Stockholm (NordSIP) – During a week dominated by enthusiastic net-zero CO2 emissions announcements from AP4, Jupiter Asset Management and Handelsbanken, Ulf Erlandsson from the Anthropocene Fixed Income Institute (AFII) throws some cold water on Brookfield’s hopes to join the party.
Brookfield Asset Management Inc. is a Toronto-based alternative asset management company focusing on real estate, energy, infrastructure and private equity. Erlandsson argues that “the announcement of a Brookfield (BAM/A CN) USD7.5bn Global Transition Fund (‘net-zero’) fund launch is particularly ill-timed given filings that Brookfield-owned Dalrymple Bay (DBI AU) is set to expand its coal operations by 15Mtpa to become the world largest export terminal, in a project called 8x.” According to him, Brookfield still holds a 49% stake in DBI following a failed IPO last year.
AFII’s executive chair describes 8x as “an enabler of further coal mine expansions in Queensland”. According to his preliminary estimates, the 8x expansion would add 50Mt per year in CO2 emissions, equivalent to 0.5GT over a 10yr running period. The exploitation of all of DBI could lead to 300Mt per year in emissions and 3GT over ten years.
Erlandsson warns that one of three things could happen. Potentially, Brookfield could cancel the 8x expansion shut the thermal coal capacity (~20%) at DBI. In this case, it could use the money from the Global Transition Fund to pay Brookfield Infrastructure investors. Alternatively, Brookfield could unconditionally apply its communicated climate policy in a full balance sheet approach and moves to cancel the 8x expansion and thermal coal capacity at DBI. Finally, “Brookfield continues to work for the 8x expansion and thermal coal business to continue at DBI and thus get in competition for “Most Egregious Greenwash” award of the decade.”
“Proceeding with 8x and running these things for a decade shaves off 1% of the remaining global carbon budget. Imagine being a person so powerful that one could affect that,” Erlandsson concludes.