Sustainable Cities

Sustainable Finance

S&P Global Ratings expects U.S. municipal green-labeled debt to continue grabbing a larger share of the municipal market in 2021, estimating green-labeled issuance of about $18 billion, or 4.1% of total municipal issuance, as projected by S&P Global Ratings Research.

For the total sustainable debt market, we believe it is possible that issuance could surpass $30 billion for 2021, bringing cumulative issuances to more than $100 billion since the first municipal green bond was issued by the Commonwealth of Massachusetts in 2013. The extraordinary pace of growth in social and sustainability bonds, combined with the role of the pandemic in driving social bonds forward in 2020, adds complexity to the forecast.

Policy

Proposals to form a national clean electricity standard have become a central focus of climate change legislation in the new Congress as U.S. President Joe Biden pushes for a carbon-free power sector.

The concept has support from Democrats and Republicans, with nearly 40 U.S. states already adopting renewable or clean energy goals or standards, according to S&P Global Market Intelligence data. But lawmakers backing a clean electricity standard, or CES, still need to resolve differences over when the U.S. power sector would need to decarbonize, among other issues.

Decarbonization

As U.S. states look to decarbonize, where they get their natural gas may be an important part of their emissions profiles, according to a recent study.

Calculating the upstream greenhouse gas intensity of each state's gas supplies, researchers at Georgia Tech's School of Civil and Environmental Engineering found that gas consumed in 2018 in the Lower 48 had methane emissions profiles that ranged from 0.9% to 3.6% of the total gas withdrawn that supplied states' consumption.

Electrification

With Democrats in control of the White House and Congress, Edison Electric Institute, the trade group representing investor-owned electric utilities, plans to advocate for policies that support the industry's transition to cleaner energy and recognize the vital importance of infrastructure investment.

"As always, our North Star is serving our customers and we will continue to center our efforts on three main pillars: maintaining the steady and strong transition to clean energy; modernizing the energy grid to make it more dynamic, more resilient and more secure; and developing the innovative solutions our customers expect and deserve," EEI President Thomas Kuhn said during a Feb. 10 virtual presentation.

Kuhn and other EEI leaders noted that the electric industry is "the most capital-intensive industry in America," racking up nearly $140 billion in capital expenses in 2020. Nearly 50% of these investments were focused on transmission and distribution.

"The transmission system is key to integrating more renewables and more clean energy into the energy grid affordably and reliably," Kuhn added in the annual Wall Street briefing.

EEI leaders largely applauded the Biden administration's climate and energy policy goals, which include a $2 trillion clean energy and green infrastructure plan.

"To achieve our clean energy goals in the fastest and most cost-efficient manner while also protecting and helping to facilitate the development of this critical infrastructure, there are critical areas that the administration can focus on to make progress," said Philip Moeller, executive vice president of the business operations group and regulatory affairs at EEI. "First, we need to take a more holistic view of transmission system needs and we need to work to improve policies and processes to evaluate and promote the development of cost-effective interregional, multiregional or cross-connection transmission facilities."

Natural Gas Challenges

The council responsible for developing model building codes overhauled its process for setting minimum energy efficiency requirements, blocking a pathway that local governments have used to secure decarbonization measures like building electrification and electric vehicle charging.

The move drew swift criticism from environmentalists, some local governments and Democratic leaders, who called the move a sign of the influence of building developers and the gas industry within the council, the International Code Council Inc., or ICC. Groups like the National Association of Home Builders and Leading Builders of America viewed the overhaul as a means of preventing climate-focused groups and civil servants from compromising the council's mission of fostering safe, affordable building development.

Real Estate

In 2019, the global value of real estate was estimated to be US$217 trillion – roughly 2.7 times the GDP of the entire world. Global real estate consumes approximately 40% of world energy annually and accounts for more than 20% of greenhouse gas (GHG) emissions. This highlights the contribution the real estate industry can make to help achieve the Paris Agreement goal of limiting global warming to well below 2°C from pre-industrial levels.

Further Reading