Jason Channell

National Grid is raising £7bn in a rights issue to fund electricity grid expansion in the UK and USA. This is the biggest rights issue in London since 2009, but is there enough here for equity investors? The new capital will help to fund 10% annual asset base growth, and 6-8% growth in earnings, but the growth in the dividend will be in line with CPIH. Clearly this is a fluid number, but currently is at 3%. There is a strong argument that the growth in the dividend should be more aligned with the growth in the underlying business.

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Against the backdrop of the ongoing debate and conflicting data surrounding various aspects of #energytransition, the overarching trend towards new and sustainable energy system continues to gain momentum. It's important to remember that different sectors and regions are undergoing their own #energytransitions, each with its own timelines, ambitions, policy support, and economic factors at play. And it has been clear that we will need a broad and diverse set of solutions – and perhaps even all of them – not only to address the #energytransition but also to meet the growing global #energydemand. Just few topics where differing perspectives shape the discussion: 🌬️☀️ #Renewables and #Intermittency : While renewable energy adoption continues to rise, concerns regarding #solar and #wind intermittency persist, with one side of the argument is that it hampers #gridstability, while others highlight advancements in #storage and #gridmanagement solutions addressing these challenges. 🌽 🍴 #Biofuels: The debate over the sustainability and environmental impact of #biofuels has increased, with conflicting studies assessing their carbon footprint and land use implications. ☢️ #Nuclearpower: Despite recent resurgence in conversations about #nuclearpower, it remains a divisive topic, with proponents highlighting its #lowcarbon base load power, while opponents raise concerns about safety, waste disposal, and the potential for proliferation. 💧 #Hydrogen: Conflicting viewpoints surround the potential of #hydrogen as a #cleanenergy solution at scale, with debates over its production methods, cost-effectiveness, and infrastructure requirements. 🏭 #CarbonCapture: #CCUS scalability, cost-effectiveness, and long-term environmental impacts continue to be debated.

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Just in. Our Q1 Public Engagement Report, explores carbon capture, utilisation and storage and the implications for companies relying on it to meet their net-zero emission targets. The report also covers how the growth of sustainable bonds has reinforced the case for credit engagement, and finally if Asian regulatory reforms are helping to improve corporate governance and unlock shareholder value across the region. Michael Benedict Yamoah, Shoa Hirosato, Ross Teverson, Haonan Wu https://bit.ly/49WmJ78

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JPMorgan Chase & Co.'s Global Head of #Energy Strategy and Head of EMEA #OilandGas Equity Research Christyan Malek has put out a note to the firm’s clients warning that higher interest rates, inflation and global conflict will materially slow the #energytransition. His timeline: multiple decades, if not generations. In the research note, which I have read, the two actions identified to most meaningfully address #climatechange are (1) switching from #coal to #gas, which could reduce global emissions by 17% and (2) setting a global #carbon price which would facilitate "government policies to focus on balancing social and environmental concerns". This FT article has no paywall. #sustainability #alternativeenergy #greentech #renewableenergy #decarbonization #decarbonisation

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The Oxford Institute for Energy Studies delves into harnessing Distributed Energy Resources (DERs) in developing nations, drawing insights from global leaders' experiences. The paper outlines three stages of DER integration, each requiring distinct technological, regulatory, and market advancements. Initially, Stage 1 involves limited DER adoption, with larger consumers focusing on cost reduction and reliability enhancement. As DER penetration increases in Stage 2, smaller consumers embrace rooftop solar PV and electric vehicles, necessitating aggregators and enhanced incentives. Finally, Stage 3 represents widespread DER adoption across user types and regions, driven by market forces rather than policy support. This phase demands advanced operational tools, effective grid access regimes, and active involvement of Distribution System Operators (DSOs) to optimize system operations. As developing countries navigate DER integration, understanding these stages and implementing corresponding frameworks becomes paramount. What strategies do you believe are crucial for developing nations to effectively harness the potential of DERs and ensure sustainable energy transitions? #energy #ders #sustainability #energytransition

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As forecast by Greenwich Forum experts, asset owners incl. #centralbanks and #SWFs buying #gold and #energy assets: what are they telling us about the future? #JoinUs #21_22_October g20pensions.org 👑GreenwichSummit.org Future of Investing European Finance Week UK & EU #Pensions #fiduciary #LaborAndCapital #viamedia Impact Forum #impactforum #impactful

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The #energytransition spotlight is now on #batterytechnology, essential for sustaining the growth of #renewables and #electricvehicles. Recent insights from the International Energy Agency (IEA) underscore a surge in #battery deployment, crucial for counteracting the intermittent nature of #solar and #wind energy and supporting the rapid adoption of #electricvehicles. Projections indicate robust continued growth in #batterystorage, establishing it as a fundamental component of future #energysystems.

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New insights briefing from the Energy Transitions Commission focused on the importance of not only raising ambition in the next round of NDCs under the Paris Agreement, but also making stronger links to national policies and increased government and industry collaboration on implementation. The ETC recommends that “NDCs 3.0” define: - Clear and detailed roadmaps for implementation of accelerated climate action backed by strong government policy (e.g., quantitative targets for GW of renewables, phase out dates for bans on the sale of gasoline or diesel engine vehicles). - Measurable, comprehensive (covering all sectors and GHGs) and granular targets for emissions reductions. - Investable plans, especially for emerging markets, clearly stating the investment and international climate finance required to deliver stated targets. https://lnkd.in/erxp23YN

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The latest Levelised Cost of Energy (LCOE) report from Lazard is now out 👉 https://lnkd.in/evJdEiXS Over the last decade or so, the LCOE of #renewable energy has fallen spectacularly. Since the financial crisis in 2008, central banks pursued ultra-loose monetary policy; the resulting ‘cheap money’ helped keep #cleanenergy costs moving lower.   However, the #LCOE of #wind and #solar technologies are particularly sensitive to costs of capital. Flip to page 16 & 17 of Lazard's new report and the analysis indicates the cost of capital (and increased capex costs) is now driving renewable project LCOEs higher.    Back in June 2022, BloombergNEF reported cost rises pushing up prices of wind energy by 7% year on year, and solar by 14%. It pegged those rises to increases in the cost of materials, freight, fuel and labour.   Despite this inflation in costs that increased renewable LCOEs, the energy crisis that increased #gas prices made renewables more attractive from a price perspective, so many companies rushed to do #corporatePPAs. When higher fuel costs increased the price of power, the LCOE of #renewableenergy remained largely unaffected...   Until now.

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Digging into the complexities of investing in commodities with a sustainable lens. Bloomberg. Sustainable investors considering extending their sights to the commodity markets have a lot to consider; the emissions associated with not just the commodities but the derivatives typically used in portfolios. They also need to understand how carbon credit futures are being used. 🔗 Read the full article on Investment IQ: https://lnkd.in/eyweNCEW #investing #assetmanagement #wealthmanagement #finance

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🚨Using the military communication tactic BLUF for a world of busy readers🚨 🆘 In a world where paying for pollution only happens (at scale) if governments mandate it; allowing carbon credits to be used in lieu of a financial emissions liability in government programmes can be a catalyst for building demand (and liquidity) for carbon credits. 🆘 Linking government carbon programmes to increase the number and heterogeneity of participants should increase liquidity and lower transaction costs for all participants. And for those who haven’t stopped reading yet 🫣  In the latest episode of 'New Frontiers in Climate Finance', host Angel Miao discussed the research of Raúl C. Rosales, PhD on the economic and environmental benefits of incorporating the Woodland Carbon Code into the UK ETS. I had the opportunity to talk about demand and liquidity in carbon markets. These are inextricably linked. ⭐️DEMAND⭐️ 😭 You can’t have a market without buyers. 😍The beauty of government mandated carbon mechanisms is that they create demand by identifying the polluter, and take those physical emissions and turn them in to financial liabilities. 👍These financial liabilities are then paid for by acquiring a carbon asset (mostly in the form of an allowance but sometimes in the form of a credit). 👍The purchase of these assets, offset the financial liability. The polluter does not become carbon neutral - they still emitted - but they incur the economic pain of polluting and are therefore incentivised to find lower cost abatement opportunities. 👎Today, the only carbon markets that operate at scale is where the government creates financial liabilities for polluting. 👎We don’t voluntarily create financial liabilities for physical emissions yet (at scale). 👍 👍 Therefore linking carbon credits to a government mandated programme creates demand and starts to build liquidity. ⭐️LIQUIDITY⭐️ More participants and in particular the more heterogeneous the participation typically contribute to better liquidity. Here's why: 👍 With more participants, there are more potential buyers and sellers in the market. This increases the likelihood that someone will be available to take the opposite side of a trade, thus enhancing liquidity. 👍 The more heterogeneous the participation means there are more diverse strategies, risk tolerances, and time horizons. Different needs bring different perspectives of value to the market which can then be expressed through price. 👍👍Better liquidity is characterised by tighter bid-offer spreads, greater market depth, more stable prices (less volatility) and easier execution of trades. 😀 which lowers transaction costs. 🙏 🙏🙏 if you got this far 🙄

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As the UK heads towards a potential change of government, what could it mean for renewable infrastructure investors and the country’s net zero ambitions? Claire Perry O'Neill, the former Minister of State for Energy and Clean Growth and COP26 President-Designate, shared her views at the #FSFLCapitalMarketsEvent last week. Claire and our lead fund manager, Ross Driver, discussed solar power in the context of the UK’s potentially changing political landscape and in a competitive global race to decarbonisation. They also discussed how the UK can re-establish its leadership and lay a credible path to facilitate solar deployment. Reflecting on the country’s decarbonisation targets, Claire pressed the urgency to improve planning and the necessity for faster action to bring more projects to life. We're grateful to her for coming along, as well as to the investors and analysts who attended. As we approach our AGM in June, we want the market to have a full understanding of how an evolving political environment can affect FSFL and our commitment to providing progressive, sustainable income and capital growth. #InvestmentTrusts #SolarPower #Renewables

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Role of Green Technologies in enabling Transition *. How to get access to private capital? *. Global policy for energy transition? *. Clear obvious benefits of Transition - talk about opportunities #netzerodeliverysummit #financeenablinginnovation City of London Corporation

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#Japan is making significant strides in its #energytransition with innovative policy and graat corporate engagement. The government's Strategic Energy Plan aims to balance #carbonneutrality goals with #economicsecurity and stable #energysupply. Key initiatives include promoting #renewableenergy, #hydrogen, and #ammonia, improving #energyefficiency in industrial sectors, and the strategic use of #nuclearpower. To finance its #energytransition, Japan will implement a growth-oriented #carbonpricing strategy, including an emissions trading system that will become mandatory by 2026, and a #carbontax on fossil fuel importers starting in 2028. Japan also plans to issue Climate Transition Bonds to fund sustainable technologies and emissions reduction initiatives. During my recent trip to Japan, I met with various companies leading these efforts. The incredible corporate buy-in to the policy is a testament to the strong alignment between governemt objectives and industry actions, which in turn is attracting significant investor interest.

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Decarbonizing hard-to-abate sectors depends on rapid scaling up of hydrogen. So why does production lag, despite global commitment to growth? This was the topic of a discussion I was part of at the 24th World Energy Congress.   With Iva Brkic and Clara Bowman, we explored barriers to accelerating hydrogen growth, including infrastructure challenges, the need for more research and development and the role of regulatory certainty to strengthen industry confidence.   We also talked about how building consumer buy-in and trust will be a critical factor in scaling up the sector. Cross-sector, public-private hydrogen projects that create both commercial and community value can help.   You can hear our discussion in the latest episode of the Talking Transitions podcast series https://lnkd.in/ecDBg9Pr   #EnergyTransition #Sustainability #Hydrogen #BetterWorkingWorld Iva Brkic Clara Bowman Sam Morgan FORESIGHT Climate & Energy Serge Colle Thierry Mortier Amy Brachio Steve Wanner Steve Wilkinson Kinga Anna Charpentier Giacomo Chiavari Dominika Ermitsch, ACCA Marco Duso David Roxby Alex Helpenstell Aleksandar Stoilov Raphaël Lechanoine Andrea Babuin Kevin Vincent Chahwan Yuliia Ovsiukhno

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💡 We recently published a new fresh take on the new #UK ETS free allocation updates in April and UKA price outlook. 😀 On 25 April 2024, the UK ETS authority, the Department for Energy Security and Net Zero, and the Department for Business, Energy & Industrial Strategy published an update to the 2021-2025 UK allocation table, with amendments to operators allowances as a result of Activity Level Changes. The Activity Level Change process for 2023 has now concluded. Free allocation for 2024 was initially released on 20 February this year, read more in our previous analysis available here. 👀 Total allocation for UK ETS 2024 is now at 32 118 696 tons, including 741 416 tons for the New Entrant Reserve (NER). This is up 0.2 million tons (Mt) from the February 2024 allocation table update, and down 1.3 Mt from the December 2023 update. Free allocation for 2025 was revised higher too, from 31 913 506 tons (including 784 557 tons for NER) to 32 104 435 tons (including 740 557 tons for NER) , while free allocation for 2023 increased to 32 568 249 tons (including 672 585 tons for NER). 🐾 UK Allowances from the primary market (despite free allocation) are sold in fortnightly auctions each year, with the resulting revenue going to the UK Treasury. According to the initial auction calendar, approximately 2.8 million UK Allowances will be offered at each 2024 fortnightly auction, totaling 69 million tonnes UKAs. 🐰 We have seen no fundamental change in the UKA market since our January 2024 update, with Q1 prices averaging £36.31 in line with our expectations in the previous update in January. The long-term outlook for the UKA market is still subject to change given that there is an expectation that the market will face additional reforms following the next election, which could happen really at any point between June and January. Unlike the EU ETS, the UK ETS still has no supply side mechanism to manage the overhang in allowances, although it is expected to introduce one in the coming years following the conclusion of the ongoing consultation. If and when these changes are announced, our forecast will be updated accordingly. Until then, however, the forecast for the UKA is set to remain fairly bearish and at substantial discount to the EUA market out to 2030. #emissions #trading #carbon

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