Financing a Clean Energy Economy

Financing a Clean Energy Economy – Opportunities and Risks for Businesses & Investors

Opportunities in a clean energy economy

*“The race for renewable energy has passed a turning point. The world is now adding more capacity for renewable power each year than coal, natural gas, and oil combined…

The shift will continue to accelerate…” (BNEF) 1

* Costs for electricity from solar and wind are plummeting and are now lower in some markets than electricity from coal or natural gas and still dropping (NYT) 2

* Some U.S. utilities are choosing solar and wind, reasoning that fixed prices for renewables protect ratepayers from price hikes 3

* Worldwide, last year, $329 billion was invested in renewables 4

* “{M]ore than half the world’s annual investment in clean energy is coming from emerging markets instead of from wealthier nations..” 5

* Businesses can save substantial amounts of money by reducing energy use. 6

* “Green mutual funds, invested in companies with exceptional environmental credentials, now outperform ‘black’ funds – which invest in fossil fuels – by more than 14% over the period 2012 to 2014.” 7

*.”. a look at profits and losses….made clear,[that] companies and investors that shun sustainable, low-carbon assets stand to lose a lot of money” (UN Investor Summit) 8

Acknowledging risks in using fossil fuels and making changes

* “Budget experts are also starting to see rising costs on the federal balance sheet. …disaster relief…Vulnerability of nation’s roads, bridges and waterways due to rising sea levels and changing weather pattern….U.S. military installations & operations are also threatened…” (Budget committee hearing) 9

* Climate change will have, ‘specific, measurable impacts on our nation’s current assets and ongoing economic activity…By not acting to lower greenhouse gas emissions today, decision-makers put in place processes that increase overall risks tomorrow” 10

* The U.S. government subsidizes the use of fossil fuels four times more than it subsidizes clean energy (Tax committees) 11

* U.S subsidies for fossil fuel, if you include… environmental damage like local air pollution, health costs, and other externalities, is estimated for 2015 at $5.3 Trillion or about $1800/person/year (IMF) 12

* The International Energy Agency (IEA) recommends phasing out fossil fuels subsidies and increasing renewable subsidies. 13

* People who invest money for others – for pensions, countries, and institutions should assess and monitor the impacts of climate change on investments and invest in clean energy, (Mercer) 14

* “350 global institutional investors representing over $24 trillion in assets have called on government leaders to provide stable, reliable and economically meaningful carbon pricing that helps redirect investment commensurate with the scale of the climate change challenge, as well as develop plans “to phase out subsidies for fossil fuels.” (Ceres) 15

* “Let’s remove the barriers … that protect the monopolies and allow consumer choice and freedom” 16

* “solar energy is cheap, plentiful and offers a monopoly-busting solution to generating electricity “ 17 (Dooley)

Footnotes:

  1. http://www.bloomberg.com/news/articles/2015-04-14/fossil-fuels-just-lost-the-race-against-renewables
  2. http://nyti.ms/1MZGIke
  3. http://www.utilitydive.com/news/utility-scale-solar-booms-as-costs-drop-challenging-gas-on-price/406692/

4 http://www.bloomberg.com/news/articles/2016-01-14/renewables-drew-record-329-billion-in-year-oil-prices-crashed

  1. http://www.bloomberg.com/news/articles/2015-11-23/leapfrogging-to-solar-emerging-markets-outspend-rich-countries-for-the-first-time
  2. Improvements in energy efficiency earned 196% payback over 2 to 3 years for S&P500 companies reporting to the Carbon Disclosure Project (CDP) https://www.cdp.net/CDPResults/3-percent-solution-report.pdf
  3. http://www.business-school.ed.ac.uk/about/news/2320   Also “the six major renewable investment funds yield between 5.5% and 7% – attractive returns in the current market. http://bit.ly/1mCJoNJ
  4. http://bit.ly/1mCJoNJ   Guardian article referring to Jan 2016 UN Investor Summit on Climate Risk with 500 global investors representing an estimated $22tn in assets

9.Budget Committee Hearing 2014 chaired by Sen Patty Murray

//www.budget.senate.gov/democratic/public/index.cfm/2014/7/the-costs-of-inaction-the-economic-and-budgetary-consequences-of-climate-change-opening-statement-of-chairman-murray

  1. Risky Business A Climate Change Assessment for the U.S. (co-chairs: Henry Paulson, Michael Bloomberg, Tom Steyer) http://riskybusiness.org/report/overview/executive-summary
  2. The Joint Committee on Taxation $30bn for oil, coal and gas related . $6.2 bn for efficiency and clean energy related. Estimates Fed Tax Expenditures 2012-2017

https://www.jct.gov/publications.html?func=startdown&id=4503

  1. http://www.imf.org/external/pubs/ft/survey/so/2015/NEW070215A.htm
  2. https://www.iea.org/Textbase/npsum/WEO2015SUM.pdf
  3. http://www.mercer.com/insights/focus/invest-in-climate-change-study-2015.html

Statement by 350 institutional investors handling $24Trillion in funds

  1. http://www.ceres.org/press/press-releases/world2019s-leading-institutional-investors-managing-24-trillion-call-for-carbon-pricing-ambitious-global-climate-deal
  2. http://www.theguardian.com/us-news/2015/dec/06/debbie-dooley-tea-party-solar-energy-florida-environment
  3. Debbie Dooley, co-founder of tea party and green tea party https://www.climaterealityproject.org/blog/debbie-dooley-changing-how-conservatives-think-about-clean-energy

Tea Party support for clean energy

Tea Party supporters in Georgia are calling for more consumer choice in energy. Debbie Dooley, a national coordinator of the Tea Party Patriots argued for a vote by the Public Service Commission of Georgia to require Georgia Power to add solar generation to its portfolio. In an interview with Chris Hayes in ‘All In’ she said, “We care about our environment.  We believe things should be done in a conservative way. ..This solar plan will not have to be subsidized.  We believe this giant utility monopoly deserves some competition and that consumers deserve a choice. …Show us in constitution where a government can pick winners & losers and set up a monopoly and be an impediment to the free market. We believe it is wrong.  In the next legislative session we will be asking the legislators to overturn the Territorial Right Act of 1973 that actually allowed these monopolies to take place.”

Byron Dorgon, a former Senator from North Dakota agreed and went further. “If we want more clean and renewable energy in this country, we have to do something about it. Thirty states have renewable energy standards, good for them, they are the heros. States need to make choices about what kind of future they want.  …. There should be renewable standards in every state should have them. We ought to have a national energy standard.”

Encouraged by public support by both the Atlanta Tea Party and the Georgia Sierra Club, members of the Public Service Commission voted on July 11, 2013 to require Georgia Power to generate more power from solar, adding 525 megawatts by  2016.  Although the power company had argued for months that such a move would raise rates, after the vote, the company’s attorney said that the addition of more solar probably would not affect power bills.

http://onlineathens.com/local-news/2013-07-10/ga-power-says-closing-coal-plant-wont-make-room-solar

http://www.ajc.com/news/news/state-regional-govt-politics/georgia-utility-regulators-back-unprecedented-sola/nYnBk/ – cmComments

Smart Businesses Tackle Climate Change

Climate Declaration 800 px

The CEOs of 33 US companies have signed a Climate Declaration calling on America to take the lead in combating climate change.  They say the same policies that will help the climate are also smart business practices, – using less electricity, choosing clean energy technology and creating new export technologies.  They recommend a coordinated effort to stabilize the climate as also the way to maximize opportunities and remain a superpower in a competitive world.

Representing employment of half a million citizens and  $450billion/year in revenue, the corporate group emphasizes that the same policies that combat climate change are also smart business practices.

A recent study by PEW backs up the claim that there huge financial potential in green energy development. It found that clean energy investment has increased by 600% from 2004 to 2011. They project that installation of renewable energy over the next six years will result in additional revenue of $1.9 trillion.

http://www.ceres.org/bicep/climate-declaration

http://bit.ly/12gUVEY

 

Solar Competition in a Darwinian Marketplace

Arno Harris, CEO of Recurrent Energy, a developer of large utility solar projects was asked by Russell Gold, energy reporter with the WSJ about bankruptcies among solar energy companies.

This was his response.

“Nobody wants to see that kind of trouble, we think about jobs lost, it’s extremely painful. However, you have to put it in context. This is fundamentally a very exciting transformation This is an industry that in the last 10 years has taken the cost of solar panels from $5 per watt to around $.50 per watt.  As result of this transformation, it has moved solar power from one of the most expensive sources of electricity to one of the second or third least expensive sources of electricity.

Inevitably, a part of that process is going to be the creation of a very Darwinian, challenging environment, in which those who cannot keep up with the cost structure necessary to stay competitive are going to get restructured, fall by the wayside, get reabsorbed.

We have to put this event in that context.  There are numbers of solar manufacturers demonstrating they do have cost structures that work in today’s prices. So that means that this industry can continue to deliver solar electricity at increasingly competitive costs.”

http://on.wsj.com/16NdWOg

Wind, Water, and Sunlight Power a Plan for a Better Economy

‘We can’t afford a green energy economy” is a myth, obvious to people who are paying attention to the hyper expensive effects of a planet-scorching fossil fuel economy.

However, now a group of scientists, headed by Mark Z. Jacobson of Stanford have crunched the numbers and laid out a serious plan for a transition to an affordable energy infrastructure in New York State that uses primarily wind, water and sun. It does not require that we ‘live in trees and eat bugs’. To the contrary, it reduces our energy costs, creates millions of jobs, improves public health and costs less than the side effects of continuing to burn fossil fuels.

The report is Examining the Feasibility of Converting NY State’s All-Purpose Energy Infrastructure to One Using Wind, Water, and Sunlight  2013  Mark Z Jacobson, Robert W Howarth, Mark A Delucchi et al.

This plan calls for electricity to be generated by solar, wind, geothermal and some hydro and wave technology.  It calls for batteries and hydrogen fuel cells in cars, trucks, buses, locomotives and ships. For heating and cooling buildings, it uses ground source heat pumps and heat exchangers.

The investment in new energy infrastructure would increasingly develop low-carbon technologies and by 2020, all new investment would be in these systems, The savings would help us phase out old fuel dependent systems by 2050.

Since renewable electricity is several times more efficient than fossil fuel combustion, losing very little energy to waste heat, the plan reduces electric usage.  

It would stabilize energy prices bringing electric rates down   from $.18/kWh to $.13/kWh, create millions of new jobs, reduce air pollution and improve public health.

The transition would help us deal with what Jacobson describes as “the epic environmental and ecological costs we all pay for our current energy supply,”  a “Fiscal Energy Cliff.” See Interviews and story on the report in Huff post.

 

http://www.huffingtonpost.com/stacy-clark/mark-z-jacobson-renewable-energy_b_2859518.html

http://www.stanford.edu/group/efmh/jacobson/Articles/I/NewYorkWWSEnPolicy.pdf

Electric Car with Gyroscope

Lit Motors’ C-1. Range – 200 miles on one charge. Will go 100 mph. Priced $24,000 initially, half that with mass marketing.  Gyroscope included. Launches 2014.

http://techcrunch.com/2012/09/10/lit-motors-will-shake-up-the-electric-vehicle-market-with-its-two-wheeled-untippable-c-1/

 

Carbon Tax Would Benefit Manufacturers

A recent report on how a carbon tax would affect our economy ignores the effects of climate change and benefits of clean energy, leading the writers to inaccurately conclude that a carbon tax would depress manufacturing and employment.  The report was written by NERA for the National Association of Manufacturers.  Interestingly, a previous report written by NERA admits that a carbon tax could be efficient in reducing greenhouse gas emissions.

However, for the Manufacturers, the NERA analysts omit consideration of the huge drain on the economy from climate related extreme weather damages to infrastructure and businesses and natural resources. They omit, as well, the benefits of expanding American clean energy and efficiency industries.  

With a carbon tax raising the cost of the carbon fuels, oil, coal and natural gas, people would buy more clean energy and also invest in technologies that reduce their energy use. Increases in American manufacturing of clean energy would lower power costs, inspire growth in other industries, and raise employment. 

If the revenues from the carbon tax are mostly returned to the public instead of used to reduce the deficit, as suggested by the study, there would be a buffer for individuals and a bonus for the American economy.

A comparison of the costs of damages from emissions in a continued fossil fuel economy versus the cost of ramping up clean energy, efficiency and conservation to create a clean energy economy was done by DARA Climate Vulnerability Monitor, finding that “Economic losses dwarf the modest costs of tackling climate change.”

In addition to the $1.2 trillion loss in forgone prosperity by our failure to act on climate change, there is also the risk of unimaginable catastrophe.

A recent report for the World Bank details the costs and risks of continuing climate disruption.  The carbon fuel economy is propelling us toward : “shock to agricultural production…and pressure on water resources which would cascade into effects on economic development by reducing a population’s work capacity …and risk crossing critical social system thresholds..[where] adaptation actions would likely become much less effective or even collapse.”

A carbon tax that encourages competitive growth in American industry would benefit all manufacturers and consumers.

 

http://daraint.org/climate-vulnerability-monitor/cvm-press-releases/

http://daraint.org/wp-content/uploads/2012/09/CVM_RELEASE_FINAL_ENGLISH.pdf

http://www.nam.org/~/media/ECF11DF347094E0DA8AF7BD9A696ABDB.ashx

http://climatechange.worldbank.org/sites/default/files/Turn_Down_the_heat_Why_a_4_degree_centrigrade_warmer_world_must_be_avoided.pdf

http://www.nytimes.com/2012/07/05/opinion/a-carbon-tax-sensible-for-all.html?_r=0