountable for any environmental or human rights violations occurring in their supply chain. For the past decade, Leonardo Bonanni has worked to increase transparency in global supply chains, turning his MIT doctoral project into supply-chain mapping software Sourcemap into a business in 2011. Next week, the company will be announcing a new round of funding as demand for supply chain due diligence continues to skyrocket. He thinks that technological advances make it possible for companies to get full visibility into their supply chain—and that inaction in this area can no longer be excused.

Supply chains, particularly for some commodities, are notoriously murky. What makes them so untransparent?

The commodities supply chains were created a long time before the internet. These goods [were] flowing around the world with very little information about how they were made, where they came from and how they impacted the environment. And so having these supply chains that brands and companies have inherited made [traceability] extremely difficult.

Traditionally, they would use auditors, they would work with local NGOs, and they would visit some of the suppliers, and that was the best they could do. New technologies allow for a more comprehensive supply-chain mapping.

How has demand for supply-chain mapping changed in the past decade?

The last three years have seen an incredible acceleration in the adoption of supply chains and due diligence software. Covid-19 has pushed a lot of companies to look more carefully at the resilience of their supply chains. Inevitably, they concluded that they needed more data to make sure that they could effectively get the raw materials from point A to point B.

New laws in the U.S. and in Europe around due diligence for issues like forced labor, deforestation, carbon footprint have also changed the level of accountability that companies need to have when they report to their stakeholders, their customers and regulators. For the first time, companies are accountable for their supply chains down to the raw materials—that's where the risks are.

Are supply-chain mapping tools leading to change? Can you discuss any examples of how certain suppliers were dropped because of the way that they were doing business?

We've helped a lot of big leather customers—whether it's in the footwear or the automotive sector—identify very high-risk suppliers in areas in South America where deforestation is happening. And they've been able to verify that these suppliers were in fact tied to deforestation. They were able to find alternative suppliers.

We've also seen industries where the choice is not to move away from a supplier, but to invest in the supply chain and improve practices. This is something we're seeing a lot in palm oil in Southeast Asia, in West African cocoa, where the product has to be sourced from these regions—some of the farmers and some of the buyers didn't have the right systems in place to do things like track payroll, and to adopt good agricultural practices.

Despite these advances, there remains some resistance in certain sectors to map their supply chains, especially when it’s in the context of tracking and reducing Scope 3 [or value-chain] emissions. Are there any good reasons for a company not to include supply-chain emissions in their climate targets?

We've been mapping cocoa from farm to containers since 2013. So it's eminently doable. All it takes is the will of industries to to ask for this data and then the sort of innovative spirit to find new ways to use it in a strategic and competitive ways. 

Some of the customers we work with have been [tracking] Scope 3 for years. They start by mapping the supply chain, and then they're able to actually control the supply chain—they find the suppliers that use less energy and less fuel, [so] they're actually also saving money.

Effectively, there's a very short time left for a company to control its direct supply chain. Pretty soon, they're going to be priced out of the market if they don't also have visibility and some kind of control over the raw materials.

Leonardo Bonanni’s answers were condensed and edited for brevity and clarity.

On The Horizon

Extreme E, the offroad SUV racing championship, has announced plans for a partner series called Extreme H, in which the vehicles’ primary power source will be a hydrogen fuel cell rather than batteries.