Investing in solutions

 

 

This ad for Bank Australia is a great example of normalising socially responsible business, renewable energy and divestment. None of these are particularly new ideas but the fact they’re on TV in a slick ad for a business shows how they’re becoming mainstream.

When watching the ad keep an eye out for the solar panels being installed by a business owner to save money, the message that the bank “doesn’t lend to the fossil fuel industry”, the lady charging her Tesla and wind turbines as the picturesque backdrop to an Australian road trip.

The more these kinds of images and messages appear in the media, particularly in a way that portrays them as business-friendly, the more normal they will seem and the more support they will have. And we certainly need more businesses and more people using their power to create a better world by investing in solutions, not fossil fuels.

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Coal is on its way out

This week Italy announced that it is aiming to phase out coal by 2025, just 6 years’ time. It joins 12 other countries that have either already phased out coal or intend to phase it out in the years leading up to 2030, including the UK by 2025 and Canada by 2030. That’s alongside 6 major cities that are doing the same, including New York, Beijing, Delhi, Berlin and Washington DC and the state of California.

Globally, the pipeline of coal plants from planning and construction to retirement shrank in the year from January 2016 to January 2017 with India and China leading the way due to pollution and excess generation capacity.

coal construction

endcoal.org

In the US, coal’s decline has been stark. Around 15 years ago coal generated around 55% of US electricity, but by 2016 it was just 33%. Between, 2011 and 2016 the four largest US coal companies lost 99.9% of their market capitalisation.

 
While globally, coal demand is still set to increase, technological advancements and the falling cost of both renewable energy and energy storage will eat even further into coal’s dominance. According to the International Energy Agency, the cost of building new renewable energy is increasingly the same as or lower than new-build coal or gas plants and renewables are set to grow twice as fast as coal out to 2022.

International Energy Agency

Coal may still be dominant but the writing is on the wall. According to a study published in Nature, 88% of the world’s coal reserves will have to stay in the ground if we are to have just a 50% chance (the toss of a coin) of capping temperature rise at 2 degrees, the target agreed to as part of the Paris Accord.

As countries face increasing pressure to meet their emissions reduction targets under the accord coal will become increasingly unpopular. Coupled with the increasing appeal of renewables and storage it seems that coal is inevitably heading for the door.

 

 

Climate Council

 

 

Photo at top: Peter Van den Bossche, Wikimedia Commons

Wind cheaper than nuclear and powering Scotland

A few renewable energy good news stories:

 

Photo at top: NHD-INFO, Wikimedia

Eat food, not too much, mostly plants

Eat food, not too much, mostly plants. – Michael Pollan

I love this line from American author and professor Michael Pollan. It distills so simply some key principles of eating sustainably and healthily; namely:

  • eating (food is awesome, valuable and powerful! Enjoy it)
  • eating only what we need (excess can lead to illness, obesity and food waste which wastes resources and creates greenhouse gas emissions; best to eat a balanced diet, avoid large portion sizes and buy only what you will eat)
  • eating more plants (very good for us)
  • eating less meat (very resource-intensive, high in greenhouse gas emissions, potentially unhealthy in high quantities).

I found it in this article about the move to a less-is-more approach to cooking amongst chefs. Worth the quick read.

Coal’s just getting in the way of a better future

In Australia the debate over climate policy is fractious. As is the case in the US, the conservative side of politics here realised political mileage could be gained from opposing climate action and renewables and backing coal and gas.

63% of Australia’s electricity generation is from coal and in 2015 the country was the second largest exporter of thermal coal. Coal companies have a lot of sway in the halls of Parliament House, particularly with the pro-business conservative Coalition government. Even the previous centre left Labor government discovered the power of mining companies in Australia after they launched fierce and effective media campaigns in opposition to the Labor government’s mining tax and a price on carbon emissions in the past 5 years.

So when it comes to climate action in Australia the market rules. Which is to say that the business interests of incumbent coal companies have equal, if not greater, weight than those of climate science. Government’s of either stripe are reluctant to intervene too much in the market to reduce greenhouse gas emissions.

Contrast this with China where the cities are scrambling to meet clean air targets for the end of the year imposed by the government with all kinds of direct interventions into energy and manufacturing markets. As the Sydney Morning Herald reports:

Steel production has been halved in major steel cities, coal banned in China’s coal capital, factories closed down for failing pollution inspections, and hundreds of officials sacked for failing to meet environmental targets.

Reduced steel production has had impacts on world markets and businesses inside and outside China have complained. This is where the difference between China and Australia emerges.

Unlike what happens when polluting industries push back against government policy in Australia and the US, they have been given short shrift by China’s Ministry for Environment Protection.

Director of environmental impact assessment for the ministry, Cui Shuhong, is even quoted by the SMH as saying that polluting companies “disrupt the market order”. This is a far cry from Australia where the government may be on the verge of rejecting a clean energy target proposed by an independent review and supported by the opposition, industry, and environmentalists.

To be fair, the interventions in China are short-term (around 5 months in length) and enforced due to public pressure to improve air quality in cities blighted by smog but the actions and the language around them represent a move away from fossil fuels and in support of renewables globally that will only grow.

More than this, they offer a vision of the way that powerful, incumbent industries can be challenged by governments. Not just when these industries threaten public health and the climate but when embracing innovative alternatives, like renewable energy, provides opportunities for economic growth and employment whilst improving environmental and social well being.

 

Photo at top: erhard.renz, Flickr

Making dollars and sense from ethical investing

This interview with WHEB sustainability investors Managing Director George Latham is a good look at the performance of ethical and sustainable investing.

It’s noteworthy though for two reasons in particular.

Firstly, for Latham’s rather handy description of ethical business as those creating “solutions to sustainability challenges” and the fact of their growth.

We find that the universe of companies that are creating what we call a solution to sustainability challenges is generally growing at a far superior rate to the rest of the world market. There is strong growth in providing good outcomes for society and the environment. Because we need more of those products that help solve the world’s major challenges.

– George Latham, WHEB Managing Director

Secondly, for Latham’s description of how ethical investing has moved from being simply a moral concern in the 90s when he started working in this space, to a legitimate and increasingly common consideration of risk and return for investors.

This reflects nicely, if somewhat superficially, the process of social change: behaviours that address socially or environmentally damaging practices emerge at the fringes before gradually being adopted by more and more people until they become normalised and part of our institutions through for instance law or established business practice.

It can often be hard to see this process (and thus the progress) of adopting socially and environmentally just behaviours because it’s generally slow. These behaviours are either already normalised in our lifetime (eg. women’s and civil rights) or considered fringe concerns (eg. veganism, polyamory).

So while Latham describes the mainstreaming of ethical investment within the investment industry, he’s also describing how sustainable and ethical behaviours come to be seen and adopted as completely normal with time. It’s worth considering what behaviours or concerns that are considered fringe today will be normal in a generation or two’s time…

Fighting climate change creates jobs

I keep bleating about this but there’s huge potential in framing climate action as a jobs creator and this tweet from the US National Resources Defense Council shows how to do it.

The tweet is launching the NRDC’s new analysis of pathway to a low-carbon economy for the United States – an, in their own words, “ambitious” plan to reach an 80% reduction in greenhouse gas emission by 2050. Not an easy plan to sell but they’re going about it the right way.

So much climate communications appears to assume that the people they’re wanting to reach are motivated by a desire to do something about climate change. Unfortunately, not everyone is so keen so we need to tailor messages to what people do care about.

That’s why this tweet, and the second line in particular, is bang on:

Fighting climate change creates jobs.

People like jobs. People vote based on jobs. If it’s clear renewables create jobs people will like and hopefully vote based on support for renewables.

The tweet also talks to something else people like: their country. It portrays climate action as patriotic, a frame that has great appeal for people no matter their political persuasion, according to research. (Here’s another good example of patriotic framing of renewables).

Tackling climate change means bold action and securing broad public support. This means communicating based on what people care about, not what we think they should care about. Which doesn’t mean that people shouldn’t be told hard truths; education is crucial. Just that if we think about what people like and value, we can sell renewables and necessary ambitious climate action, like the NRDC’s plan, more effectively.