Leading sustainable investors have claimed the latest findings from the Intergovernmental Panel on Climate Change (IPCC) are further evidence for investment in sustainable companies and industries.
The IPCC’s second report of three in its Climate Change 2014 series warns how warmer temperate can put pressure on food prices, national security, health and the environment.
Vicente Barros, co-chair of the working group that produced the study, said investing in “better preparation” for the environmental, social and economic risks was sensible, and “can pay dividends both for the present and for the future”.
He added, “We live in an era of manmade climate change. In many cases, we are not prepared for the climate-related risks that we already face.”
The comments from Barros, who is from the University of Buenos Aires in Argentina, were echoed by leading sustainable investors.
Neville White, head of sustainable and responsible investment (SRI) at Ecclesiastical Investment Management, described the IPCC report as a “bleak wake-up call” for policymakers. He pointed towards the recent floods that had devastated parts of southern England as a “compelling example” of climate change’s impact.
White’s firm Ecclesiastical manages over £2 billion in assets, and he added that investors have a big role to play in “promoting energy efficiency, alternative technology and reduction targets in the emission of harmful greenhouse gases”.
Elsewhere, Seb Beloe, partner and head of sustainability research at London-based WHEB, noted the difference in how scientists and policymakers view the threat posed by climate change.
“The contrast between the sense of urgency in the latest IPCC report and the poor quality of discourse on climate change in the mainstream media and among political parties could not be clearer. The report confirms that climate change is not a ‘future hypothetical’ but a present reality“, he said.
“When people complain about food prices they need to realise that climate change is a significant contributor to this. Climate change is not esoteric and theoretical but impacting in real ways on real people today.”
Acknowledging the financial risks associated with climate change is becoming an increasingly mainstream concern for the investment world. A survey last year of asset managers and owners whose collective assets exceeded $14 trillion found that 53% had used climate change as their motivation when investing in or divesting from certain stocks. This was a marked increase from 23% in 2012 and 9% in 2011.
Meanwhile, the fossil fuel divestment movement has gained particular traction in recent months. Research by the likes of the Carbon Tracker Initiative suggests as much as 80% of fossil fuel reserves are “unburnable” once the need to stay below 2C of warming is factored in. Major investors, academic institutions and other organisations have used this rationale as their motivation for divesting from high-carbon assets.
The expected tightening of climate change legislation – including more ambitious emissions reduction targets – is also of concern to some investors who hold fossil fuel stocks.
After the latest IPCC report, James Cameron, chairman of asset management and advisory firm Climate Change Capital, said, “You will see much more activity from governments on climate in the next two years. In addition, institutional investors will be looking to invest away from risk and towards opportunity in the transformation we must make.”
He described energy, water and food as “critical investment areas”, adding, “Whatever the financial product, assets held in agriculture, energy, infrastructure, property will be revalued by reference to the physical consequences of climate change and the public policy response.”
The UK trade body for sustainable finance called for policy that ‘incentivises’ investment in the low-carbon economy. Caroline Escott, head of government relations at the UK Sustainable Investment and Finance Association (UKSIF), said, “Sustainable and responsible investors have led the way for many years in understanding the risks associated with climate change and taking these into account in their investment decisions.
“It is now increasingly urgent that governments create the right kind of stable and coherent policy framework that incentivises investment in a long-term, sustainable economic future.”
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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