Climate Change is one of the most pressing issues of our time. To meet the ambitious goals of the Paris Agreement and transition our economy away from carbon-intensive energy sources, it will take collaboration between government and business leaders.
JPMorgan Chase is committed to doing its part, including through our commitment to generate and purchase energy and corresponding renewable energy credits equal to our global electricity consumption.
Bringing a 100% renewable energy commitment to life requires building out the requisite technology systems. The lack of coherent, immutable energy & carbon data will be a core challenge. You can’t manage what you can’t track and understand.
We have been working with a consortium of companies to make this technology system a reality – to allow us to track every electron we purchase from the source to the site in real time and then leverage cutting edge building management technologies to optimize our consumption. Incorporating principles of blockchain, we have come together with building owners, renewable generators, and technology companies to develop new technology that allows property owners like JPMorgan Chase to see exactly where our power is coming from, how it is used, and importantly associate and claim the renewable characteristics of that power. And, by deploying this technology with smart building systems, we are able to do even more to ensure our buildings use their power as efficiently as possible.
A foundational component of this system is groundbreaking energy tracing technology. Consider the fact that both energy generation and energy consumption are energy events – constituting energy supplied to or energy taken from the grid respectively – and these energy events are read by a meter. The technology reads, assembles, enriches and publishes these generation and consumption events on a continuous basis and makes them available first in a user-accessible, web-based interface, second via API and finally and most importantly, in the form of blockchain-resident digital climate assets (e.g. renewable energy generation data accumulated into 1MWh RECs, or load-matched renewable energy supply accumulated into time- and location-specific bundles exactly offsetting our measured, read and digitized consumption profile, which leads to the natural result and ability to calculate and tokenize Energy Efficiency Credits as envisaged by Local Law 97, etc.). Once resident on the blockchain, digital climate assets are capable of being claimed for own use, traded bilaterally, or made available as part of a multi-party exchange.
The blockchain framework underpinning the solution we are pursuing is an industry recognized and supported framework – Quorum. Building on Quorum fosters interoperability across already enabled payment systems as well as standardization of data frameworks and criteria with respect to Quorum resident digital climate assets.
This groundbreaking technology system is not something JPMorgan has to install, configure and maintain; rather, our role and that of our service providers (energy supply companies, building management systems, on-site renewable generation contractors, etc.) is to make the data events and data pathways available to the company we are partnering with to deliver digital, data driven attestation of carbon neutrality.
Another aspect of our work with this consortium of companies is focused on carbon scoring. Simply put, we are creating a carbon reporting scale of 0-100, whereby a score of 100 means that JPMorgan Chase has fully load-matched the entirety of its global energy consumption with provable and traceable renewable energy supply on a 24×7, 365 day basis. Any hour of any day across our portfolio where we are not fully “load-matched” causes the score to drop below 100. JPMorgan Chase would like to see this “carbon score” applied into all financing practices such that the higher one’s carbon score, the lower the cost of borrowing, which is the same methodology that sustainable bonds, green bonds and sustainable-linked-lending follow. Doing so will properly align market incentives and help accelerate decarbonization initiatives.
In New York City and beyond, it will become increasingly important for building and business owners to track their energy profile, carbon footprint, and the effectiveness of mitigation initiatives. Incorporating this carbon score into financing and lending processes will be a key part of the solution – aligning stakeholders’ incentives with our value and goal of guiding the world toward deep decarbonization and a more sustainable and clean energy future.
Not only does this approach help support compliance reporting, such as for Local Law 97, building and business owners can also leverage the technology and service capabilities of the consortium to streamline reporting following various industry standards such as SASB, TCFD, GRI with verifiable and defensible data. This can be a differentiator not just for companies, but for their investors and customers as well.
These are exactly the types of technologies and approaches that we will collectively need to more widely deploy if we are to make significant progress in reducing carbon emissions from the building stock. We at JPMorgan Chase are proud to support these efforts.
Alec Saltikoff Executive Director, Global Head of Sustainability and Energy at JPMorgan Chase