Earlier this year, Heather Zichal, global head of sustainability at JP Morgan Chase (JPMC), and Ramaswamy Variankaval, global head of the JPMC Center for Carbon Transition, wrote in Fortune Magazine that the bank is on track to provide nearly a trillion dollars in clean energy financing by 2030.
The International Energy Agency (IEA) recently observed that the “energy world is at the dawn of a new industrial age–the age of clean energy technology manufacturing,” the authors shared, adding, “Capitalizing on this opportunity, while also advancing energy security and meeting today’s energy needs reliably and affordably, is a core challenge of our time.”
JPMC has invested more than $170 billion into green initiatives over the last two years, and plans to commit an additional $800 billion to clean energy financing by 2030.
The bank has been a leader in sustainability for decades, and regularly publishes research on the catastrophic effects of climate change if carbon emissions and other drivers are not addressed at scale. For example, its insights on extreme weather, heat, drought, and other climate change phenomena have a direct impact on food and water security, public safety, damage to property and entire ecosystems.
“To date, most climate investing has gone to building out renewable energy generation and storage,” the bank said. “Adaptation, by contrast, has been underfunded.”
Looking at the sources of carbon, according to JPMC, makes it clear that reducing energy emissions, important as it is, is not enough. It uses “Three Rs” to explain its recommended strategy: Reduction of emissions, Removal of carbon, and Retrofitting of physical assets.
Each of the three Rs offers investors a range of potential opportunities, the bank said. Energy production and consumption are major sources of the emissions causing climate change, but other sources also need reduction.
Reduce: Emissions reduction, which includes the decarbonization of the energy supply, has been a major focus of climate investments. There are also less well-known opportunities to reduce energy demand and to transform other (non energy) carbon-intensive processes.
Remove: Carbon removal is necessary to reach net zero in situations where carbon-neutral substitutes are not available, the bank says. Excess greenhouse gasses can be sequestered from the atmosphere naturally and mechanically. Greenhouse gasses can even be removed from the ocean, which absorbs CO2.
Retrofit: The bank highlights three broad adaptation categories, each with related investment opportunities.
They are:
- Water efficiency solutions designed to increase water supply in the face of regional droughts, changes in precipitation patterns and over pumping of wells.
- Food and agriculture innovation to address global population growth which require greater productivity, less waste, and strategies to improve regional and local farming.
- Buildings and infrastructure, which must be built or retrofitted to withstand the climate of the future, in addition to current climate change ramifications that are already taking a huge toll on the planet.
“In this new era, we’re growing JPMorgan Chase’s focus on financing the energy transition because it’s the right thing to do for clients, customers, communities, and shareholders,” Zichal and Variankaval wrote in the Fortune essay. “America can seize the opportunity to drive economic growth through innovation while creating jobs and delivering market-driven progress in advancing the energy transition.
