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

Free Investment Advice from an Expert

Jeremy Grantham, Chief Investment Strategist for GMO, an Management Firm that oversees more than $100 billion in investments, announced his opposition to the Keystone Pipeline in an interview with Charlie Rose Mar 11, 2013. Grantham is known for having predicted the last several financial crises.

Grantham says that climate change is a numbers issue; the rise of .8oC in temperature is obvious, we can see spring arriving earlier, and know that it took additional carbon in the air to make that happen. Grantham continues, explaining the problem with continuing to burn fossil fuels is that we can only emit 565 gigatons of carbon into the air before world temperatures reach “2oC which is considered the boundary, below which we might limp our way through.” But in fuel reserves there is five times that much, “enough to cook our goose and guarantee our grandchildren starve to death in floods and all.”

Every previous human civilization expanded, then met limits of available resources and collapsed. Grantham describes two gifts that our civilization has that give him hope. The first is our ability to limit birth rates, and the fact that when people get richer, they choose to have fewer children. A shrinking population puts less pressure on finite resources.

The second gift is alternative energy technology, solar, wind, geothermal, new grid, and batteries which give us the ability to “move fairly seamlessly” to using the renewable resource of energy from the sun which never runs out. “If you can capture the sun’s energy, you can keep civilization going.”

Then he added, “Science will not guarantee to save us it will only give us a possible out.”

Listen to the interview at :

http://www.charlierose.com/view/interview/12812

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

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.

Green Economy can Reduce Long Term Health Care Costs

We can reduce worldwide health care costs by transitioning to low carbon energy that does not overheat the planet, according to a new study.

Climate related health issues include illness from diarrheal disease estimated to kill 2.5 million people per year now, and half again that many by 2030. The warming   climate is also expected to raise death rates from extreme heat by 20%,  from malaria by 15%, and from meningitis by 25%. Agricultural and water losses are expected to raise deaths from hunger by  42% by 2030.

Adding climate related losses to industry, natural resources and habitat to these health costs is expected depress the world gross domestic product by 3.2% per year by 2030 according to the Climate Vulnerability Monitor.  

However, with an investment of  0.5% of GDP, one sixth the expected losses from global warming,  in low carbon policies like clean energy, energy efficiency, and forest conservation, we could stabilize the climate, strengthen our economy and reduce human suffering.

This study is chaired by the founder of the Club of Madrid, and advised by  international expertise in economics, resource and risk management, science and energy.   

Coal shipments from Montana to China not good for the economy

The Army Corps of Engineers and other agencies are holding hearings on proposals to take coal by train from Wyoming and Montana through Idaho, Oregon and Washington to terminals on the Washington and Oregon Coast for shipment to China. More information at the Power Past Coal Campaign.

Testimony we submitted: 

As part of the Environmental Impact Statement (EIS)  for the proposed coal terminal, please include data detailing the results of shipping and burning that coal on climate, on human health, the environment and the economy.

If a government official has control of a loaded gun, someone asks if they can pass it to another person, the official agrees and it’s used for murder, the official and the government become part of that crime. We are asking you to make our government take responsibility for the results of its actions.

Building a terminal to ship coal will result in an increase in global warming. Emissions from burning and shipping  fossil fuel kill 5 million people a year now, through drought, flood, hunger, disease and trauma according to the  DARA Climate Vulnerability Monitor.

If the EIS considers the economy and employment, it needs to include study of how global warming reduces productivity now and over the coming decades and the alternative of a green energy economy.

According to DARA, continued burning of fossil fuels will shrink the gross domestic product, costing us 6 times more than it would cost us to invest in energy efficiency and clean technology and reduce the risks of global warming.

The fossil fuel industry is spending its ample profits on intense lobbying and public relations to keep their 85% monopoly of the energy market, We have a responsibility to resist, to champion competitiveness. Society should no longer pick up the tab for the many external costs of fossil fuel or give permission for hazardous investments.

The cost of wind and solar electricity has been dropping steadily over the past decades and is already competitive with electricity generated by gas or coal in many places. By the time the terminal would be completed, solar electricity will clearly be a cheaper option.

Why would China then want to buy our coal?  China is already producing wind power for as low as 7 cents a kilowatt-hour and overflowing with cheap solar panel production. Green technology, including batteries, grids and efficiency innovations manufactured in America are the key to a stronger economy, increased exports and profits to our communities. 

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