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22 November 2021

Redmayne Bentley Market Round Up

After a gruelling end to negotiations at the eleventh hour, the COP26 global climate summit -spanning two weeks, with 40,000 participants - was concluded last Saturday. The summit ended with leaders signing up to the Glasgow Climate Pact which included multiple agreements, but most prominently the “phasing down” of Coal and fossil fuels to accelerate efforts in closing coal plants without a carbon capture facility. Furthermore, the pact aims to end fossil fuel subsidies.

Adding to the agreement, the pact also includes Climate Finance, which is a tax aimed at developed countries and is expected to raise US$100 bn each year until 2025 to help developing countries undertake green projects. Moreover, the Carbon markets - an element of the Paris rule book - has been finalised which will allow the rules to create a market for units representing emissions reductions that countries can trade. A voluntary adaptation fund will also be created, to help developing countries prepare for climate change by 2025.

Market analysts are now digesting the summit conclusions. According to Jefferies, a US research analyst, COP26 has widened the intention-action gap stating new promises were made but the real tangible action plan was still missing on how the targets and promises are supposed to reached. Developed nation governments remain in breach of their promises to give US$100bn in assistance aid to developing nations, although the foundation has perhaps been laid for new investment opportunities for private markets. According to the credit rating agency Moody’s, a faster energy transition would raise credit pressure for carbon-intensive sectors and economies although the weak progress at COP26 meant that these pressures will mostly remain modest and manageable.

UK Energy firm SSE has announced plans to invest £12.5bn over the next five years in an attempt to accelerate its net zero attempt amid pressure as hedge fund Elliot management calls for a breakup of the company. The company owns and runs north Scotland’s main fossil-fuel fired power station but has promised to reduce its emissions through carbon capture technology. SSE also declared that they could deliver a quarter of the UK governments’ target to quadruple offshore wind capacity to 40 gigawatts by the end of the decade. Moreover, the company also aims to expand overseas into European markets like Denmark and Spain, in order to do so SEE plans to dispose its 25% stake in its electricity network businesses.   

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
 
Redmayne Bentley Market Round Up
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