AIG to Go Net Zero and Exit Coal / Oil Sands

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American International Group Inc. (NYSE: AIG) is stepping up with its own net-zero pledge.

AIG has committed to reaching Net Zero GHG (Greenhouse Gas) emissions across its underwriting and investments portfolios by 2050.

They’ve announced that they’re not investing directly into or providing insurance for the construction of any new coal-fired power plants, thermal coal mines, or oil sands projects.

They have also taken it a step further and announced they are phasing out investing and insuring companies that get over 30% of their revenue from these industries.

The New York-based insurer is also halting investing and insuring all new Arctic energy exploration activities.

AIG has also committed to having 100% renewable energy for its operations by 2030.

“The data about climate change is unambiguous and we believe that AIG can be a catalyst for positive change as it relates to sustainability advancements and renewable energy expansion.” AIG Chairman and CEO Peter Zaffino said in the statement.

Last year AIG had revenues of over $52 Billion.

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Xpansiv Expansion Ahead of IPO

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Xpansiv is planning an IPO on the Australian Stock Exchange later this year. But right now they are in full M&A mode.

They are cashed up and have started making acquisitions in a massive roll-up play in the carbon markets.

Xpansiv’s trading platform currently hosts over 90% of all voluntary carbon credit transactions globally.

In 2021, Xpansiv recorded $305 million in revenue (~300% higher than the prior-year).

Over 120 million tonnes of carbon were traded on its CBL Exchange last year (a 4x increase over 2020.)

Their platform is used by the largest corporations such as Walmart, Tesla, Chevron, Shell, and Goldman Sachs.

The platform matches companies needing to buy credits (to fulfill their net-zero objectives) and speculators/investors with carbon credit providers.

They recently teased a potential vertical integration acquisition called the “Moonraker” project in their latest investor pitch deck. The transaction is expected to be worth over $100 million.

They also recently announced to acquire a leading provider of registry infrastructure for energy and environmental markets – APX Inc.

Xpansiv had two $100 million funding rounds in the past 2 years and also a $40 million pre-IPO deal.

They are expected to raise more than $500 million in the coming weeks – placing them at a ~$2 Billion market cap ahead of them being publicly traded.

As more and more companies make NetZero pledges, the amount of capital being deployed in the carbon sector is growing every quarter.

Xpansiv CEO, Joe Madden has stated that “it was clear that there were trillions of dollars in mismatch there, and somehow that would have to get reconciled. And markets were where it was going to get reconciled.”

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The Carbon Collapse in Europe

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The events unfolding in the Ukraine and sanctions on Russia have created sentiment across the board – even in the carbon sector.

Many are fearful of the potential economic fall-out of the Ukraine invasion and also a decline in overall industrial demand.

Typically, spiking gas and power prices would also increase the price of carbon.

As higher natural gas price encourages some power generators to switch to cheaper and dirtier coal. Coal emits upwards of double the emissions of natural gas, so this should increase the demand for carbon permits – in theory.

Some are speculating that some participants are offloading their EUA positions to cover losses elsewhere.

Before Russia’s invasion of Ukraine, the EU carbon price was near an all-time high of close to 100 Euros, this followed a record 2021.

Analysts at Engie EnergyScan noted that the “fundamentals of the market, i.e., its increasing tightness, are not changed by the crisis and the current prices could be considered as attractive”

Some speculators may be in a holding pattern in regards to entering the market again and are likely waiting for a resolution to the conflict. But the overall macro view of the carbon sector still remains strong.

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