Rockefeller Foundation bets big on climate initiatives
The Rockefeller Foundation is working to drive climate change and collective action in four key areas of the global economy, focusing on the most urgent issues in each of these areas, a top executive told AsianInvestor.
“Energy, food, health, and financial systems: these are the four programmatic areas we are focusing on currently,” said Joseph Curtin, managing director of the Power & Climate team at Rockefeller Foundation.
Acknowledging that net zero by 2030 was not possible, Curtin shared, “Our approach prioritises addressing the most pressing issue first in each of these four areas, and this is coal, in the area of energy.”
The Rockefeller Foundation, established 110 years ago by oil magnate John D. Rockefeller, recently cut ties with fossil fuels.
The Rockerfeller Foundation
In addition to committing to divest from its existing fossil fuel investments, the $5-billion endowment has also vowed to refrain from any new investments in the fossil fuel sector.
Joseph Curtin, Rockefeller FoundationWith these actions, the Rockefeller Foundation became one of the largest US foundations to join the divestment movement in the fossil fuel-led energy space.
Elaborating on the net-zero targets, Curtin shared that while the general global target for net zero is set for 2050, some countries like India and China have set later targets.
The timeline for achieving net zero depends on the context, noted Curtin, and can vary depending on the country or company’s context and capabilities.
SPOTLIGHT ON COAL
Coal is considered the world’s dirtiest fuel, emitting more greenhouse gases than any other source. In 2022, global coal demand reached its highest level ever, and it remains the largest energy source for electricity generation.
The Rockefeller Foundation is working on various initiatives to reduce the usage of coal. Curtin highlighted practical difficulties in phasing out coal.
“Many asset owners, who manage extensive portfolios across the region, face significant challenges in divesting from coal. They are often bound by long-term contracts that guarantee future revenues, making it impractical to cancel these agreements without incurring substantial financial losses,” he shared.
To address these challenges, the Rockefeller Foundation and the Global Energy Alliance for People and Planet (GEAPP) are working on the world’s first “coal-to-clean” credit program (‘CCCI’) in emerging economies.
The methodology for accelerated coal retirement involves three key aspects, according to Curtin. “Retiring coal plants ahead of schedule, building clean power replacements, and ensuring a just transition for affected workers and communities.”
ALSO READ: Rockefeller Foundation makes a push for transition credits
IMPACT IN NUMBERS
In September 2023, the foundation announced that it will invest over $1 billion in the next five years to advance the global climate transition and ensure everyone can participate in it. This includes providing additional resources, advocacy, and strategic support to a series of GEAPP initiatives, co-launched with the IKEA Foundation and the Bezos Earth Fund.
The Rockefeller Foundation has committed $500 million to the cause, which remains its largest single investment.
“Realisation of the initiative will be measured in terms of financial impact, carbon savings, and livelihood improvements,” noted Curtin.
Elaborating on the success parameters of the CCCI initiative, Curtin added: “Success is marked by key milestones, such as financial transactions, legal contract signings, and project submissions. These milestones occur at various stages of the transaction, leading up to the construction of renewable energy projects and the subsequent decommissioning of coal plants.”
The foundation is looking to establish its internal MRV (measurement, reporting, and verification) framework, which will serve as its accountability mechanism for the dollars invested in these initiatives.
Financial engineering often plays a critical role in structuring emissions reduction purchase agreements. In such agreements, the purchaser commits to buying a certain amount of emissions reductions once they have been verified, ensuring that payment is only made for actual, verifiable reductions in emissions.
This provides a financial incentive for projects that reduce emissions, and allows for the securitisation of future cash flows, facilitating upfront investments.
“From a corporate perspective, each project includes an MRV framework,” Curtin said. “This framework ensures that contracts are fulfilled, renewable energy replacements are built, and credits are issued only for actual emissions reductions achieved on the ground.”
“Future cash flows can be securitised in various ways to provide upfront investment, allowing investors to plan accordingly,” he added.