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Responses to Governor Carney’s warning of ‘catastrophic impacts of climate change’

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The Governor of the Bank of England’s dramatic analysis of the impacts of climate on financial stability, has been followed by these expert responses. We’ll add to them as we receive them.

Mark Campanale, Founder and Executive Director of the Carbon Tracker Initiative said: “Carbon Tracker welcomes this important milestone, a major international microprudential regulator clearly setting out for the first time how climate risk is a material financial risk.

“The PRA and ourselves share a common acknowledgement that a declining ‘carbon budget’ to 2 degrees will mean that fossil fuels will need to stay in the ground. For investors, including insurance companies, this creates the risks of ‘stranded assets’ in an investment portfolio. Carbon Tracker agrees that the best way to address this risk is by relevant disclosure that allows policymakers, firms and investors the ability to make informed choices.

“Carbon Tracker’s analysis of the world’s top 200 publicly traded fossil fuel companies discovered that they are developing or are proposing to develop enough fossil fuels to take us beyond 4 degrees of warming. This report highlights the risks facing these companies and the potential for litigation related to climate damage.

“With this report, investors will sit up and take notice of the potential risks and liabilities these companies face and begin to re-price this material risk. Fossil fuel investors face the combined risk of their business models being out-competed by price competitiveness of the renewables energy sector, while also potentially picking up the costs of climate damage.”

Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change said: “Mark Carney spoke under the Lutine Bell, the way Lloyds has signalled great events that will affect the market. He chose his setting perfectly. We welcome his focus on more consistent and reliable carbon disclosure that will allow investors to make a more informed assessment of the climate risks in their portfolios”.

James Bevan, Chief Investment Officer at CCLA said: “The Bank of England’s public statement that climate risk is a material financial risk speaks to the challenge of so-called stranded assets, and makes planning for declining carbon intensity an absolutely mainstream investment requirement. CCLA agrees that the best immediate means of illuminating the risk are through relevant disclosure that supports informed decision taking. As investors we recognise that the investment risks associated with companies with high carbon intensity are now significant, and CCLA will now work to build coalitions of investors driving change though engagement and co-filing such as with ‘Aiming for A’.”

Julian Poulter, Founder and CEO of the Asset Owner Disclosure Project (AODP): “The lessons of the sub-prime crisis were quickly forgotten by most banks itching to return to their short term ways, but Mark Carney has laid out their next crisis in black and white – “Sub-Clime” is coming and we need to act fast. Investors should be taking action now, not panicking once the crash hits and it is too late.”

John Rogers, former CEO and President of the CFA Institute said: “Mark Carney has offered a worthwhile challenge to institutional investors: Become part of the solution to climate change by acting as fiduciary capitalists. Preventable Surprises applauds this call to action, and will support the financial industry with actionable ideas to help investors engage with the companies whose shares and debt they own.”

Alice Garton, Lawyer at ClientEarth, says: “Today’s report from the Bank of England should sound warning bells for anyone working in the financial sector. It confirms climate change is an immediate, material business risk.

“The case for litigation brought against those ignoring climate change risk grows ever stronger. If directors fail to manage the risks and opportunities presented by climate change, they could be found personally liable for losses incurred by the company in the future.

“Investors such as pension fund trustees and their advisors also have legal duties to manage the risks affecting their portfolios. ClientEarth is examining these duties and we may bring legal challenges if we find that funds are failing to meet their obligations. Investors across the board cannot afford to treat climate change as a distant possibility. Increased regulation, changing market dynamics and heightened risk to physical assets must shape their investment decisions from today.”

David Nussbaum, CEO of WWF-UK said in response: “When the Governor of the Bank of England warns of the economic impacts of climate change, it’s certainly time to listen.  This week alone Shell has pulled out of the Arctic, WWF has launched a report about mining companies encroaching on natural world heritage sites, and now Mark Carney is effectively saying ‘change course or prepare for disaster’.

“The writing is on the wall.  At the moment, many investors and businesses are ahead of governments in acting on their understanding of the impacts of climate change.  Governments need to step up to the plate at the Paris climate talks in December and deliver a deal that will set a path for a low-carbon future – and boost investors’ confidence that they will continue along that path.”

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
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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renewable energy policy
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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