Carbon Bubble Is Bursting as Divestment Takes Hold
By Clara Vondrich
Where goes investment, there goes the climate. This is the fact today as we stand on the brink of locking in irreversible climate change with our fossil-heavy economy. Like never before, institutional investors have the power to make or break the future.
The International Energy Agency published a bombshell report in 2011 noting that our climate fate would be sealed by 2017 without a rapid departure from business as usual. By that year, dangerous warming of more than 2 degrees Celsius would be locked in by a global system of long-lived pipelines, refineries, power plants and transportation systems. Since then, the "safe" level of warming has been tightened further to 1.5 degrees, with evidence that 2 degrees is a death warrant for many island nations.
It's now 2017 and the pace of the clean energy transition still lags behind the physics. Some say 2 degrees, much less 1.5 degrees, is a pipe dream. The upshot is that every investment we make into our energy system matters, bringing us either closer to or further away from climate hell. By this measure, the policies of China—closing its coal plants and committing hundreds of billions of dollars to renewable energy—are prudent, while the rhetoric and policies of the Trump administration—promising to rebuild America's coal industry and firing off executive orders to fast track the Keystone XL and Dakota Access pipelines—are retrograde. One creates an enabling environment for progress and thriving, the other is disabling and destabilizing.
In the face of Trump's commitment to double-down on dirty energy, the DivestInvest movement is more important than ever. The investor class manages trillions in assets that will either be used to build the clean energy future or keep us mired in the past. Luckily, nearly 700 institutional investors managing assets in excess of $5 trillion have made some form of fossil fuel divestment commitment. This includes global insurance companies like Allianz, sovereign wealth funds like Norway's and preeminent universities, cities, faith organizations and foundations.
Still, to divest is not enough. A commitment to invest in the clean energy future—renewable energy, efficiency, sustainable agriculture and forestry, water and cleantech—is just as crucial. The whole energy system must be rebuilt, reimagined—moving away from a monolith of centralized power stations to a mix of utility grade wind and solar farms, microgrids and distributed clean energy systems. The foundations of DivestInvest Philanthropy understand this and hence their commitment to invest part of their portfolio annually into climate change solutions.
Investors in the future have the markets at their backs: Electricity from solar and wind power is now as cheap—or cheaper—than its fossil counterparts in much of the world.
Batteries are sailing down their cost curves with price reductions of 60 percent or more over the past 6 years. Electric vehicles are projected to hit parity with gasoline cars by 2022, a point totally disruptive to the oil industry. 2015 saw the world's highest annual investment into clean energy of almost $350 billion. Renewable energy comprised more than half of all new power-generating capacity that year, overtaking coal in total installed power capacity worldwide. Coupled with the formidable market signal of the Paris climate agreement, investors in the clean energy economy are in pole position to do well while doing good.
Meanwhile, the carbon bubble is bursting—sometimes quickly, sometimes slowly. Coal's fall was fast and furious: The Dow Jones U.S. Coal Index dropped more than 80 percent over the past five years and former lions of industry Peabody and Arch Coal have filed for bankruptcy. Oil and gas seem poised to limp along a few more years, though prices remain depressed and volatile. Last month, Chevron posted its first loss in decades, while Exxon saw its smallest quarterly profit in 17 years: Most striking, it also wrote off $2 billion in gas fields—finally admitting it was not immune to stranded assets. Shell itself says that oil demand will likely peak within the next five years followed by precipitous declines as electric vehicles come on-line en masse.
Yet, among institutional investors, there remains anxiety around the perceived lack of green products to sink their teeth into. But two new reports by Mercer and Croatan Institute chip away at the myth that there are not adequate investment opportunities into the clean energy future. Each assessment takes a portfolio-wide approach, looking at opportunities across all asset classes of a typical institutional portfolio.
The Mercer work provides the most comprehensive analysis of funds consistent with the DivestInvest pledge, looking at opportunities across public equity, fixed income, absolute return/hedge funds, private equity and infrastructure. The emphasis is on commingled institutional investment vehicles (pooled funds), rather than mutual funds, which have been catalogued by other groups. Mercer's full product list is available to DivestInvest signatories.
Meanwhile, the Croatan Report explores investments in climate solutions that also have a direct benefit to the local community. Many of the investments featured in the Croatan Report are consistent with the notion of a Just Transition, the idea that the clean energy transition should not recreate old and broken power structures that benefit the few at the expense of the many: Rather, investments should be made with intention to revive and rebuild communities, fostering job creation and local ownership of renewable energy systems where possible. The report is anchored in inspiring case studies featuring DivestInvest Philanthropy members.
These reports are essential contributions—showing that there is a robust and growing supply of investment-grade opportunities in the clean energy transition. In 2017, the stakes couldn't be higher.
Clara Vondrich is the director of DivestInvest Philanthropy.
Santa Barbara Becomes First California City to Pass Resolution Against Offshore Oil and Gas Drilling
The Santa Barbara City Council approved a resolution Tuesday opposing new drilling off the California coast and fracking in existing offshore oil and gas wells. The resolution is the first in a new statewide campaign to rally local governments against proposals to expand offshore fossil fuel extraction in federal waters.
The vote—which makes Santa Barbara the first California city to oppose both fracking and new offshore drilling—follows President Trump's April 28 executive order urging federal agencies to expand oil and gas leasing in federal waters. The order could expose the Pacific Ocean to new oil leasing for the first time in more than 30 years.
Starting Wednesday, the vast majority of Americans can learn about every potentially harmful chemical in their drinking water and what scientists say are the safe levels of those contaminants. The Environmental Working Group's (EWG) new national Tap Water Database is the most complete source available on the quality of U.S. drinking water, aggregating and analyzing data from almost 50,000 public water systems in all 50 states and the District of Columbia.
The organization has earned a reputation for ambitious data-mining research projects that shake up policy debates and consumer markets. EWG's online Farm Subsidy Database, listing millions of subsidy recipients, and its Skin Deep guide to more than 70,000 personal care products, draw tens of millions of visitors every year.
By Stacy Malkan
Ever since they classified the world's most widely used herbicide as "probably carcinogenic to humans," a team of international scientists at the World Health Organization's (WHO) cancer research group have been under withering attack by the agrichemical industry and its surrogates.
In a front-page series, The Monsanto Papers, the French newspaper Le Monde described the attacks as "the pesticide giant's war on science," and reported, "to save glyphosate, the firm [Monsanto] undertook to harm the United Nations agency against cancer by all means."
The lengthy report from the Energy and Policy Institute uses reams of archival documents to demonstrate that utility industry representatives knew as far back as 1968 that burning fossil fuels could trigger "catastrophic effects" on the climate.
By Sharon Kelly
The Pennsylvania's Environmental Hearing Board ordered Sunoco Pipeline LP Tuesday to temporarily halt some types of work on a $2.5 billion pipeline project designed to carry 275,000 barrels a day of butane, propane and other liquid fossil fuels from Ohio and West Virginia, across Pennsylvania, to the Atlantic coast.
On July 19, three environmental groups presented Judge Bernard Labuskes, Jr. with documentation showing that the project had caused dozens of drilling fluid spills and other accidents between April and mid-June.
By Andy Rowell
The UK has followed France in banning the sale of new petrol and diesel cars by 2040, as part of its plan to tackle chronic air pollution in cities. The government has been coming under intense pressure to act, with an estimated 40,000 people dying prematurely a year from air pollution.
By Colleen Curry
People traveling across America today can, if they're lucky, pitch a tent in the same exact spot that early American explorers and map-makers Lewis and Clark did, amid the jagged rocks and sweeping plains of the Upper Missouri River Breaks in central Montana.
Brent Rose, a journalist and filmmaker who has been traveling around the U.S. in a van for two years, was one of the lucky ones.
Kyara, a killer whale born at SeaWorld San Antonio just three months ago, died Monday at the park, as reported in this video from Newsy. Kyara is the last orca to be born in captivity under the SeaWorld breeding program, which shut down in 2016.
In a statement, SeaWorld said the cause of death was "likely pneumonia" and that "Kyara had faced some very serious and progressive health issues over the last week."