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‘Carbon Bubble’ Could Cost World Trillions

SingaporeSuperTrees

Singapore-Supertrees are generating solar power, acting as air venting for conservatories, and collecting rain water, June 11, 2015 (Photo by Güldem Üstün) Creative Commons license via Flickr

By Sunny Lewis

CAMBRIDGE, UK, June 7, 2018 (Maximpact.com News) – Globally, the consumption of fossil fuels will slow down or decline in the near future as a result of fast-moving technological change and new climate policies, creating a “dangerous carbon bubble,” finds a newly published study by an international team of scientists.

If not deflated early, the carbon bubble could lead to a discounted global wealth loss of between US$1 trillion and $4 trillion, a loss comparable to what triggered the 2007 financial crisis, the study shows.

Relying on groundbreaking modeling techniques, researchers from Radboud University in the Netherlands, the University of Cambridge’s Centre for Environment, Energy and Natural Resource Governance (C-EENRG), Cambridge Econometrics, The Open University in the UK and the University of Macau were able to show that the demise of the fossil-fuel industry will have profound economic and geopolitical consequences.

The study is published in the current issue of the journal “Nature Climate Change.”

“If countries keep investing in equipment to search for, extract, process and transport fossil fuels, even though their demand declines, they will end up losing money on these investments on top of their losses due to limited exports,” explains co-author Dr. Jean-Francois Mercure of Radboud University and C-EENRG.

“Countries should instead carefully deflate the carbon bubble through investment in a variety of industries and steady divestment,” he advises. “The way in which this is done will determine the impact of the ongoing low-carbon transition on the financial sector.”

This transition will result in clear winners, importers such as China and the European Union, and losers, exporters such as Russia, the United States and Canada, which could see their fossil-fuel industries nearly shut down.

If these countries keep up their investment and production levels despite declining demand, the global wealth loss could be huge. Even the United States could not pull out from this transition, as it would only hurt itself even more, the researchers warn.

This new study is more conservative in its warnings than a 2013 research paper from Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. That paper calls for regulators, governments and investors to re-evaluate energy business models against carbon budgets, to prevent a $6 trillion carbon bubble in the next decade.

The Underlying Reasoning

Quite a few major economies rely heavily on fossil-fuel production and exports. The price of fossil-fuel companies’ shares is calculated under the assumption that all fossil-fuel reserves will be consumed.

But to do so would be inconsistent with the tight carbon budget set in the 2015 Paris Agreement, which limits the increase in global average temperature to “well below 2°C above pre-industrial levels.”

According to a 2015 study in the journal “Nature,” an estimated third of oil reserves, half of gas reserves and more than 80 percent of known coal reserves should remain unused in order to meet global temperature targets under the Paris Agreement.

To date the Paris accord has not deterred continuing investment in fossil fuels because of the belief that climate-friendly policies will not be adopted, at least not in the near future.

But the researchers show that ongoing technological change, by itself and even without new climate policies, is already reducing global demand growth for fossil fuels, which could peak in the near future.

Examples are clean technologies in power generation, cars and households that become more efficient and so reduce the use of fossil fuels.

For instance, countries, states and cities representing 75 percent of new passenger car sales in 2016 have established electric vehicle targets totaling 15.1 million, providing policy certainty of a transition away from oil consuming vehicles.

New climate policies would aggravate the impact of policies like this, Dr. Mercure and his colleagues believe.

Because the Trump Administration has proclaimed the United States’ intention to withdraw from the Paris Agreement, the scientists also modeled what would happen if the United States did continue to invest in fossil-fuel assets instead of diversifying and divesting from them.

The analysis shows the GDP of the United States would be reduced even further.

Dr. Mercure clarifies this point, saying, “With a declining global fossil-fuel demand, fossil-fuel production in the USA is becoming uncompetitive, and may shut down.”

“If the USA remains in the Paris Agreement, it will promote new low-carbon technologies and reduce its consumption of fossil fuels, creating jobs and mitigating its loss of income, despite losing its fossil-fuel industry,” he said.

“If it pulls out, it will nevertheless lose its fossil-fuel industry, but by not promoting low-carbon technologies, will miss out on job creation opportunities, while increasing its fossil-fuel imports by not reducing its domestic fossil-fuel consumption. The outcome is therefore worse if the USA pulls out,” said Dr. Mercure.

The process of transition towards a low-carbon economy is now becoming “inevitable,” as policies supporting this change have been developed and gradually implemented for some time in many countries, the authors point out.

Hector Pollitt, study co-author from Cambridge Econometrics and C-EENRG, says, “This new research clearly shows the mismatch between the reductions in fossil fuel consumption required to meet carbon targets and the behavior of investors.”

“Governments have an important role to play in emphasizing commitments to meet the Paris Agreement to ensure that the significant detrimental economic and geopolitical consequences we have identified are avoided,” warned Pollitt.

The authors conclude that economic damage from a carbon bubble burst could be avoided by decarbonizing early.

Divestment is Prudent

“We should be carefully looking at where we are investing our money. For instance, much like companies, pension funds and other institutions currently invest in fossil-fuel assets. Following recommendations from central banks, commercial banks are increasingly looking at the financial risks of stranded fossil-fuel assets, even though their possible impacts have not yet been fully determined,” said Mercure.

“Until now, observers mostly paid attention to the likely effectiveness of climate policies, but not to the ongoing and effectively irreversible technological transition,” Mercure concludes. “This level of ‘creative destruction’ appears inevitable now and must be carefully managed.”

Another new study, released June 4, bolsters these findings.

Policymakers are being misinformed by the results of economic models that underestimate the future risks of climate change impacts, according to the new paper by authors in the United States and the United Kingdom.

Published in the “Review of Environmental Economics and Policy” calls for the Intergovernmental Panel on Climate Change (IPCC) to improve how it analyzes the results of economic modeling as it prepares its Sixth Assessment Report, due to be published in 2021 and 2022.

The IPCC is the UN body for assessing the science related to climate change. It has 195 member states.

The paper’s authors point to “mounting evidence that current economic models of the aggregate global impacts of climate change are inadequate in their treatment of uncertainty and grossly underestimate potential future risks.”

This study, “Recommendations for Improving the Treatment of Risk and Uncertainty in Economic Estimates of Climate Impacts in the Sixth Intergovernmental Panel on Climate Change Assessment Report,” was written by Thomas Stoerk of the nonprofit Environmental Defense Fund, Gernot Wagner of the Harvard University Center for the Environment and Bob Ward of the ESRC Centre for Climate Change Economics and Policy and Grantham Research Institute at the London School of Economics and Political Science.

They warn that the assessment models used by economists “largely ignore the potential for ‘tipping points’ beyond which impacts accelerate, become unstoppable, or become irreversible.”

Featured image: Heavy seas engulf the Block Island Wind Farm, the first U.S. offshore wind farm, located off the coast of Rhode Island in the Atlantic Ocean. It came online in December 2016. (Photo by Dennis Schroeder / National Renewable Energy Laboratory) Public domain


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One Planet Summit Inspires Climate Action

By Sunny Lewis

PARIS, France, December 12, 2017 (Maximpact.com  News) – Two years to the day after the historic Paris Agreement on climate, more than 50 heads of state, as well as environment ministers and regional leaders, bank and finance executives and celebrities are meeting today to drive action that will finance global efforts to meet the goals of the agreement.

The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees Celsius. The agreement also aims to strengthen the ability of countries to deal with the impacts of climate change.

Today’s invitation-only One Planet Summit, convened by President of France Emmanuel Macron, was attended by British Prime Minister Theresa May, Spain’s Mariano Rajoy, European Commission President Jean-Claude Juncker, and Mexican President Enrique Peña Nieto, among many others.

President Juncker said, “The time has now come to raise our game and set all the wheels in motion — regulatory, financial and other — to enable us to meet the ambitious targets we have set ourselves. This is a necessity dictated by our current living conditions as well as those of future generations. This is the time that we must act together for the planet. Tomorrow will be too late.”

The European Commission released its 10 item Action Plan for the Planet, consisting of: putting the financial sector at the Service of the Climate, investment in Africa and the EU Neighbourhood region, urban investment support, clean energy for islands, support for the transition of coal and carbon intensive regions, youth, smart buildings, clean industrial technology and clean, connected and competitive mobility.

Prime Minister May announced a big increase in UK aid for Caribbean countries devastated by hurricanes as part of a £140 million climate change grant for the world’s least developed countries.

“Tackling climate change and mitigating its effects for the world’s poorest are among the most critical challenges that we face,” said May.

“And by redoubling our efforts to phase out coal, as well as build on our world leading electric car production, we are showing we can cut emissions in a way that supports economic growth,” she said.

U.S. President Donald Trump was not invited to the summit, as he is streamlining fossil fuel exploration and development, even removing U.S. public lands from federal protection so industry can have at them.

Trump has vowed to withdraw the United States from the Paris Agreement, a lengthy process that cannot begin until 2020, after that year’s presidential election. Countries cannot withdraw until three years after the Paris Agreement took effect on November 4, 2016. After that, the rules mandate a one-year notice period. Still, because the accord is non-binding, Trump could choose to just ignore the accord’s terms.

President Macron told NBC News in an interview in June, “I’m pretty sure that my friend President Trump will change his mind in the coming months or years, I do hope. It’s extremely aggressive to decide on its own just to leave, and no way to push the others to renegotiate because one decided to leave the floor.”

Syria last month ratified the Paris Agreement, leaving the United States as the only country to reject the accord.

President Macron unveiled the winners of the first “Make Our Planet Great Again” climate research grants established after Trump announced his intention to pull out of the Paris accord. The French president said that Trump’s decision was a “deep wake-up call for the private sector” to take action.

Thirteen of the 18 multi-year award winners are American scientists; all winners will conduct climate research in France. The three-year to five-year grants are worth up to €1.5 million each. Overall, the program totals about €60 million in direct funding and in-kind support.

Macron told the winners Monday night, “What you are showing here this evening, with your commitment, with the projects that have been chosen … is that we do not want climate change, and we can produce, create jobs, do things differently if we decide to.”

In any case, the One Planet Summit featured dire warnings, rich pledges and actions that two years ago were not even on the horizon.

“Those who fail to bet on a green economy will be living in a grey future,” United Nations Secretary-General António Guterres warned today, calling for greater ambition by governments, civil society, the private sector and finance partners to help tackle the global climate challenge.

“Green business is good business,” the UN chief said, speaking at the opening of the One Planet Summit. “Renewables are now cheaper than coal-powered energy in dozens of developed and developing countries.”

Guterres stressed that for climate action, it is not funding but trust that is lacking. To fix it, he said, first and foremost, rich countries must honor their commitment and provide US$100 billion a year through 2020 for developing countries to mitigate and adapt to the already-changing climate.

It also means that the Green Climate Fund must become an effective and flexible instrument, especially for the most vulnerable countries such as small island states and least developed countries.

“These two conditions are essential for trust between developed and developing countries,” said Guterres.

“Everyone is looking for paths to economic growth that are low carbon,” said World Bank President Jim Yong Kim, as he announced that the World Bank <worldbank.org> will no longer finance upstream oil and gas, after 2019.

In exceptional circumstances, said Kim, consideration will be given to financing upstream gas in the poorest countries where there is a clear benefit in terms of energy access for the poor and the project fits within a country’s Paris Agreement commitments.

Alex Doukas, director of the Stop Funding Fossils Program at Oil Change International, said, “The World Bank’s monumental announcement that they are moving out of upstream oil and gas finance after 2019 stole the show in Paris. This move from the World Bank demonstrates real climate leadership, and could help signal a broader shift away from the tens of billions of dollars in public finance that G20 governments and multilateral development banks dump into fossil fuels each year.”

“These institutions still provide $72 billion in public finance to fossil fuels annually,” said Doukas, “which is why a shift away from fossil fuel finance is crucial if we hope to meet the aims of the Paris Agreement.”

“Government commitments to scale up climate finance are important, but they’re not enough. Others need to follow the lead of the World Bank and signal that they will stop funding fossils,” said Doukas.

Kim said that the World Bank Group is on track to meet its target of 28 percent of its lending going to climate action by 2020 and to meeting the goals of its Climate Change Action Plan, developed following the Paris Agreement.

For instance, last week, the World Bank and the Government of Egypt signed a US$1.15 billion development policy loan aimed at reducing fossil fuel subsidies and creating the environment for low-carbon energy development.

The World Bank Group will accelerate energy efficiency in India; scale up solar energy in Ethiopia, Pakistan and Senegal; establish a West Africa Coastal Areas investment platform to build resilience for coastlines there; and introduce the City Resilience Platform with the Global Covenant of Mayors so that up to 500 cities will have access to finance for climate change resilience.

The International Finance Corporation (IFC), a subsidiary of the World Bank Group has pledged invest up to US$325 million in the Green Cornerstone Bond Fund, a partnership with the European asset management company, Amundi, to create the largest-ever green bond fund exclusively dedicated to emerging markets.

“This is a $2 billion initiative aiming to deepen local capital markets, and expand and unlock private funding for climate-related projects. The fund is already subscribed at over $1 billion,” the IFC announced.

European Bank for Reconstruction and Development (EBRD) President Sir Suma Chakrabarti said his bank intends to invest up to US$100 million in “Amundi Planet – Emerging Green One.”

The EBRD joined other global development organizations in stepping up the momentum for global climate action.

Chakrabarti told summit participants that the bank expects to meet its ambitious climate finance goals set at the 2015 Paris Climate Agreement three years ahead of time. The EBRD is already dedicating close to 40 percent of its annual investments to climate finance, a target it had initially set for 2020.

In Paris, Chakrabarti unveiled plans to step up EBRD support for the promotion of green cities, launching the Green Cities Climate Finance Accelerator with the Global Covenant of Mayors for Climate and Energy (GCoM), an international alliance of 7,498 cities and local governments moving towards a low-emission and climate-resilient society.

Under the new partnership, the EBRD and the GCoM are seeking to drive climate action in up to 60 cities, including many that to date have not been a focus for climate support.

At the One Planet Summit, from left, President of Mexico Enrique Peña Nieto, United Nations Secretary-General António Guterres, World Bank President Jim Yong Kim. December 12, 2017 (Photo courtesy Office of President Peña Nieto) Posted for media use

At the One Planet Summit, from left, President of Mexico Enrique Peña Nieto, United Nations Secretary-General António Guterres, World Bank President Jim Yong Kim. December 12, 2017 (Photo courtesy Office of President Peña Nieto) Posted for media use

The World Bank, too, is partnering with the Global Covenant of Mayors and will lend US$4.5 billion to ensure 150 cities have the funds to implement initiatives to increase sustainability and resilience and fight climate change.

Marking the two-year anniversary of COP21 where the Paris Agreement was signed, the Global Covenant of Mayors joined with C40 Cities Climate Leadership Group, ICLEI, and various regional covenant partners, to announce the One Planet Charter – a new commitment campaign that will help cities swiftly implement actions to ensure Paris Agreement goals are met.

Through the One Planet Charter, cities will commit to specific climate action that drives investments, green public procurement, and policy decisions in renewable energy, energy efficiency, electric vehicles, and efforts for zero emission buildings and zero waste.

Cities will bring detailed descriptions of their commitments to the 2018 Global Action Summit in California.

Chakrabarti said, “We are delighted by our new financing initiative and partnership with the Global Covenant of Mayors

for Climate and Energy. … As cities around the world drive climate leadership, we are pleased that this investment will ultimately support the quality of life at the local level and contribute to addressing the global climate challenge.”

Paris Mayor Anne Hidalgo, board member of the Global Covenant of Mayors for Climate and Energy, who also chairs C40 Cities: “C40’s Deadline 2020 research revealed precisely what needs to be delivered by the cities of more than 100,000 citizens around the world, to deliver on the ambition of the Paris Agreement. The decisions being made by mayors right now on investments for sustainable and resilient infrastructure will determine the future of generations to come. The One Planet Charter will make it easier to build the argument for bold climate action and investment in these crucial months and years ahead.”

In a separate initiative, nine of Europe’s largest industrial issuers of green bonds – EDF, Enel, ENGIE, Iberdrola, Icade, Paprec, SNCF Réseau, SSE and TenneT – announced their joint pledge to further develop “one of the most dynamic segments of sustainable finance today, the green bond market.”

Their pledge came on Monday, Paris 2017 Climate Finance Day, the day before the One Planet Summit.

Ten years after the first green bond was issued, this market has turned into “an exciting place,” said the nine companies, who say they are committed to tackling climate change, to a growing awareness to environmental protection, low carbon

transport and buildings, as well as energy efficiency.

Said José Sainz Armada, chief financial officer of the Spanish public multinational electric utility Iberdrola, “Ever since incorporating Sustainable Development Goals to the company’s strategy, Iberdrola has become the largest European issuer of green bonds, the perfect source of long-term finance for projects making an environmental difference. Through independent certification, private investors guided by ethical principles ensure their funds are managed with a sustainable perspective and the strictest social criteria.”

To date, all nine companies have issued a total of €26 billion in green bonds, which accounts for over 10 percent of all the world’s outstanding green bonds.

The nine signatories of Monday’s pledge commit to a long-term presence in the market. They say that green bonds will be at the heart of their project financing and business lines, and that they will implement stringent reporting procedures. The pledge also calls upon other industrial corporations to consider issuing green bonds.

Also announced at the One Planet Summit is Climate Action 100+, a new initiative backed by 225 investors, including nearly 70 North American investors, with $26.3 trillion in assets under management.

Climate Action 100+ is a five-year global effort led by investors to scale up engagement with the world’s largest corporate greenhouse gas emitters to improve governance on climate change, curb emissions and strengthen climate-related financial disclosures.

“Moving 100 of the world’s largest corporate greenhouse gas emitters to align their business plans with the goals of the Paris Agreement will have considerable ripple effects,” said Anne Simpson, member of the Climate Action 100+ Steering Committee and investment director of sustainability at the California Public Employees’ Retirement System, the largest U.S. public pension fund.

“Our collaborative engagements with the largest emitters will spur actions across all sectors as companies work to avoid being vulnerable to climate risk and left behind,” said Simpson.

As part of today’s launch, investors released the list of the first 100 companies that they plan to engage as part of the initiative. The list includes companies in the oil and gas, electric power and transportation sectors that have been identified as the world’s largest greenhouse gas emitters.

But all these actions and promises did not go far enough for the conservationists in the Climate Action Network, a global group of over 1,200 NGOs working to promote government and individual action to limit human-induced climate change to ecologically sustainable levels.

Pointing out that 2017 is likely to be among the five-warmest years since the Industrial Revolution, and that the planet has suffered massive hurricanes in the Atlantic and the Caribbean, devastating floods in south Asia, and out of control wildfires in California, the Climate Action Network is pressing for even more urgent action.

Brett Fleishman, 350.org senior finance campaigner, said, “President Macron and other world leaders, are meeting right now to supposedly discuss shifting capital to climate solutions. But we are here to ring the alarm by bringing attention to the unabated support of the fossil fuel industry. We have research that clearly demonstrates that the French government, through its many agencies, is still invested in the energies sources of the past. This acts as a drag on the climate finance summit. This charade of caring about the planet can’t go on. Every euro and dollar spent on adaptation and mitigation is undercut by even more money spent on the fossil fuel industry.”

“Whatever the outcomes from this summit,” said Fleishman, “the global climate movement will keep on pushing through 2018 to accelerate the transition away from fossil fuels to 100 percent renewable energy for all.”

MOre than 1,000 delegates participated the summit, which will continue Wednesday with various side events.

The One Planet Summit is organized jointly by France, the United Nations and the World Bank, in partnership with the United Nations Framework Convention on Climate Change, the We Mean Business Coalition, the Global Covenant of Mayors for Climate and Energy, the European Commission, the C40 Cities Network, the OECD and Bloomberg Philanthropies.


Featured Image: President of France Emmanual Macron and British Prime Minister Theresa May at the One Planet Summit, Paris, France, December 12, 2017 (Photo courtesy #10 Downing Street) Creative Commons license via Flickr

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Europe’s ‘Clean Energy Revolution’

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Gemasolar was the first commercial-scale plant in the world to apply central tower receiver and molten salt heat storage technology. The molten salt storage tank permits independent electrical generation for up to 15 hours without any solar feed. May 7, 2009, Seville, Spain. (Photo by Markel Redondo / Greenpeace)

By Sunny Lewis

BRUSSELS, Belgium, December 8, 2016 (Maximpact.com News) – To keep the EU competitive as renewables displace fossil fuels, shaking up global energy markets, the European Commission has proposed a new package of measures to “equip all European citizens and businesses with the means to make the most of the clean energy transition.”

The “Clean Energy for All Europeans” legislative proposals are designed to show that, as the Commission said, “the clean energy transition is the growth sector of the future – that’s where the smart money is.”

The measures are aimed at establishing the EU as a leader of the clean energy transition, not just a country that adapts to a renewable energy future as required by the 2015 Paris Agreement on Climate, which more than 100 nations have now formally joined.

In October 2014 the European Council, composed of the heads of state or government of the EU member states, agreed on the 2030 climate and energy policy framework for the EU.

That’s why the EU has committed to cut emissions of the greenhouse gas carbon dioxide (CO2) by at least 40 percent by 2030, less than 15 years away.

Europe is on the brink of a clean energy revolution,” said Commissioner for Climate Action and Energy Miguel Arias Cañete.

And just as we did in Paris, we can only get this right if we work together.

With these proposals, said Cañete, the Commission has cleared the way to a more competitive, modern and cleaner energy system. “Now,” he said, “we count on European Parliament and our Member States to make it a reality.”

If the new proposals become law, EU consumers of the future may have the possibility of producing and selling their own electricity, a better choice of supply, and access to reliable energy price comparison tools.

Increased transparency and better regulation give civil society more opportunities to become more involved in the energy system and respond to price signals.

The package also contains several measures aimed at protecting the most vulnerable consumers.

The EU is consolidating the enabling environment for the transition to a low carbon economy with a range of interacting policies and instruments reflected under the Energy Union Strategy, one of the 10 priorities of the Juncker Commission.

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Caption: Commission President Jean-Claude Juncker briefs the European Parliament, Oct. 26, 2016 (Photo © European Union 2016 – European Parliament”) Creative Commons license via Flickr.

In his State of the Union Address to the European Parliament, September 14, President Jean-Claude Juncker emphasized investment.

The €315 billion Investment Plan for Europe, which we agreed just 12 months ago, has already raised €116 billion in investments in its first year of operation. And now we will take it further,” said President Juncker, doubling down on the EU’s future.

We propose to double the duration of the Fund and double its financial capacity to provide a total of at least €500 billion of investments by 2020,” Juncker said.

The Commission has already offered CO2 reduction proposals. In 2015, the executive body proposed to reform the EU Emission Trading System to ensure the energy sector and energy intensive industries deliver the needed emissions reductions.

Last summer, the Commission proposed ways of accelerating the low-carbon transition in other key sectors of the European economy.

Today’s proposals present the key remaining pieces to fully implement the EU’s 2030 climate and energy framework on renewables and energy efficiency.

All the Energy Union related legislative proposals presented by the Commission in 2015 and 2016 need to be addressed as a priority by the European Parliament and Council.

Modernising the EU’s economy is key, said Vice-President for Energy Union Maroš Šefcovic. “Having led the global climate action in recent years,” he said, “Europe is now showing by example by creating the conditions for sustainable jobs, growth and investment.

Clean energies, in total, attracted global investment of over €300 billion in 2015, and the Commission sees opportunity for the EU in the clean energy wave of the near future.

By mobilising up to €177 billion of public and private investment a year from 2021, this package can generate up to one percent increase in GDP over the next decade and create 900,000 new jobs, the Commission said.

The Clean Energy for All Europeans legislative proposals cover energy efficiency, renewable energy, the design of the electricity market, security of electricity supply and governance rules for the Energy Union.

The Commission also proposes a new way forward for Ecodesign, the law that sets minimum mandatory requirements for the energy efficiency of household appliances, information and communication technologies and engineering.

The package includes actions to accelerate clean energy innovation, to renovate Europe’s buildings and a strategy for connected and automated mobility.

Commissioner Cañete said, “I’m particularly proud of the binding 30 percent energy efficiency target, as it will reduce our dependency on energy imports, create jobs and cut more emissions.

Our proposals provide a strong market pull for new technologies,” he said, “set the right conditions for investors, empower consumers, make energy markets work better and help us meet our climate targets.

Links to all documents in the Clean Energy package:


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Investors Assess Their Climate Risks

smokestackhelsinki

Greenhouse gas emissions from the coal-fired cogeneration Hanasaari B power plant at sunset in Helsinki, Finland, March 9, 2013 (Photo by Fintrvlr) Creative Commons license via Flickr

By Sunny Lewis

OAKLAND, California, October 20, 2016 (Maximpact.com News) – Investors are being put on notice that some mutual funds and exchange traded funds labeled “sustainable,” “ecology,” “green” or “integrity” may actually have very high carbon footprints.

Now, a free software tool that empowers investors to track the carbon pollution that companies embedded in their funds are emitting has expanded its analysis to cover funds worth US$11 trillion.

FossilFreeFunds.org, a website created by the environmental advocacy nonprofit As You Sow, has added carbon footprinting of over $11 trillion in global mutual funds and ETFs to the site – the largest-ever analysis of this kind.

Fossil fuel investments carry real financial risks,” says FossilFreeFunds.org on its site. Their analysis covers more than 8,500 global mutual funds, including 3,000 of the most commonly-held funds in U.S. retirement plans, so that all investors can be aware of the climate risk in their retirement accounts, with financial data provided by Morningstar.

In August, Morningstar introduced a Sustainability Rating for Funds that offers an objective way to evaluate how investments are meeting environmental, social, and governance challenges, helping investors put their money where their values are.

Transparency leads to transformation,” said Andrew Behar, CEO of As You Sow. “Measuring a company’s carbon emissions is a critical way to understand the specific climate risk of your investments.

We have aggregated this data for all of the companies embedded in each of the 8,500 most-held global mutual funds and ETFs,” said Behar. “This tool enables every investor to answer the question, ‘Am I investing in my own destruction or the clean energy future?

The analysis uses data from global sustainability solutions provider South Pole Group, and yourSRI.com, a carbon data analyst and reporting solution provider for responsible investments.

Intially, the analysis will cover funds in Denmark, France, Germany, Hong Kong, the United Kingdom and the United States. The developers plan to expand to include every fund in every exchange around the world.

Institutional investors such as California’s CalPERS and Sweden’s AP4 have embraced carbon footprinting as a way to protect their assets from climate risk.

Major index providers are increasingly offering low-carbon options that incorporate a footprinting analysis.

Traditional fossil-free investment approaches avoid companies with reserves of coal, oil, and gas that represent potential future emissions.

Carbon footprinting turns the focus to current greenhouse gas emissions, helping reveal businesses that operate with higher and lower footprints than their industry peers.

californiaoilrefinery

ConocoPhillips oil refinery, Rodeo, California, December 11, 2012 (Photo by ah zut) Creative Commons license via Flickr

As You Sow explains that, “Carbon footprinting a mutual fund means accounting for the quantification and management of greenhouse gases. It is the first step towards understanding an investor’s impact on climate change.

A carbon footprint is calculated by measuring and/or estimating the quantities and assessing the sources of various greenhouse gas emissions that can be directly or indirectly attributed to the activities of the underlying holdings.

 “Decarbonizing” a portfolio involves investing in companies that have lower carbon footprints than their peers.

The FossilFreeFunds.org platform allows investors to see real scores that are updated every month with Morningstar’s latest holdings data.

A few examples from the analysis:

  • Given that BlackRock recently published a major report on portfolio climate risk, it may be a surprise that the BlackRock Basic Value Fund’s (MABAX) has a carbon footprint 170 percent higher than its benchmark, the Russell 1000 Value Index.
  • Dimensional Social Core Equity (DSCLX) has 85 percent more carbon than the MSCI All World Index, with 13 percent of the portfolio made up of fossil fuel companies including Shell, BP, and tar sands giant Suncor.
  • The State Street SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX) holds 40 fossil fuel companies, including companies with reserves like Phillips66, Valero, and Marathon; coal fired utilities Duke Energy and Southern Company, and oil field services leader Halliburton.

Having funds with smaller footprints is one way to avoid climate risk,” said Andrew Montes, director of digital strategies at As You Sow. “It also actively rewards companies that have made positive decisions to lower the climate impact of their operations.

Investor demand will drive fund managers to drop companies with high carbon footprints and include those companies that are shifting to the clean energy economy,” explained Montes.

By providing a way to examine carbon demand and consider the value chain when measuring climate impact, the data can help investors large and small reconcile their investing with their values.


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Green Firms Outperform Fossil Fuelers 3: 1

Vestas wind turbines

Vestas wind turbines generate power in The Netherlands, December 2015 (Photo by Siebe Schootstra) Creative Commons license via Flickr

By Sunny Lewis

OAKLAND, California, August 23, 2016 (Maximpact.com News) – A 21.82 percent return on investment over the past decade – that’s the proud record of The Carbon Clean 200 – a new list of 200 clean energy companies selected for this inaugural version of the list by the nonprofit groups As You Sow and Corporate Knights.

 The Clean200 ranks the largest publicly listed companies worldwide by their total clean energy revenues as rated by Bloomberg New Energy Finance (BNEF).

 In order to be eligible, a company must have a market capitalization greater than $1 billion, as of June 2016, and earn more than 10 percent of total revenues from clean energy sources.

The Clean200 list is being presented as the inverse of the Carbon Underground 200, a trademarked list of fossil fuel companies being targeted for divestment.

The Carbon Underground 200 generated just a 7.84 percent annualized return over the same past decade.

 “The Clean200 nearly tripled the performance of its fossil fuel reserve-heavy counterpart over the past 10 years, showing that clean energy companies are providing concrete and measurable rewards to investors,” said co-author Toby Heaps, CEO of Corporate Knights, based in Toronto, Canada.

What’s more, the outstanding performance of this list shows that the notion that investors must sacrifice returns when investing in clean energy is outdated,” said Heaps.

Many clean energy investments are profitable now,” he said, “and we anticipate that over the long-term their appeal will only go up as technologies improve and more investors move away from underperforming fossil fuel companies.

The top 10 Clean200 companies are:

  • Vestas, Denmark – wind power
  • Philips Lighting, Netherlands – LED lighting
  • Xinjiang Gold-A, China – wind plants
  • Tesla Motors, United States – electric vehicles
  • Gamesa, Spain – wind turbines
  • First Solar, United States – solar modules
  • GCL-Poly Energy, China  – solar grade polysilicon
  • China Longyuan-H, China – wind farms
  • Kingspan Group, Republic of Ireland – insulation and building envelopes
  • Acuity Brands, United States – LED lights

 Over 70 of the 200 companies on the list do receive a majority of their revenue from clean energy, the listing shows.

Our intention with The Clean200 is to begin a conversation that defines what companies will be part of the clean energy future,” said co-author Andrew Behar, chief executive of As You Sow, headquartered in Oakland.

The Clean200 turns the ‘carbon bubble’ inside out,” said Behar. “The list is far from perfect, but begins to show how it’s possible to accelerate and capitalize on the greatest energy transition since the industrial revolution.

Part of the reason behind the high rate of return appears to lie in China.

 “The 21.82 percent return was due in large part to significant exposure to Chinese clean energy companies which have experienced explosive growth,” said Heaps.

The returns of the Clean200 outside of China were lower, but still superior to the S&P 1200 global benchmark and Carbon Underground 200, he said.

The Clean200 list excludes all oil and gas companies and utilities that generate less than 50 percent of their power from renewable sources, as well as the top 100 coal companies measured by reserves.

 The list also filters out companies profiting from weapons manufacturing, tropical deforestation, the use of child and/or forced labor, and companies that engage in negative climate lobbying.

The performance analysis for each of the three lists is based on a ‘snapshot in time’ analysis of current constituents as the BNEF clean energy revenue exposure database is new and does not go back in time.

 The analysis also introduces a survivorship bias that can be present when stocks which do not currently exist (because they have failed, for example) are excluded from the historical analysis. This bias can result in the overestimation of past returns.

The methodology and list used to develop the Clean200 are in the creative commons and can be downloaded at www.clean200.org.

 As You Sow is a nonprofit organization that promotes environmental and social corporate responsibility through shareholder advocacy and coalition building. www.asyousow.org.

 Corporate Knights calls itself  “The Magazine for Clean Capitalism,” and says it “seeks to provide information that empowers people to harness markets for a better world.” www.corporateknights.com

 The groups disclaim responsibility for any unprofitable investments that might be made by their readers.

 “As You Sow and Corporate Knights are not investment advisors nor do we provide financial planning, legal or tax advice,” they state. “Nothing in the Carbon Clean 200 Report shall constitute or be construed as an offering of financial instruments or as investment advice or investment recommendations.


Featured image: Safer, cooler, sturdier and longer-lasting than other lighting, LED lights are used for a road sign (Photo by Washington State Dept. of Transportation) Creative Commons license via Flickr

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Jury Still Out on Carbon Capture & Storage

SaskPower's Boundary Dam Power Station near Estevan, Saskatchewan

SaskPower’s Boundary Dam Power Station near Estevan, Saskatchewan

By Sunny Lewis

LONDON, UK, April 5, 2016 (Maximpact.com News) – Since the Paris Climate Agreement was reached in December, preventing the greenhouse gas carbon dioxide (CO2) from entering the atmosphere has become a top priority for many governments, utilities and private individuals who believe climate change to be the major problem of this generation.

Carbon capture and storage (CCS) enables a power station or factory that burns coal, oil or gas to remove the CO2 before it reaches the atmosphere and store it permanently in an old oilfield or a deep saline aquifer formation.

Some attempts at capturing and storing CO2 have been more successful than others.

First, capture technologies allow the separation of CO2 from other gases produced by power generation and factories by one of three methods: pre-combustion capture, post-combustion capture and oxyfuel combustion.

The captured CO2 is then transported by pipeline or ship to the storage location. Millions of tonnes of CO2 are now transported for commercial purposes each year by road tankers, ships and pipelines.

Once at its destination, the captured CO2 is stored in geological rock formations typically located several kilometers below the surface.

At every point in the CCS chain, from production to storage, industry can use a number of process technologies that are well understood and have excellent health and safety records, says the London-based Carbon Capture and Storage Association (CCSA).

Alberta Minister of Energy Diana McQueen and Conservative MP Mike Lake tour the Quest Carbon Capture and Storage facility at Shell's Scotford plant near Fort Saskatchewan on April 17, 2014. The project is retrofitting the Scotford bitumen upgrader for carbon capture, designed for up to 1.2 million tonnes of CO2 captured per year, piped 80 kilometers north and injected more than two kilometers below the Earth's surface. (Photo by Chris Schwarz courtesy Government of Alberta) Public Domain

Alberta Minister of Energy Diana McQueen and Conservative MP Mike Lake tour the Quest Carbon Capture and Storage facility at Shell’s Scotford plant near Fort Saskatchewan on April 17, 2014. The project is retrofitting the Scotford bitumen upgrader for carbon capture, designed for up to 1.2 million tonnes of CO2 captured per year, piped 80 kilometers north and injected more than two kilometers below the Earth’s surface. (Photo by Chris Schwarz courtesy Government of Alberta) Public Domain

The Canadian province of Quebec is excited enough about this possibility that it just bet Cdn$15 million on a new enzyme-based technology.

Quebec has established a goal to reduce its greenhouse gas emissions by 20 percent below 1990 levels by 2020, and 37.5 percent below this same level by 2030.

In its 2016-2017 Budget, released March 17, the Quebec provincial government announced that it has allocated $15 million over the next three years to create a consortium that will promote adoption of CO2 Solutions’ patented enzyme-enabled carbon capture technology.

The process is now ready for commercialization.

In the Canadian province of Saskatchewan, the Boundary Dam Integrated Carbon Capture and Storage Project is SaskPower’s flagship CCS initiative.

This project transformed the aging Unit #3 at Boundary Dam Power Station near Estevan into a long-term producer of up to 115 megawatts of base-load electricity, capable of reducing greenhouse gas emissions by up to one million tonnes of carbon dioxide (CO2) a year, the equivalent of taking more than 250,000 cars off Saskatchewan roads annually.

The captured CO2 is sold and transported by pipeline to nearby oil fields in southern Saskatchewan to be used for enhanced oil recovery. CO2 not used for enhanced oil recovery will be stored in the Aquistore Project.

Aquistore is a research and monitoring project to demonstrate that storing liquid CO2 deep underground in a brine and sandstone water formation is a safe, workable solution to reduce greenhouse gases.

Through the development of the world’s first and largest commercial-scale CCS project of its kind, SaskPower hopes to make a viable technical, environmental and economic case for the continued use of coal.

In Norway last December, Aker Solutions signed a contract with the city of Oslo for a five-month test CCS project to capture CO2 emissions from the city-operated waste-to-energy Klemetsrud plant.

The project is funded by Gassnova, the state enterprise that supports the development and demonstration of technologies to capture CO2.

“This is pioneering work with significant potential as the world focuses on finding ways to limit carbon emissions,” commented Valborg Lundegaard, head of Aker Solutions’ engineering business. “This pilot project is of international importance.”

The test will be key to qualifying Aker Solutions’ amine-based CO2 capture technology for commercial application at the world’s waste-to-energy plants. There are about 450 such plants operating in Europe and about 700 globally.

Japan is preparing to test its biggest project yet for capturing and storing CO2 under the ocean floor despite concerns about cost and the safety of pursuing the technology in a region prone to earthquakes.

Starting this month, engineers plan to inject CO2 into deep saline aquifers off the coast of Hokkaido at the northern tip of Japan. The gas will be captured from a refinery operated by Idemitsu Kosan Co. under the government-backed project.

Some Japanese companies are already lending their expertise to and investing in CCS projects overseas.

Mitsubishi Heavy Industries Ltd. designed and built a project in the U.S. state of Alabama with the utility Southern Company.

Three of the six companies building the world’s largest CCS project on Barrow Island off the northwest coast of Western Australia are Japanese. Although a Class A Nature Reserve, Barrow Island is said to be a location where industry and the environment co-exist.

All 51 modules required for the three LNG trains have been delivered to Chevron's Gorgon CCS project on Australia's Barrow Island. (Photo courtesy Chevron)

All 51 modules required for the three LNG trains have been delivered to Chevron’s Gorgon CCS project on Australia’s Barrow Island. (Photo courtesy Chevron)

The Gorgon Project is a liquefied natural gas (LNG) and domestic gas joint venture supplied by the Greater Gorgon Area gas fields.

The Chevron-operated Gorgon Project is a joint venture of the Australian subsidiaries of Chevron (47.3 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent).

On March 20, Chevron announced that its first shipment of LNG from the Gorgon Project had left Barrow Island. The cargo goes to Chubu Electric Power, for delivery into Japan.

“Departure of the first cargo from the Gorgon Project is a key milestone in our commitment to be a reliable LNG provider for customers across the Asia-Pacific region,” said Mike Wirth, executive vice president, Chevron Midstream and Development. “This is also important for our investors as we begin to generate revenue from a project we expect will operate for decades to come.”

But bad news appears to dog the CCS industry.

On Friday, the Gorgon project had to temporarily halt production due to technical difficulties with a propane refrigerant circuit at the Gorgon plant site.

Chevron and its Gorgon partners are facing a repair bill that could amount to “hundreds of millions of dollars” after “a major mechanical problem flared as soon as the maiden LNG cargo was sent,” reported the “West Australian” newspaper on Friday.

There are many skeptics, given that it can cost billions of dollars for a CCS facility and none have a long record of successful operation at an industrial scale. Some investors initially put their money into carbon capture and storage (CCS) technologies only to see their CCS plans fail or get tossed out by governments.

“It is our view that CCS is unlikely to play a significant role in mitigating emissions from coal-fired power stations,” authors including Ben Caldecott, director of the sustainable finance program at the University of Oxford’s Smith School of Enterprise and the Environment, wrote in a report published in January.

“Deployment of CCS has already been too slow to match” scenarios presented by the International Energy Agency and the Intergovernmental Panel on Climate Change, they warned.

Another concern is whether stored CO2 will leak from storage sites, releasing the gas back into the atmosphere.

“There is no guarantee that carbon dioxide can be stored in a stable way in Japan where there are many earthquakes and volcanic eruptions,” Kimiko Hirata, a researcher for Kiko Network, a Kyoto-based environmental group, told Bloomberg News.

In 2015, the FutureGen Alliance, a U.S. industrial group with a high-profile carbon capture project in Illinois, lost its Department of Energy financing.

FutureGen, a partnership between the U.S. government and an alliance of coal-related corporations, was retrofitting a coal-fired power plant with oxy-combustion generators. The excess CO2 would be piped 30 miles (48 km) to be stored in underground saline formations. Costs were estimated at US$1.65 billion, with $1 billion provided by the U.S. government.

But the U.S. Department of Energy ordered suspension of FutureGen 2.0 in February 2015, citing the alliance’s inability to raise much private funding. At the time of suspension the power plant part of the project had spent $116.5 million and the CCS part had spent $86 million.

In the UK, the British National Audit Office (NAO) has announced plans to investigate then-Chancellor of the Exchequer George Osborne’s 2015 decision to scrap a £1bn prototype carbon capture scheme that has already cost the taxpayers at least £60 million.

The spending watchdog said that this summer it will examine the expenses incurred in running, and then prematurely halting, a CCS competition for financing.

In the competition, the Department of Energy and Climate shortlisted two projects. Shell was developing a trial scheme at Peterhead in Scotland alongside one of the big six energy suppliers and power station owner SSE. A separate White Rose project was being developed by Drax at its coal-fired plant in Selby, North Yorkshire.

They were awarded multi-million pound contracts to finalize these proposals before a final investment decision could be taken.

But in November 2015 the agency withdrew funding for the program, suspending the competition.

The NAO will review the government decision, what impacts it will have on the department’s objectives of decarbonization and security of supply, and the costs incurred by government in running the competition.

Dr. Luke Warren, chief executive of the CCSA, called the funding cut “devastating.”

“Only six months ago the government’s manifesto committed £1 billion of funding for CCS,” said Warren. “Moving the goalposts just at the time when a four year competition is about to conclude is an appalling way to do business.”

In February, the UK Parliament’s Energy and Climate Change Committee reported on the future of CCS in the country in view of the funding cut.

The government’s decision to pull funding for carbon capture and storage at the last minute will delay the development of the technology in the UK and could make it challenging for the UK to meet its climate change commitments agreed at the Paris COP21 summit, the Energy and Climate Change Committee report warned.

Said Angus MacNeil MP, Energy and Climate Change Committee Chair, “If we don’t invest in the infrastructure needed for carbon capture and storage technology now, it could be much more expensive to meet our climate change targets in the future. Gas-fired power stations pump out less carbon dioxide than ones burning coal, but they are still too polluting.”

“If the government is committed to the climate change pledges made in Paris, it cannot afford to sit back and simply wait and see if CCS will be deployed when it is needed,” said MacNeil. “Getting the infrastructure in place takes time and the government needs to ensure that we can start fitting gas fired power stations with carbon capture and storage technology in the 2020s.”


Featured image Coal Pile courtesy of 123R

Green Economies Arising Across Europe

GermanyWindfarm By Sunny Lewis

HELSINKI, Finland, February 4, 2016 (Maximpact.com News) – A broad political will and the involvement of many different economic and social actors are essential for successful transition to a green economy, conclude researchers from five institutes of the Partnership for European Environmental Research (PEER).

For their newly published report, “Implementing the Green Economy in a European Context: Lessons Learned from Theories, Concepts and Case Studies,” the researchers studied 10 innovative cases from Denmark, Finland, France, Germany and the Netherlands.

They found that successful projects include a broad range of stakeholders, have strong and consistent political support, and integrate research activities into the implementation of the initiatives.

In his forward to the report, PEER Chairman Prof. Dr. Georg Teutsch wrote, “These case studies were utilized to reveal opportunities, but also barriers and challenges for the transformation into a zero waste, renewable bio- and ecosystem-services-based production system.”

“The project aimed at producing increased understanding about the concepts and foundations for future circular and green economy securing the maintenance of a full range of ecosystem services on which society relies,” he wrote.

Transitions to a green economy are never purely based on win-win solutions, but require trade-offs among multiple goals across many sectors, the report finds.

Reaching a win-win proposition becomes more laborious the more stakeholders and competing interests there are, the researchers explained. “Sometimes win-win solutions were not enough if the alternatives remained more profitable, market structures did not encourage change or stakeholders were not committed.”

Driven to meet growing demands for food, drinking water, timber, fiber, and fuel as well as minerals, humans have changed ecosystems more rapidly and extensively over the past 100 years than at any time in human history, according to the report.

“These changes are a result of traditional one-way linear economic models: resource – product – waste and may lead to depletion of natural resources and irreversible changes in the environment,” the report states.

Today, civil society, industrial and political leaders are acknowledging the urgent need for reconsideration and revision of this type of thinking.

Greening an economy is being promoted as a new strategy for enhancing human well-being and reducing environmental risk, defined as “low-carbon and climate proof, resource-efficient and socially inclusive,” according to the report.

The PEER report contains conceptual analysis and empirical case studies that indicate the need for far-sighted planning, multi-source financing and wide stakeholder participation in green economy initiatives.

Jyväskylä

Jyväskylä is the largest city in the region of central Finland on the Finnish Lakeland. It was the subject of one of the 10 cases analyzed in the PEER report.

 

 

 

 

The 10 case studies spanned national, regional and local activities.

The two on the national level are:

  • Germany’s energy transition, since the 1980s
  • Increasing the construction of large-scale buildings from wood in Finland, since the 1990s

 

The five regional cases are from France, Finland and Germany. They are:

  • A project to support the implementation of biogas plants in the area of Brittany, France (2007-11)
  • A project to minimize organic waste in the Rennes Metropole region of France (2010-2012)
  •  A project to develop the city of Jyväskylä, Finland into a resource-wise region (2013-2015)
  •  A project to form a network of Finnish municipalities that creates and carries out solutions to reduce greenhouse gas emissions, since 2008
  • An initiative to sell certificates on emission reductions to support peat land restoration, since 2010

 

The three local case studies are:

  • An industrial symbiosis initiative in the harbor area of Dunkirk, France, since the 1960s
  • Cooperation between farmers and the water company to improve soil in the Duurzaam region of The Netherlands, since 2013
  • A project on off-shore macroalgae cultivation to promote circular resource management and bio-based production in Denmark, since 2012

 

Lea Kauppi, Director General of the Finnish Environment Institute and a former PEER chairperson.

“As illustrated by the study, the complexity and multi-sectoral nature of the green economy calls for a broad integration of sectors connected to environment, innovation, transport, housing, energy, agriculture and spatial planning,” said Lea Kauppi, director general of the Finnish Environment Institute, one of the five institutes responsible for the report, and a former PEER chairperson.

“The case studies also illustrate the need for comprehensive analysis of the effects of regulation and legislation, as well as the importance of stakeholder commitment, good leadership and coordination,” she said.

The report concludes that transforming the economy requires innovation in terms of technology, organizational support, market and broader societal conditions, and an overarching governance framework, but most of all, a consistent and cross-sectoral political will.

All the PEER partners supported the preparation of the project, and finally five institutes were the active research members: the Finnish Environment Institute, which handled coordination of the project; Alterra Wageningen UR in the Netherlands; IRSTEA – the National Research Institute of Science and Technology for Environment and Agriculture in France; the Helmholtz Centre for Environmental Research – UFZ in Germany; and the (DCE) Danish Centre for Environment and Energy at Aarhus University.

A biogas plant in the Brittany region of France developed by Hera Cleantech, the environmental engineering division of the Spanish international group Hera Holding.

A biogas plant in the Brittany region of France developed by Hera Cleantech, the environmental engineering division of the Spanish international group Hera Holding.

Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Main and Featured image: This windfarm in Gemeinde Driedorf, Hesse, Germany is part of the German transition from energy generated from fossil fuels and nuclear power stations to renewable energy. June 2013 (Photo by Neuwieser) under creative commons license via Flickr
Image 01: Lea Kauppi is director general of the Finnish Environment Institute and a former PEER chairperson. (Photo courtesy Linkedin)
Image 02: A biogas plant in the Brittany (Photo courtesy Hera Cleantech)

Fossil Fuels: To Invest or Divest – That Is the Question

GlobalMapHottest2015

By Sunny Lewis

WASHINGTON, DC, January 21, 2016 (ENS) – The year 2015 was Earth’s hottest by widest margin on record, and in December 2015 the temperature was the highest for any month in the 136-year record, according to scientists with the U.S. space agency, NASA, and the U.S. oceanic and atmospheric agency NOAA.

Those who blame the burning of coal, oil and gas for this unprecedented warming are urging investors to pull their money out of fossil fuel companies and urging fossil fuel companies to reconsider their business activities.

This week, a group of investors led by New York State Comptroller Thomas P. DiNapoli and the Church of England demanded that ExxonMobil, the world’s largest publicly traded international oil and gas company, disclose the climate resilience of its business model.

The group of investors, including co-filers the Vermont State Employees’ Retirement System, the University of California Retirement Plan and The Brainerd Foundation, represents nearly $300 billion in assets under management and more than $1 billion in Exxon shares.

Their demand follows the Paris Agreement on climate change reached by 195 nations in December.

“The unprecedented Paris agreement to rein in global warming may significantly affect Exxon’s operations,” said DiNapoli, who is Trustee of the New York State Common Retirement Fund, the third largest public pension fund in the United States, with $184.5 billion in assets under management as of March 31, 2015.

The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. The Fund has a diversified portfolio of public and private equities, fixed income, real estate and alternative instruments.

“As shareholders, we want to know that Exxon is doing what is needed to prepare for a future with lower carbon emissions,” said DiNapoli. “The future success of the company, and its investors, requires Exxon to assess how it will perform as the world changes.”

The Church of England’s investment fund, the Church Commissioners, manages a fund of some £6.7 billion, held in a diversified portfolio including equities, real estate and alternative investment strategies.

“Climate change presents major challenges to corporate governance, sustainability and ultimately profitability at ExxonMobil,” said Edward Mason, the Head of Responsible Investment for the Church of England’s investment fund.

“As responsible investors we are committed to supporting the transition to a low carbon economy,” said Mason. “We need more transparency and reporting from ExxonMobil to be able to assess how they are responding to the risks and opportunities presented by the low carbon transition.”

ExxonMobil says “Society faces a dual energy challenge: We need to expand energy supplies to support economic growth and improve living standards, and we must do so in a way that is environmentally responsible.”

The oil and gas giant says it is relying on developing new technologies to reduce greenhouse gas emissions.

“We believe that carbon emissions will plateau and start to decrease starting around 2030 as energy efficiency spreads and as various carbon-reduction policies are enacted around the world,” ExxonMobil says in a position statement on its website.

“ExxonMobil leads in one of the most important next-generation technologies: carbon capture and sequestration (CCS). CCS is the process by which carbon dioxide gas that would otherwise be released into the atmosphere is separated, compressed and injected into underground geologic formations for permanent storage.

In addition, ExxonMobil says it continues to fund and conduct research on advanced biofuels. “This work is part of our many investments in new technologies with the transformative potential to increase energy supplies, reduce emissions, and improve operational efficiencies.”

Across Europe, the year 2015 was the second hottest on record, with mean annual temperatures just above the 2007 average and below the record set in 2014, according to an analysis by one of the World Meteorological Organization’s regional climate centers. Much of eastern Europe was exceptionally warm, with temperatures higher than in 2014.

The negative climate trend is expected to continue for at least the coming five decades, says WMO Secretary-General Petteri Taalas, who took office at the start of the year. He predicted a growing number of weather-related disasters and a continuing increase in sea level rise.

In the first global effort to avert the worst impacts of climate change, under the Paris Climate Agreement world leaders committed to holding the rise in global temperatures well below two degrees Celsius and to seek to restrict warming to 1.5 degrees.

The shareholder proposal filed by Comptroller DiNapoli and the Church of England’s investment fund asks ExxonMobil to publish an assessment of how its portfolio would be affected by a two degree target through, and beyond, 2040.

Specifically, the assessment should include an analysis of the impacts of a two-degree scenario on the company’s oil and gas reserves and resources, assuming a reduction in demand resulting from carbon restrictions.

Exxon’s peers, Shell and BP, have already agreed to disclose how they will be impacted by efforts to lower greenhouse gas emissions in response to similar shareholder proposals co-filed in 2015 by the Church of England and other investors and endorsed by the boards of both companies.

More recently, 10 global oil and gas companies, including Shell and BP, announced their support for lowering greenhouse gas emissions to help meet the 2 degree goal.

In addition, the global movement seeking to encourage investor divestment of fossil fuel stocks is gathering strength, says Brett Fleishman of the global climate action group Fossil Free, a project of the nonprofit 350.org.

“If it is wrong to wreck the climate, it is wrong to profit from that wreckage,” declares Fossil Free.

Fleishman cites a recent report (CISL_Report) by the University of Cambridge that details the material risk of climate change to investment portfolios. The report found that, “Short-term shifts in market sentiment induced by awareness of future climate risks could lead to economic shocks and losses of up to 45 percent in an equity investment portfolio value.”

The University of Cambridge report was not alone. The growing risk to the economy and investment funds because of climate change has been reported by the financial giants of the world – HSBC, Deutsche Bank, Standard and Poor’s, CitiBank and The Bank of England, among others.

The dire forecasts are already affecting investors. California’s pensions systems lost more than $5 billion on their fossil fuel holdings last year. The Massachusetts state pension fund lost $521 million in value from their fossil fuel stocks over the past year, a 28 percent decline.

Those major losses are advancing the divestment dialogue this year.

“While each [Fossil Free divestment] campaign is independently run and may bring different emphases and asks depending on their local context,” says Fleishman, the majority of campaigns are asking institutions to “immediately freeze any new investment in fossil fuel companies, and divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within five years.”

AfricanCatholics

African Catholic groups associated with 350.org have called on Pope Francis to support the divestment movement.

In a December letter to the Pope they wrote, “Because of the grave threat of climate change and the fossil fuel sector’s unyielding refusal to change, it is no longer right for religious groups to profit from investments in such companies. We appeal for your support for the global divestment movement from the fossil fuel industry and to call for a just transition towards a world powered by 100 percent renewable energy.”

They felt that Pope Francis acknowledged their concerns in his speech to the United Nations Environmental Programme in Nairobi, where he stated that the Paris climate conference, “represents an important stage in the process of developing a new energy system which depends on a minimal use of fossil fuels, aims at energy efficiency and makes use of energy sources with little or no carbon content.”

Now, 350 Africa intends to broaden its sphere of influence to include divestment activists of all faiths, saying in December, “We need to change the idea that the climate change crisis is to only be tackled by environmental organizations. The recent resolution of the Anglican Church of Southern Africa to explore withdrawing their investments from companies that exploit fossil fuels, is an example of how faith groups can do their part in the climate movement through divestment.”


Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Header image: 2015 was the warmest year since modern record-keeping began in 1880, finds a new analysis by NASA’s Goddard Institute for Space Studies. The record-breaking year continues a long-term warming trend – 15 of the 16 warmest years on record have now occurred since 2001. (Image: Scientific Visualization Studio courtesy NASA Goddard Space Flight Center) public domain
Featured image: New York State Comptroller Thomas DiNapoli, April 2015 (Photo courtesy New York State Comptroller) Public Domain via Flickr
Image 01: African Catholics advocate for divestment from fossil fuel companies, December 2015, Nairobi, Kenya (Photo courtesy Go Fossil Free.org)