Today an unprecedented gathering of some of the world’s leading figures from the finance sector are meeting at the historic Guildhall in the City of London with carbon risk and climate experts to discuss the financial implications of the upcoming COP21 summit in Paris in December.
Key speakers at the event will be Christiana Figueres, Executive Secretary of the United Nations Framework Convention on Climate Change, and Lord Adair Turner, former chair of the FSA and the UK Committee on Climate Change.
The event will also include a specially recorded video address from HRH The Prince of Wales in which His Royal Highness will say: “Climate change is becoming an increasing source of risk to the finance community. There are therefore two factors to consider: firstly whether to divest from sectors especially those directly involved in fossil fuels, which will be severely impacted by any agreement to limit global temperatures to a 2 degree rise.
“Secondly, whether to invest in sectors which support the low carbon economy and are therefore better positioned in terms of risk and opportunities. Some investors, such as philanthropic trusts and foundations, will also have to consider whether continuing to invest in high carbon assets represents a significant conflict to their overall mission and objectives.”
Panelists during the event include CEOs, Chairs and senior executives from Bank of America Merrill Lynch, Newton, Carbon Tracker, Overseas Development Institute, Chatham House, Sarasin & Partners, Mercer, CCLA, MSCI and Aviva. Also attending will be Lord Mountevans, the incoming Lord Mayor of the City of London.
The event, organized by the City of London, Ashden Trust, Mark Leonard Trust, and the Carbon Tracker Initiative, and supported by the Local Authority Pension Fund, Aiming for A, IIGCC, Church Investors Group, and ShareAction will see over 300 attendees including many CEOs and leaders from the worlds of finance, business, government, policy, civil society, faith, philanthropy, higher education and health.
A major theme of the event will be stranded assets and the ‘carbon bubble’. This follows a recent speech by Mark Carney, Governor of the Bank of England who said: “If [the IPCC carbon budget] estimate is even approximately correct it would render the vast majority of reserves ‘stranded’ – oil, gas and coal that will be literally unburnable without expensive carbon capture technology, which itself alters fossil fuel economics….climate change will threaten financial resilience and longer-term prosperity.”
Mark Campanale, Founder of the Carbon Tracker Initiative, which first coined the phrase the ‘carbon bubble’ said: “The transition to a low carbon energy system and the growth of new energy systems, such as decentralized solar energy generation and battery storage, means that tomorrow’s energy will look very different from today’s. Costs of clean power generation are falling.
“Investors stuck in a ‘business as usual’ approach to energy investment risk and holding on to high carbon energy could leave their portfolios dangerously exposed. The commitments in Paris require emissions to drop by 30-40%. These goals negate fossil fuel industry plans to expand the sale of their products. Even Goldman Sachs is telling their clients that the chances of a recovery in the worst polluting sector, the coal industry, is looking bleak”.
Christiana Figueres will open the event to speak about what is expected to be agreed in Paris, the implications for the finance sector and fossil fuel industry. She is likely to say that it is essential that political leaders and the finance sectors start to assess the financial risk of climate change to help a achieve a fast and smooth transition to the low-carbon economy.
The first of three panels will consider and discuss the material risks posed by climate change, risks on company valuations and the implications for finance and investment of the outcomes of the Paris talks. The second panel will discuss what the ‘stranded assets’ concept and the need for portfolio and energy-system decarbonisation mean for the valuation models used by investors in fossil fuel companies. It will also look at how the growth of renewables and the speed of the clean energy transition are affecting the fossil-fuel sector.
Following the second panel Sarah Butler-Sloss, Chair of the Ashden Trust and founding member of Europeans for Divest Invest will speak about what civil society expects from institutional investors and asset managers and call for greater leadership. She said: “Given what we now know about the impacts of climate change, it’s essential that climate risk is a material factor in investment decisions.
“For those of us in the charity sector, there are clear ethical responsibilities relating to our charitable objectives. Shortly we will bring into the public domain a new legal opinion by eminent QC and expert in charity law, Christopher McCall that will clarify the extent to which investments in carbon intensive assets conflict with the intent behind charities with environmental and health objectives.”
The final panel, chaired by Catherine Howarth, CEO of ShareAction, will ask what can and should the finance sector do to provide the leadership for called for by Butler-Sloss.
The event will end with concluding thoughts and a call to action from Lord Adair Turner.
Picture credit: Guildhall facade by Diego Delso via Flickr
Will Self-Driving Cars Be Better for the Environment?
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.
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 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.
New Zealand to Switch to Fully Renewable Energy by 2035
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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