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Climate change from A to Z: A FT jargon buster

Climate change from A to Z: A FT jargon buster

An illustrative logo

An illustrative logo
© Ulla Puggaard
© Ulla Puggaard

Adaptation Making changes to deal with the effects of climate change — both now and in the future. This includes developing crops that are able to cope with changing climatic conditions as well as building infrastructure such fire and flood defences.

Air/Atmosphere Although oxygen is essential for life on Earth, it is not the only component of the atmosphere. It is composed of approximately 78% nitrogen and 21% oxygen. It also contains small amounts carbon dioxide, neon, and hydrogen.

It is easy to see the damaging effects of carbon, methane, or other greenhouse gases in their descriptions: even though they are very small in amount, they absorb and trap heat.

Air pollutionThis is distinct from carbon and other greenhouse-gas emissions and is not always a result of climate change.

AQIAn Air Quality Index (AQI) is used to measure air pollution. It is a combination of different types such as nitrogen dioxide and small particulate matter. When the AQI is more than 100, it’s about the same as breathing in exhaust from a car all day. However, AQI is not a standardised formula — countries can calculate AQI in different ways.

AfoluThe Intergovernmental Panel on Climate Change (see IPCC report on climate change) uses the term agriculture, forestry, and other land use.

AosisThe Alliance of Small Island States consists of small island and coastal states mainly in the Pacific and Caribbean who are most likely to be affected by rising sea level, extreme weather, and other effects of global heating.

BiofuelA fuel that is derived from renewable, biological resources, such as crops like maize and sugarcane, and some types of waste.

Biomass Material made from renewable organic material, which comes from plants and animals.

ClimateThis is the average weather and includes phenomena such a rain, flooding, droughts and storms, heat, cold, and other extreme weather.

Climate changeClimate change refers to the changes in climate that occur as a result of global warming. Climate change has a varied impact. One place could become more wetter, while another could become dryer. Some areas are heating up faster due to climate change (especially in the polar regions), while others have only experienced small temperature shifts.

Carbon Border Adjustment Method (CBAM) An EU proposal that will place a carbon price on imports of a targeted selection of products from countries with less ambitious national climate policies. This is designed to avoid what is known as “carbon leakage”, or the transfer of production by businesses to countries with more lax emission constraints.

Carbon budget The amount of carbon that can escape into the atmosphere before it reaches a certain level that would cause global warming beyond agreed limits.

Carbon capture and Storage (CCS). Refers to capturing carbon dioxide — typically when it is close to the source of emissions, such as at the smokestack on a power plant — and then permanently storing (or sequestering) the CO2, for example by injecting it underground.

Carbon capture, utilisation and storage (CCUS).As before, but you are using the carbon instead of storing it. This is the act of capturing and reusing carbon for further use. For example, by injecting it or binding it to something else, for example to harden “green” cement.

Carbon dioxide CO2 in the air is measured in parts per million — so In 2021For every 1mn air particles, the air contained approximately 414 parts carbon dioxide. This compares to the pre-industrial levels which were around 280ppm. The planet is still considered healthy by scientists at 350.

Source: IEA report.

The total greenhouse gas emissions (see the entry) were estimated to be 59bn tonnes of carbon equivalent in 2019, with an error margin around 10 per cent according to scientists behind the latest estimates. IPCC Report (see IPCC),

Carbon dioxide equivalentEach greenhouse gas has its own global warming potential. To compare other gases with carbon dioxide, one must calculate the carbon dioxide equivalent.

Carbon intensityThe carbon dioxide emissions measured relative to a unit (example: ExxonMobil) of revenue or relative GDP (example: a country). For example, if a company grows its emissions faster that its revenue, then its carbon intensity will decrease over the course of time even though its absolute emissions will rise.

To accommodate their rapidly growing economies, some developing countries have adopted carbon intensity goals, rather than absolute emission targets. For example, China’s target is to reduce carbon intensity by more than 65 per cent by 2030, relative to 2005 levels. However, this reduction in carbon intensity ignores the fact that absolute emission will rise even if that goal is achieved.

Carbon leakageRefers to the relocation or transfer of an industry to countries with weaker emission rules.

Carbon neutral This refers to carbon emission reduction and carbon balancing. This differs from ‘net zero’, which typically includes the removal or offsetting of all greenhouse gas emissions, including methane and hydrofluorocarbons.

Carbon offsetCompensating for emissions by making a cut in carbon dioxide or saving it from the atmosphere. This could include planting trees or other carbon removal activities.

Carbon priceTo incentivise consumers and businesses to reduce carbon-intensive activities, a cost is applied to carbon dioxide pollution. It can be a tax or a permit to pollute that companies trade.

Carbon sequestrationStoring carbon dioxide naturally, by absorption by trees and plants or mechanically through carbon storage and capture (see entry).

Emissions Trading Scheme/System Emissions trading is a system that places a limit on the amount of greenhouse gases that can be emitted from polluters and issues allowances accordingly. The cap is gradually reduced so that total emissions decrease. Carbon allowances can also be purchased at auction and traded. These markets determine the carbon price. Each unit traded is intended to cover one tonne of carbon emitted.

EU taxonomy A common EU-wide classification system that provides investors and companies with a framework for determining whether economic activities are environmentally sustainable. The EU has six environmental goals. Most of them have a direct or indirect connection to climate change. It will require large companies to disclose whether their capital spending is aligned with the EU’s environmental objectives.

Fossil fuels Over millions of years, fossil fuels were formed from the remains of animals and plants. The main fossil fuels are coal, petroleum and natural gas. They release carbon dioxide, methane, and other greenhouse gases when they are burned (see Greenhouse gas).

Global warming Refers to the fact that the earth is hotter now than it has been in the past century. The average air temperature is about 1.1C higher now than it was in 1900. The oceans have also warmed.

Global average temperatureThe average surface temperature of the Earth is calculated from three main sources: satellites and monthly readings from a network land stations. Sea surface temperature measurements are taken from a shipping network.

Glasgow Finance Alliance for Net ZeroGroup of financial institutions that have backed UN Race to Zero campaign. This campaign has pledged to decarbonize the world economy and reach net zero emission by 2050.

The Net Zero Banking Alliance (see Entry) represents the banks and the Net Zero Asset Managers initiative the fund managers.

Greenhouse gas The main gases that cause the heating of the atmosphere include carbon dioxide, methane and ozone as well as nitrous oxide, hydrofluorocarbons, and hydrofluorocarbons. 

According to scientists, the total annual greenhouse gas emissions were calculated at 59bn tonnes carbon dioxide equivalent in 2019, with an error margin around 10 per cent according to the latest figures. IPCC Report (see IPCC). This is mainly made up of carbon dioxide and other gases such as methane or nitrous oxide.

Green bonds Green bonds, green loans, nature bonds, social bonds, sustainability bonds — the definition depends on the use of proceeds.

Green bonds are used to finance projects that have positive climate and/or environmental impacts. Sustainability-linked bonds and loans involve specific reporting or project selection criteria. Check out the International Capital Market Association’s and Loan Market Association’s requirements.

HYDROGEN

Green hydrogen This is achieved by using clean electricity from renewable energy technology to electrolyse water (H2O). It separates the hydrogen atom from its molecular twin oxygen. Currently, it is very expensive.

Blue hydrogen Produced using natural gaz, but with carbon emissions being stored and reused. Due to a lack in capture projects, production is negligible.

Grey hydrogen This is the most widespread form of hydrogen production. It is produced from natural gas via steam methane conversion, but it does not contain any emissions.

Brown hydrogenThis is the cheapest method to make hydrogen, but the most damaging for the environment due to the use of thermal coal.

Pink/purple hydrogen This electrolysis is powered by nuclear energy.

Turquoise hydrogen Methane pyrolysis is used to produce hydrogen and solid carb. It has not been proven to work at scale. Concerns regarding methane leakage.

IPCCThe Intergovernmental Panel on Climate Change was established in 1988 by the UN Environment Programme (WMO) and the World Meteorological Organization (WMO) to provide a clear scientific view of the latest climate science and its potential consequences. Its work is voluntary and involves thousands of scientists.

Energy costs are standardizedThe LCOE is a measure of the power source that allows for comparisons of different methods of electricity generation on an ongoing basis.

The LCOE is also a minimum constant price electricity must be sold to make a project financially viable over its lifetime.

MethanePotent warming gases are both natural and artificial. The latter include gas leaks and rice paddies, landfill, and coal mining. Natural sources include swamps. Cows, wetlands, and melting permafrost. Methane makes up the majority of natural gas.

Methane molecules are 25 times more powerful than carbon dioxide based on their weight. It also has a shorter lifespan than CO2, which can stay in the atmosphere for up to a century.

On a 20 year time horizon, methane has 80x the warming effect as carbon dioxide.

Mitigation There are many ways to stop climate change from getting worse. These include reducing greenhouse gas emissions and increasing the absorption back into nature.

See Also
Climate change set to upend global fishery agreements, study warns

Net zeroEmissions can be reduced to zero and offset any remaining emissions through projects that remove them from the atmosphere.

Contributions determined by the nation (NDCs). Each nation’s climate plans, including climate-related targets, policies and measures that each government aims to implement in response to climate change and as a contribution to global action. A comprehensive Here is the guide to national climate goals

Net-Zero Banking AlliancePart of the Glasgow Finance Alliance for Net Zero umbrella, Comprised of 98 member bankMore than 40% of global banking assets are accounted for by accounting.

Nitrous oxide (N2O).Known as laughing gas, a greenhouse gas with warming pot,. It is produced through fertilizers and agriculture.

Nitrogen dioxidePollutants that are mainly caused by road transport and diesel cars.

Ocean acidificationThe Ocean absorbsAbout 25% of carbon dioxide is the result of human activity in the atmosphere. Carbonic acid is formed when it dissolves in seawater. Carbon emissions from the industrial era already Seawater pH has been loweredby 0.1 This can impact the survival of marine organisms, and even kill coral reefs.

Paris climate agreement The We are in agreementIt aims to limit global warming well below 2C above preindustrial levels, and ideally, to 1.5C. It was adopted by the World Health Organization in 2015. 2016: In effect. It has been ratified and adopted by 193 countries. Each country sets their own voluntary emission targets, and each country tightens these targets over the course of time (see NDCs).

PPMAbbreviation of parts per million. The Intergovernmental Panel on Climate Change, (IPCC), has determined that greenhouse gas levels should remain below 450ppm CO2 equivalent to avoid dangerous climate change. That level peakedIn 2021, it will be almost 420ppm

REDDReduce Emissions from Forest Degradation and Deforestation is a priority UN-affiliatedProgram to provide financial incentives for developing countries to conserve forests.

Science-based targets Targets are considered “science-based” if they are in line with what the latest climate science deems necessary to meet the goals of the Paris agreement to limit global warming to well below 2C above pre-industrial levels and pursuing efforts to limit warming to 1.5C. 

Scope 1 and 2 emissions Greenhouse gas emissions are categorised into three groups or “Scopes” by the most widely used international accounting tool, the Greenhouse Gas Protocol.

Scope 1Covers direct emissions from sources owned or controlled. Scope 2Covers indirect emissions from the generation and heating of electricity, steam, and heating used by the reporting company. Scope 3 includes all other indirect emissions that occur in a company’s value chain. Scope 3 emissions are often not included in reporting by many companies.

Sustainable development goals (SDGs) These 17 goals were set by the UN in 2015 by world leaders, with a 2030 target. They include the goal of ending poverty and other forms of deprivation, as well improvements in health and education, economic growth, and tackling climate change and conserving the natural environment.

Sustainable finance regulation directive The EU regulation came into effect on March 10, 2021. It aims to require financial institutions, pension funds, insurance companies to disclose sustainability risk. This includes all sustainability risks, not just climate but also governance and social.

Tipping pointCritical climate thresholds, once reached, can cause irreversible changes to our planet’s systems. These thresholds could be exceeded by global warming.

TCFD Task Force on Climate-related Financial Disclosures — 2015 – LaunchedDuring the Paris climate negotiations, as a market-driven effort, Mark Carney, then Bank of England Governor and now UN special Envoy for Climate Action and Finance, supported it. Mary Schapiro, former chair of the SEC, is its secretary.

Their goal is to produce consistent, voluntary climate-related financial risk disclosures to be used by companies for information to investors and lenders as well as insurers and other stakeholders.

UNFCCCThe UN Framework Convention on Climate Change (UNFCCC) is one of several international agreements on global environmental issues that were adopted at the 1992 Earth Summit, Rio de Janeiro. The UNFCCC aims to prevent “dangerous” human interference with the climate system. It was ratified by 192 nations and entered into force March 21, 1994.

Emissions from value chains Scope 3 is also known (see Scope 3 below). Many businesses’ carbon footprint is more than 70% due to the emission of value chain (scope 3) gases.

Watts Kilowatts (1,000), Megawatts (m), Gigawatts (250,000), and 1 Billion. Watts per hour refer to the rate at energy is used/generated.

One 60-watt lightbulb, left on for an hour, consumes 60 Watt-hours.

One KW of wind turbine-generated electricity will power one kettle for one hour.

The average US home uses less than 11,000kWh per annumApproximately 1.25kW per hour. We can safely say that 1GW will power enough. Average conditions for 90,000 homes in the USA per year.

Zero carbon This means that there are no carbon emissions. This compares with ‘net zero’, where greenhouse gas emissions are balanced out.

This guide will be regularly updated.

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