A Framework to support investors and funders to identify those system solutions and technologies that have significant ability or potential to contribute to reduced greenhouse gas emissions in society, so called avoided emissions, has been launched by Mission Innovation.
The financial sector has long seen climate change almost exclusively as a risk with the need to avoid or divest certain investments to make an impact. Whilst this is part of the solution, the strength of the financial sector is its ability to invest. Mission Innovation wants to provide a mechanism to measure the impact of investing in companies that are providing the solutions needed to reduce emissions. The new Framework, one of the key activities identified in the MI Action Plan, allows the quantification of the impact of clean energy technologies and solutions and their potential to contribute to avoided emissions.
The overall concept of avoided emissions is that a solution (product or service) enables the same function to be performed with significantly less Greenhouse Gas (GHG) emissions. The method of measuring avoided emissions is to compare a baseline scenario without the enabling solution with a scenario using the enabling solution, where the baseline represents the ‘business as usual’ scenario.
The framework is designed to be a tool for investors and companies to enable them to quantify these avoided emissions. This can help trigger action on three levels. Firstly, by reframing the way investors think about climate change and approaching it not just as a problem but instead find opportunities to make an impact. Then by re-prioritising, which involves taking concrete steps towards supporting the right solutions. This can be done, for example, by linking the increased sales of solutions that help reduce emissions to the wider climate agenda. And then by accelerating the uptake of disruptive solutions that contribute to avoided emissions.
Rather than focusing on problems, such as companies that emit a lot of greenhouse gases, have high carbon assets, and/or obstruct the transition to a zero-carbon society, this initiative focuses on opportunities e.g. technologies, system solutions, companies and new clusters with existing or future potential to deliver zero-carbon solutions at the speed and scale required to avoid dangerous climate change.
Sweden is leading the development of the Framework in collaboration with interested parties. The recent launch is the result of a two-year initial development process during which a better understanding of avoided emissions and their positive climate impact has been achieved. It is also the start of a two-year process to engage with a broader range of investors to test the Framework in preparation for the launch in 2020 of a complete Framework that anyone can use with little guidance. The team is working with pension funds and institutional investors, venture capital investors as well as multilaterals to test the Framework.
A range of deliverables will be produced during the next two years, including:
- 100 cases to be presented at the fourth Mission Innovation Ministerial meeting (MI-4) in May 2019. The solutions will each have the potential to reduce carbon dioxide emissions by 10 million CO2e or more by 2030 and/or be of strategic importance.
- 1000 cases to be presented at the fifth Mission Innovation Ministerial meeting in 2020 using the second draft of the Framework.
- A web tool to help guide stakeholders (solution providers, investors and users/supporters) to shift from only focusing on reducing emissions in existing structures to accelerating a new generation of solutions.
- An avoided emissions tool for cities and government agencies, e.g. a ‘calculator’ where countries can see the potential of, as well as the delivered, avoided emissions that have been enabled by smart solutions.
There is an opportunity to nominate solutions where the existing or potential for reduced emissions in society has already been estimated or to nominate solutions whose potential should be estimated. The team is also looking for financial companies, large and small solution providers, cities, incubators, etc., who are trying to identify, support, and/or accelerate the uptake of low/zero- carbon solutions. Twenty of these Framework Explorers will be presented at MI-4 as ‘solution framework innovators’.
The development team is keen to receive comments on the draft Framework. This month the webpage will be updated to allow comments to be made directly on a wiki-version of the Framework. Visit the website to download the Framework Methodology.
The Mission Innovation newsletter will report on the progress of the initiative in the coming months. Sign up here to receive the Mission Innovation newsletter.