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Post-Paris: Investing In A Greener Tomorrow



Following the COP21 conference on climate change, the United Nations’ policies in the Paris Agreement will have important repercussions for investments in fossil fuel-based sectors. Michael Wilkins, Managing Director of Infrastructure Finance Ratings at Standard & Poor’s (S&P), stresses that new impetus from the Paris agreement will help the financing of more clean energy as investors divest from fossil fuels.

The Paris Agreement on climate change, approved at the United Nations’ COP21 summit last December, marks a milestone in the fight against global warming. Committing governments to keep global temperature rises below the critical 2 degree threshold, the agreement has set targets to significantly reduce global greenhouse-gas emissions.

Key to following through on these pledges is monetising the reduction of emissions, meaning investors will increasingly find disincentives for engaging with fossil fuel-based sectors. Meanwhile, considerable incentives for financing cleaner energy are necessary to usher in a complete global transition.

Here, other international initiatives – such as the UN’s Principles for Responsible Investment Initiative and the Climate Bonds Initiative’s Green Infrastructure Investment Coalition – will be essential to help unlock the private-sector capital needed to address the public spending deficit.

Divesting from fossil fuels

While the transition to cleaner, greener energy sources will not be immediate, the Paris Agreement is certainly a step in the right direction. But meeting the Agreement’s long-term emissions-reduction targets – to ensure emissions peak as soon as possible, and of carbon-neutrality by the middle of the century – will depend on creating the right incentives.

Monetising the reduction of emissions is key. Establishing a clear carbon price by emissions trading mechanisms (already implemented in the EU) or carbon taxes could see increased divestment from fossil fuel-based energy projects. Development of such mechanisms could push the carbon price up – leading to increased fossil fuel commodity prices, and harsher costs of complying with new regulation for certain industries.

Of course, the highly carbon-intensive oil and coal-based sectors would bear the financial brunt, along with related commodities and utilities. Coal-fired power plants in particular are most vulnerable to becoming ‘stranded’ (an asset that no longer has economic value). In fact, if governments are able to honour the carbon reduction pledges set by COP21, $33.1 trillion of global coal, oil and gas revenues would be at risk of becoming stranded by 2040, according to the International Energy Agency (IEA).

And momentum is increasing. 25 institutional investors in the ‘Portfolio Decarbonization Coalition’ have already committed to decarbonising $600 billion of their portfolios. In addition, the Bank of England has stressed the need to factor climate risk in financial planning, which signals a shift in approach. In response, S&P is increasingly reflecting environmental and climate-related risk in its credit analysis.

Finance going green

But if countries are to fulfil their pledges, investment in environment-friendly projects will need a boost – around $16.5 trillion globally over the next 15 years, according to the IEA. As the chart shows, annual investment in clean energy must be ramped up significantly if the 2 degree benchmark of a global temperature rise is to be achieved.

Post-Paris Investing in a greener tomorrow

The Paris Agreement certainly offers investment potential. For example, Dubai has committed to sourcing 75% of its power from solar energy by 2050, India and France aim to provide $1 trillion of solar investment by 2030, and Chinese and Indian COP21 targets alone require global wind and solar capacity to double within 15 years. Such opportunities will create significant demand for capital.

The private sector can help to meet this financing demand as institutional investors look to stock their portfolios with new assets in clean energy production. Particularly, developing low-carbon infrastructure will rely on scaling up the green bond market from the current global issuance of $40 billion to nearer $1 trillion per year.

Various initiatives can help here. The UN-supported Principles for Responsible Investment Initiative promotes awareness of sustainability in the private sector. Meanwhile, the Climate Bonds Initiative’s Green Infrastructure Investment Coalition stands to help investors understand the financing of low carbon, energy-efficient infrastructure.

The global energy transition has begun: with the right incentives and support, investors could certainly help to unlock the potential of the Paris Agreement.


New Zealand to Switch to Fully Renewable Energy by 2035



renewable energy policy
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New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.


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How Going Green Can Save A Company Money



going green can save company money
Shutterstock Licensed Photot - By GOLFX

What is going green?

Going green means to live life in a way that is environmentally friendly for an entire population. It is the conservation of energy, water, and air. Going green means using products and resources that will not contaminate or pollute the air. It means being educated and well informed about the surroundings, and how to best protect them. It means recycling products that may not be biodegradable. Companies, as well as people, that adhere to going green can help to ensure a safer life for humanity.

The first step in going green

There are actually no step by step instructions for going green. The only requirement needed is making the decision to become environmentally conscious. It takes a caring attitude, and a willingness to make the change. It has been found that companies have improved their profit margins by going green. They have saved money on many of the frivolous things they they thought were a necessity. Besides saving money, companies are operating more efficiently than before going green. Companies have become aware of their ecological responsibility by pursuing the knowledge needed to make decisions that would change lifestyles and help sustain the earth’s natural resources for present and future generations.

Making needed changes within the company

After making the decision to go green, there are several things that can be changed in the workplace. A good place to start would be conserving energy used by electrical appliances. First, turning off the computer will save over the long run. Just letting it sleep still uses energy overnight. Turn off all other appliances like coffee maker, or anything that plugs in. Pull the socket from the outlet to stop unnecessary energy loss. Appliances continue to use electricity although they are switched off, and not unplugged. Get in the habit of turning off the lights whenever you leave a room. Change to fluorescent light bulbs, and lighting throughout the building. Have any leaks sealed on the premises to avoid the escape of heat or air.

Reducing the common paper waste

paper waste

Shutterstock Licensed Photo – By Yury Zap

Modern technologies and state of the art equipment, and tools have almost eliminated the use of paper in the office. Instead of sending out newsletters, brochures, written memos and reminders, you can now do all of these and more by technology while saving on the use of paper. Send out digital documents and emails to communicate with staff and other employees. By using this virtual bookkeeping technique, you will save a bundle on paper. When it is necessary to use paper for printing purposes or other services, choose the already recycled paper. It is smartly labeled and easy to find in any office supply store. It is called the Post Consumer Waste paper, or PCW paper. This will show that your company is dedicated to the preservation of natural resources. By using PCW paper, everyone helps to save the trees which provides and emits many important nutrients into the atmosphere.

Make money by spreading the word

Companies realize that consumers like to buy, or invest in whatever the latest trend may be. They also cater to companies that are doing great things for the quality of life of all people. People want to know that the companies that they cater to are doing their part for the environment and ecology. By going green, you can tell consumers of your experiences with helping them and communities be eco-friendly. This is a sound public relations technique to bring revenue to your brand. Boost the impact that your company makes on the environment. Go green, save and make money while essentially preserving what is normally taken for granted. The benefits of having a green company are enormous for consumers as well as the companies that engage in the process.

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