The Investment Leaders Group (ILG) have launched a report detailing the results of economic modelling on the impact of climate and energy regulation on company profitability. The Investment Leaders Group is a network of ten pension funds, insurers and asset owners, organised by the University of Cambridge Institute for Sustainability Leadership. Their report focuses on some of the most high-risk industries and areas including oil, gas and utilities in the UK, Spain, Germany, California (USA) and Alberta (Canada).
The COP21 climate agreement indicates a growing global action on climate change. In response, the report written by the ILG assesses the impact of future carbon and energy-related regulation on high-risk industries in high-risk areas.
The report has shown that if these companies do not change, they will be facing a substantial financial risk in the future.
The ILG highlights three key findings on the significant effects of climate and energy regulation on company profitability at a national level, and how there are substantial differences between individual companies in the same sectors and areas.
It shows how carbon and energy regulation can impact companies’ margins, using the example that “impacts for oil and gas companies are negligible under the Transition Scenario, but risks will become a reality if the price of carbon is assumed to be €45.”
The report supports companies’ risk mitigation activities, stating that they do make a difference.“Electric utilities were shown to be able to increase margins by more than 50 per cent in the UK and Spain by using risk mitigation activities” highlighting the importance of investors engaging with companies directly.
The report also suggests that energy and carbon risk assessments can facilitate stock-picking. It states that “the analysis for oil shows that margin impact can differ between refiners in the same country by up to 30 per cent due to refinery configuration.”
The ILG detail in their report a unique model which can be adapted to any individual company. It captures both energy and carbon-related regulation and defines two regulatory scenarios for 2020. The model helps companies provide a risk assessment arising from the chosen regulatory scenario before and after any corporate action.
The tool will provide “outputs that can be integrated into existing valuation techniques, providing transparency on the measures required for companies to reduce the impacts on profitability associated with climate-related regulations.”
It will also help companies looking to understand their ability to respond to energy and carbon regulation, improve stock picking and empower them to engage with companies on actions they can take to make themselves ‘future proof’.
Further development of the model detailed in the report is needed but, once finished, it could be used to “complement bottom-up financial analysis”. In the future, the model can also be expanded to other high-risk sectors such as chemicals and transportation.
A Good Look At How Homes Will Become More Energy Efficient Soon
Everyone always talks about ways they can save energy at home, but the tactics are old school. They’re only tweaking the way they do things at the moment. Sealing holes in your home isn’t exactly the next scientific breakthrough we’ve been waiting for.
There is some good news because technology is progressing quickly. Some tactics might not be brand new, but they’re becoming more popular. Here are a few things you should expect to see in homes all around the country within a few years.
1. The Rise Of Smart Windows
When you look at a window right now it’s just a pane of glass. In the future they’ll be controlled by microprocessors and sensors. They’ll change depending on the specific weather conditions directly outside.
If the sun disappears the shade will automatically adjust to let in more light. The exact opposite will happen when it’s sunny. These energy efficient windows will save everyone a huge amount of money.
2. A Better Way To Cool Roofs
If you wanted to cool a roof down today you would coat it with a material full of specialized pigments. This would allow roofs to deflect the sun and they’d absorb less heat in the process too.
Soon we’ll see the same thing being done, but it will be four times more effective. Roofs will never get too hot again. Anyone with a large roof is going to see a sharp decrease in their energy bills.
3. Low-E Windows Taking Over
It’s a mystery why these aren’t already extremely popular, but things are starting to change. Read low-E window replacement reviews and you’ll see everyone loves them because they’re extremely effective.
They’ll keep heat outside in summer or inside in winter. People don’t even have to buy new windows to enjoy the technology. All they’ll need is a low-E film to place over their current ones.
4. Magnets Will Cool Fridges
Refrigerators haven’t changed much in a very long time. They’re still using a vapor compression process that wastes energy while harming the environment. It won’t be long until they’ll be cooled using magnets instead.
The magnetocaloric effect is going to revolutionize cold food storage. The fluid these fridges are going to use will be water-based, which means the environment can rest easy and energy bills will drop.
5. Improving Our Current LEDs
Everyone who spent a lot of money on energy must have been very happy when LEDs became mainstream. Incandescent light bulbs belong in museums today because the new tech cut costs by up to 85 percent.
That doesn’t mean someone isn’t always trying to improve on an already great invention. The amount of lumens LEDs produce per watt isn’t great, but we’ve already found a way to increase it by 25 percent.
Maybe Homes Will Look Different Too
Do you think we’ll come up with new styles of homes that will take off? Surely it’s not out of the question. Everything inside homes seems to be changing for the better with each passing year. It’s going to continue doing so thanks to amazing inventors.
ShutterStock – Stock photo ID: 613912244
IEMA Urge Government’s Industrial Strategy Skills Overhaul To Adopt A “Long View Approach”
IEMA, in response to the launch of the Government’s Industrial Strategy Green Paper, have welcomed the focus on technical skills and education to boost “competence and capability” of tomorrow’s workforce.
Policy experts at the world’s leading professional association of Environment and Sustainability professionals has today welcomed Prime Minister Teresa May’s confirmation that an overhaul of technical education and skills will form a central part of the Plan for Britain – but warns the strategy must be one for the long term.
Martin Baxter, Chief Policy Advisor at IEMA said this morning that the approach and predicted investment in building a stronger technical skills portfolio to boost the UK’s productivity and economic resilience is positive, and presents an opportunity to drive the UK’s skills profile and commitment to sustainability outside of the EU.
Commenting on the launch of the Government’s Industrial Strategy Green Paper, Baxter said today:
“Government must use the Industrial Strategy as an opportunity to accelerate the UK’s transition to a low-carbon, resource efficient economy – one that is flexible and agile and which gives a progressive outlook for the UK’s future outside the EU.
We welcome the focus on skills and education, as it is vital that tomorrow’s workforce has the competence and capability to innovate and compete globally in high-value manufacturing and leading technology.
There is a real opportunity with the Industrial Strategy, and forthcoming 25 year Environment Plan and Carbon Emissions Reduction Plan, to set long-term economic and environmental outcomes which set the conditions to unlock investment, enhance natural capital and provide employment and export opportunities for UK business.
We will ensure that the Environment and Sustainability profession makes a positive contribution in responding to the Green Paper.”