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

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

 

Policies for a Green Energy Economy

An e-mail survey came today from the Democratic Party asking for thoughts about how we should move forward.

What do you think of this answer???

With thanks for the progress made toward a greener economy, I would like the President to make leadership for a new energy economy his top priority.  The price of a transition to efficiency and clean energy would be much less than the cost to our society of continuing to burn oil, coal and natural gas.

Americans know that burning fossil fuels increases catastrophic weather damage and risks future economic collapse. We have good alternatives, just in time to help us preserve our economy and our resources.

This plan would result in revitalization of our economy, increased employment, lower energy costs, export profits, and a safer world.

We need the administration to:

1. Support Environmental Protection Agency (EPA) rulings based on climate science and a political policy imperative to end the burning of all fossil fuels

2. Increase Department of Energy (DOE) support for energy efficiency, and clean energy research, development and marketing

3. Cancel tariffs on foreign on clean energy technology and subsidize American clean energy production, (maybe with Department of Defense (DOD) funds, as military say our dependency on fossil fuels is a vulnerability,) Set carbon related tariffs on imported products from countries without a carbon tax.

4. Mandate all government facilities retrofit for energy efficiency and double required energy efficiency standards in new buildings

5. Mandate all new purchases of government vehicles be electric or hybrid, and continue research into non-food biofuels for aviation

6. Deny permits for additional oil or gas drilling, pipelines, or export terminals for coal, oil, gas or liquid natural gas

7. Support legislation for a carbon fee and dividend, energy standard, an end to subsidies for fossil fuel, tax credits for solar, wind, wave and geothermal energy production and other steps to incentivize investment in green energy, energy efficiency and conservation. The legislative goal should be for all new investments in energy to go into development of clean energy, not more oil, coal or natural gas. (Please note that the EPA has not determined that natural gas is better for the climate, and studies measuring unavoidable leakage and venting of gas/methane indicate that it is as bad as coal and oil. )

The Obama administration has helped the transition to a green energy economy, but worldwide carbon emissions are increasing. U.S. leadership could turn the tide.

Prices Should Include the Full Costs of Production

Ever feel like all your efforts to lower your carbon footprint are just not solving the climate problem? Bret Weinstein, agrees, it is not enough, in a TEDX talk on the “Personal Responsibility Vortex,

Our society lets corporations make money without taking responsibility for covering all their costs. As long as they can dump garbage, pollute air, land and water with toxics, waste resources, and overheat the climate without having to pay for these costs and damages, they will do it.

We expect businesses to add value to our society by creating products or processes that are helpful. However, many businesses do only what is in their own interest, regardless of the cost to society. Since these self-interested businesses tend be more competitive, they gradually push the beneficial businesses to focus more on short-term profit and the system evolves toward ruthlessness. Since the economy spills over into politics, the dynamic also concentrates wealth and power in people who are then able to veto any attempt to change the status quo.

We need to do two things, first require that all businesses engage in full cost accounting, putting every cost, every damage, every external consequence of production on public balance sheets. Then, require businesses to include all those costs in the prices of their products.

For individuals to choose low carbon options without working to change the system, feeds the vortex.

Weinstein suggests that if the founding fathers had been able to look into the future and see the mountaintop removal, deep sea drilling and high line logging, they would have put sustainability into the bill of rights.

We need to direct our efforts to “collective action that can restructure incentives that surround the market” and change the system.

Carbon Fee and Dividend to Spur Innovation and Jobs

Bill McKibben’s Letter 12/13/2012, excerpts:   “We need a simple honest flat across-the- board fee on the carbon content of fossil fuels, collected from fossil fuel companies at the domestic mine or port of entry, the fee gradually rising over time, the funds distributed 100 percent to the public, equal amounts to all legal residents, not one dime to the government, no enlargement of government. Such a “fee-and-dividend” system would cause fossil fuel CO2 emissions to rapidly decline, most coal and unconventional fossil fuels would be left in the ground. For example, economic modeling for the U.S. shows that a $10/tonCO2 fee, rising $10 each year, would reduce emissions 30 percent after a decade,…

“We have tremendous potential for innovation that will be spurred once there is a rising carbon price. New products, more jobs. As the carbon price rises, tipping points will be reached where low-carbon or no-carbon alternatives phase in rapidly, leaving fossil fuels in the ground….

“We need building standards, we should not produce electronic goods that draw energy even when not in use, etc. Such things will be easier to achieve, and partly self-enforced, by an underlying steadily rising carbon price….

“Only a few nations need agree on a carbon fee. They will place a border duty on products from countries that do not have an equivalent carbon fee. …This approach provides a tremendous incentive for other nations to adopt a similar domestic carbon fee, so they can collect it themselves rather than lose it as a border duty…”

http://www.columbia.edu/~jeh1/mailings/2012/20121213_StormsOfOpa.pdf

Citizens Climate Lobby helps citizens lobby for national carbon fee and dividend legislation because it “will put us on the path of a sustainable climate by reducing our greenhouse gas emissions and transitioning us to a clean energy economy.” Check out their introductory call every Wednesday.

http://www.citizensclimatelobby.org/node/444