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Letter calls for investigation into high-carbon investment

A prestigious group of politicians, academics, scientists, investors and green campaigners have clubbed together to write an open letter urging the Bank of England to rethink its economic agenda and to focus more on reducing carbon emissions. Alex Blackburne has a look at it.

Several of the country’s leading renewable energy and climate change supporters have issued Sir Mervyn King, the governor of the Bank of England, with an open letter, which it hopes will force a rethink over the central bank’s agenda.

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A prestigious group of politicians, academics, scientists, investors and green campaigners have clubbed together to write an open letter urging the Bank of England to rethink its economic agenda and to focus more on reducing carbon emissions. Alex Blackburne has a look at it.

Several of the country’s leading renewable energy and climate change supporters have issued Sir Mervyn King, the governor of the Bank of England, with an open letter, which it hopes will force a rethink over the central bank’s agenda.

Having created the Financial Policy Committee (FCP) to look at the risks in the finance sector and investments, the Bank of England is being asked by the esteemed ensemble to “investigate how the UK’s exposure to high-carbon investments might pose a systemic risk to our financial system and what the options might be for managing this potential threat to our economic security”.

Signees of the letter include Conservative MP Zac Goldsmith, former secretary of state for the environment, John Gummer, and former chief scientific adviser to the Government, Sir David King.

Dr Aled Jones, director of the Global Sustainability Institute at Anglia Ruskin University, is another of the 20 names attached to the document.

He explained the reason for the letter, and why it was addressed to the Bank of England.

“The Government has long term targets for transitioning the UK economy to a low carbon economy through the Climate Change Act”, he said.

“There is a risk that what’s listed on the stock market currently is incompatible with those end goals.

“[The Bank of England’s Financial Policy Committee has been] set up to look at risks in the finance sector and in investment, and we think this is one of the risks it needs to be looking at because it could potentially be quite large.”

Paul Ekins, professor of energy and environment policy at the University College London’s Energy Institute, also lent his name to the proposal.

He described the Bank of England as “the main guardian of stability of the financial system”, so it was entirely their prerogative to ensure a sustainable investment-led future.

“Current valuations of high-carbon and carbon-exposed companies are inconsistent with the stated aim of the world community to keep global warming below 2 degrees Celsius”, he said.

“If the world community were to act decisively on their stated aim, as they might were there to be a major climate-related disaster, then the value of those companies would fall precipitately.

“This is a material risk which markets currently do not seem to be taking into account.

“The letter asked the Bank of England to investigate it and make recommendations as to a way forward.”

The letter asks the Bank of England to investigate high-carbon investments and make recommendations to help achieve a low carbon economy.

It claims that, “Five of the top ten FTSE 100 companies are almost exclusively high-carbon and alone account for 25% of the index’s entire market capitalisation” – something that is not like to be exclusive to just that indices.

The need for a clearer focus on achieving the country’s long term carbon-reduction goals is bigger than ever – if only to prevent another financial crash – something that is inevitable if we continue investing in high-carbon companies.

“We need to prevent the deep and profound harm that could be wrought by an over-exposure to high-carbon assets and a rapid shift in their values”, said Ben Caldecott, head of policy at environmental investment banking group, Climate Change Capital, who recently wrote an article for the Guardian on the issue.

“Unlike sub-prime mortgages before the financial crisis, this time regulators must act to prevent the build-up of systemic risk in our financial system.”

Ultimately, will the Bank of England take note of the alliance’s letter then?

“We think so”, claimed Dr Jones.

“We referenced an article that Lord Stern also wrote [for the Financial Times, entitled A profound contradiction at the heart of climate change policy, so lots of people are focusing on this and highlighting it as an issue.

“We hope they will listen.”

You can help to ensure that the Bank of England acknowledges the seriousness of the letter’s request by advocating sustainable investment, rather than high-carbon.

To do this, get in touch with your financial adviser. Alternatively, fill in our form. Either way, your money can make a massive difference in the march towards a responsible future.

Photo: KJGarbutt via Flickr

Economy

Will Self-Driving Cars Be Better for the Environment?

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Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

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.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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