Navigating the Twisty Path of the Transition Process

In the realm of sustainable business practices, the concept of transition planning has gained traction in recent years. According to Romain Poivet, many market participants were attempting to avoid this concept before its inception. However, the importance of transition planning is becoming increasingly apparent, as companies strive to reduce their carbon footprint and meet their environmental targets.

One of the pioneers in this area is Schneider Electric, a leading energy management company. They began reporting on avoided emissions publicly in 2015 and have since set an ambitious target to deliver 800 megatons of avoided emissions over the period 2018-2025.

The need for credible transition plans has been a topic of discussion at various forums, including the CIB's 2024 Green Summit. In response, initiatives such as the Transition Plan Taskforce (TPT) and the ATP-Col have been launched. The TPT aims to establish the gold standard for transition plans globally, while the ATP-Col was created in 2023 to collectively develop a consensual framework for assessing companies' transition plans' credibility.

Quantis, a leading environmental sustainability consultancy, is also working on a standardized and transparent database of avoidance factors. This database, set to be operational from March 2025, will allow companies and projects to quantify, compare, and audit the emissions avoided by their efforts.

Transition planning is not without its challenges. The phase out of fossil fuel related facilities and equipment can bring about complexities, as seen in the decommissioning and rehabilitation of the Hazelwood power station and mine in Victoria, Australia. This project, which took 4 years to complete, required careful planning to consider social and employment impact, stability of the mine during decommissioning, replacement of the power reduction, and regulatory considerations.

In the realm of lithium mining, Vulcan Energy is reimagining the process with a plan to build the world's first carbon neutral, integrated lithium and renewable energy business. Their project, which includes the enhancement of water retention capacity and a negative 2.9t of CO2 emitted per tonne of lithium hydroxide to be produced, is a testament to the potential of sustainable mining practices.

The financing of Vulcan's project marks a significant milestone, as it is the first green enabling loan (compliant of the ICMA recently published guidelines) with CIB as the Green coordinator. The European Investment Bank (EIB) has also been an active player in supporting fair transitions, ensuring that phase out projects have minimal impact on the livability of communities nearby. They provided financing of EUR 200mn for the rehabilitation, stabilization, and remediation of former lignite mining sites in the Federal State of Brandenburg, Germany, from 2013-2022.

In conclusion, the transition towards a sustainable future is a complex yet necessary journey. Transparency, credible plans, and stakeholder management are key elements in this process. The ongoing efforts of companies like Schneider Electric, Vulcan Energy, and the various initiatives discussed here, are steps in the right direction towards a greener, more sustainable future.