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In search of the ecological truth

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Things are not looking good for the global economy at the moment – the eurozone is in crisis, the Middle East remains a hotbed of discontent that could erupt at any minute and the emerging giants that are supposed to be driving growth are instead showing signs of slowing down.

Everywhere you look, there seems to be a crisis of one type or another – and this is just what we need, according to one commentator. In a new report, Dennis Nacken, senior capital markets analyst at Allianz Global Investors, argues that crises can be a good thing – indeed they are vital to our continuing progress.

The report starts from the premise, set out early last century by the Russian economist Kondratieff, that crisis can mark a period of radical change where old sectors of industry are replaced by new ones that ultimately usher in a new era of prosperity.

There have been five previous ‘Kondratieff cycles’, the report argues, driven by the development of: the steam engine (1780-1830); railways and the steel industry (1830-1880); electricity and chemicals (1880-1930); automobiles and petrochemicals (1930-1970); and information and communications technology (1970-today).

The arrival of each wave of new technology led to a period of “creative destruction” that heralded the start of a new phase of progress. And now a sixth cycle is upon us, characterised by the combination of green markets with information technology.

There are five characteristics of a Kondratieff cycle, Nacken explains.

1. The potential for further exploitation of an old basic innovation is exhausted (a cycle of around 40 to 60 years).

2. There is a high level of excess financial capital (versus physical capital).

3. There is a period of severe recession (period of radical change).

4. Society and its institutions are undergoing transformations.

5. New technologies are overcoming macroeconomic bottlenecks.

All of these conditions would appear to apply today and in addition, it is no longer sustainable to aim to produce as much as possible as quickly as possible, with no regard for the burden this might place on debt balances or the environment. Instead, the macroeconomic bottleneck factor of the 21st century seems to be the scarcity of resources.

However, it is not only resources that are in increasingly short supply – we are also slowly running out of environment”, Nacken says.

One thing is certain: over the long term, ever faster, higher and stronger is not going to be an option given the limited commodity and energy resources.”

So while previous bursts of innovation improved the productivity of labour, the next cycle will be driven by an imperative to improve resource and energy productivity, he argues.

This is because under the new conditions imposed by globalisation, demographic development, climate change, scarce resources and greater awareness of, and responsibility towards, the environment on the part of consumers, growth will probably be generated from a new mix of economics and ecology.

The crucial reorganisation of energy infrastructure in this respect could prove to be a powerful engine that really gets growth going.”

This analysis helps to explain some of the hysterical reactions to the growth of clean technology markets – some 2.5m jobs are expected to be lost in the traditional energy sectors of coal, gas and oil. However, this will be more than offset by the creation of 5.3m new jobs in renewable energies.

The report contends that the integration of IT with the new green markets is set to drive growth and help to create a 21st century infrastructure that will include a switch to renewable energies; the conversion of buildings into micro power stations thanks to micro-generation technologies; an increased use of energy storage in buildings, cars and within the energy infrastructure; the expansion of a global smart grid system; and an increasingly electric transport infrastructure.

Michael Liebreich, chief executive of Bloomberg New Energy Finance, came at this issue from a slightly different direction recently, saying that the renewable energy industry is in a development stage, similar to what the automotive industry experienced in the 1900s.

In 1903, the United States had over 500 car companies, most of which quickly fell by the wayside even as the automobile sector grew into an industrial juggernaut”, he pointed out.

A century ago, writing off the auto industry based on the failures of weaker firms would have been foolish. Today, the renewable energy sector is experiencing similar growing pains as the sector consolidates.”

Nonetheless, the growth is there for all to see – since 2005, biofuel consumption has increased six-fold, while in 2011 wind power installations were up a fifth on the year before at 40.5 gigawatts (GW) and 27.4GW of new solar capacity was installed in 2011 – a 70% increase on the year before.

The reason for this growth is clear – in 1975, the average cost of a photovoltaic module per watt of solar energy was $94.81, which fell to $12.17 in 1985, $5.76 in 1995, $4.34 in 2005, and $0.96 at present. According to Goldman Sachs, next year the cost will be just $0.84.

But the crucial breakthrough will be making all the different energy technologies fit together with each other and the rest of the economy – cars and trains will act as batteries, buildings will be able to power down at peak times and Spanish or Moroccan sunshine will boil the kettles of waking workers in Germany – all facilitated by the growth of the smart grid.

Such developments are vital, Nacken says, because: “the environment itself has become a scarce asset. It can no longer be consumed free of charge. Prices must tell, not just the economic, but also the ‘ecological truth’.”

World leaders, businesses and NGOs are gathering in Brazil for the Rio+20 summit, where they will seek to fashion a new framework for a green economy. Expectations of progress are low, but the fact that natural capital and the phasing out of fossil fuel subsidies are high on the agenda is a promising development – and the fact is that real progress is being made out in the real economy, suggesting that the day when prices do indeed tell the ecological truth may be a step nearer.

Mike Scott is a freelance writer specialising in environment and business issues for the press and corporate clients. His work has been published in the Financial Times, The Times, the Guardian and the Daily Telegraph as well as in business publications ranging from Bloomberg New Energy Finance to Flight International.

Further reading:

Survey reveals promising trends for sustainable investment

Inspiring innovation in sustainable finance: FT/IFC Conference

Economics versus ethics: the story of modern sustainable investment

Mike Scott is a freelance writer specialising in environment and business issues for the press and corporate clients. His work has been published in the Financial Times, the Times, the Guardian and the Daily Telegraph as well as in business publications ranging from Bloomberg New Energy Finance to Forbes.

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2017 Was the Most Expensive Year Ever for U.S. Natural Disaster Damage

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Natural Disaster Damage
Shutterstock / By Droidworker | https://www.shutterstock.com/g/droidworker

Devastating natural disasters dominated last year’s headlines and made many wonder how the affected areas could ever recover. According to data from the U.S. National Oceanic and Atmospheric Administration (NOAA), the storms and other weather events that caused the destruction were extremely costly.

Specifically, the natural disasters recorded last year caused so much damage that the associated losses made 2017 the most expensive year on record in the 38-year history of keeping such data. The following are several reasons that 2017 made headlines for this notorious distinction.

Over a Dozen Events With Losses Totalling More Than $1 Billion Each

The NOAA reports that in total, the recorded losses equaled $306 billion, which is $90 billion more than the amount associated with 2005, the previous record holder. One of the primary reasons the dollar amount climbed so high last year is that 16 individual events cost more than $1 billion each.

Global Warming Contributed to Hurricane Harvey

Hurricane Harvey, one of two Category-4 hurricanes that made landfall in 2017, was a particularly expensive natural disaster. Nearly 800,000 people needed assistance after the storm. Hurricane Harvey alone cost $125 billion, with some estimates even higher than that. So far, the only hurricane more expensive than Harvey was Katrina.

Before Hurricane Harvey hit, scientists speculated climate change could make it worse. They discussed how rising ocean temperatures make hurricanes more intense, and warmer atmospheres have higher amounts of water vapor, causing larger rainfall totals.

Since then, a new study published in “Environmental Research Letters” confirmed climate change was indeed a factor that gave Hurricane Harvey more power. It found environmental conditions associated with global warming made the storm more severe and increase the likelihood of similar events.

That same study also compared today’s storms with ones from 1900. It found that compared to those earlier weather phenomena, Hurricane Harvey’s rainfall was 15 percent more intense and three times as likely to happen now versus in 1900.

Warming oceans are one of the contributing factors. Specifically, the ocean’s surface temperature associated with the region where Hurricane Harvey quickly transformed from a tropical storm into a Category 4 hurricane has become about 1 degree Fahrenheit warmer over the past few decades.

Michael Mann, a climatologist from Penn State University, believes that due to a relationship known as the Clausius-Clapeyron equation, there was about 3-5 percent more moisture in the air, which caused more rain. To complicate matters even more, global warming made sea levels rise by more than 6 inches in the Houston area over the past few decades. Mann also believes global warming caused the stationery summer weather patterns that made Hurricane Harvey stop moving and saturate the area with rain. Mann clarifies although global warming didn’t cause Hurricane Harvey as a whole, it exacerbated several factors of the storm.

Also, statistics collected by the Environmental Protection Agency (EPA) from 1901-2015 found the precipitation levels in the contiguous 48 states had gone up by 0.17 inches per decade. The EPA notes the increase is expected because rainfall totals tend to go up as the Earth’s surface temperatures rise and additional evaporation occurs.

The EPA’s measurements about surface temperature indicate for the same timespan mentioned above for precipitation, the temperatures have gotten 0.14 Fahrenheit hotter per decade. Also, although the global surface temperature went up by 0.15 Fahrenheit during the same period, the temperature rise has been faster in the United States compared to the rest of the world since the 1970s.

Severe Storms Cause a Loss of Productivity

Many people don’t immediately think of one important factor when discussing the aftermath of natural disasters: the adverse impact on productivity. Businesses and members of the workforce in Houston, Miami and other cities hit by Hurricanes Harvey and Irma suffered losses that may total between $150-200 billion when both damage and sacrificed productivity are accounted for, according to estimates from Moody’s Analytics.

Some workers who decide to leave their homes before storms arrive delay returning after the immediate danger has passed. As a result of their absences, a labor-force shortage may occur. News sources posted stories highlighting that the Houston area might not have enough construction workers to handle necessary rebuilding efforts after Hurricane Harvey.

It’s not hard to imagine the impact heavy storms could have on business operations. However, companies that offer goods to help people prepare for hurricanes and similar disasters often find the market wants what they provide. While watching the paths of current storms, people tend to recall storms that took place years ago and see them as reminders to get prepared for what could happen.

Longer and More Disastrous Wildfires Require More Resources to Fight

The wildfires that ripped through millions of acres in the western region of the United States this year also made substantial contributions to the 2017 disaster-related expenses. The U.S. Forest Service, which is within the U.S. Department of Agriculture, reported 2017 as its costliest year ever and saw total expenditures exceeding $2 billion.

The agency anticipates the costs will grow, especially when they take past data into account. In 1995, the U.S. Forest Service spent 16 percent of its annual budget for wildfire-fighting costs, but in 2015, the amount ballooned to 52 percent. The sheer number of wildfires last year didn’t help matters either. Between January 1 and November 24 last year, 54,858 fires broke out.

2017: Among the Three Hottest Years Recorded

People cause the majority of wildfires, but climate change acts as another notable contributor. In addition to affecting hurricane intensity, rising temperatures help fires spread and make them harder to extinguish.

Data collected by the National Interagency Fire Center and published by the EPA highlighted a correlation between the largest wildfires and the warmest years on record. The extent of damage caused by wildfires has gotten worse since the 1980s, but became particularly severe starting in 2000 during a period characterized by some of the warmest years the U.S. ever recorded.

Things haven’t changed for the better, either. In mid-December of 2017, the World Meteorological Organization released a statement announcing the year would likely end as one of the three warmest years ever recorded. A notable finding since the group looks at global land and ocean temperature, not just statistics associated with the United States.

Not all the most financially impactful weather events in 2017 were hurricanes and wildfires. Some of the other issues that cost over $1 billion included a hailstorm in Colorado, tornados in several regions of the U.S. and substantial flooding throughout Missouri and Arkansas.

Although numerous factors gave these natural disasters momentum, scientists know climate change was a defining force — a reality that should worry just about everyone.

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Environment

How to be More eco-Responsible in 2018

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eco-responsible
Shutterstock / By KENG MERRY Paper Art | https://www.shutterstock.com/g/kengmerrymikeymelody

Nowadays, more and more people are talking about being more eco-responsible. There is a constant growth of information regarding the importance of being aware of ecological issues and the methods of using eco-friendly necessities on daily basis.

Have you been considering becoming more eco-responsible after the New Year? If so, here are some useful tips that could help you make the difference in the following year:

1. Energy – produce it, save it

If you’re building a house or planning to expand your living space, think before deciding on the final square footage. Maybe you don’t really need that much space. Unnecessary square footage will force you to spend more building materials, but it will also result in having to use extra heating, air-conditioning, and electricity in it.

It’s even better if you seek professional help to reduce energy consumption. An energy audit can provide you some great piece of advice on how to save on your energy bills.

While buying appliances such as a refrigerator or a dishwasher, make sure they have “Energy Star” label on, as it means they are energy-efficient.

energy efficient

Shutterstock Licensed Photo – By My Life Graphic

Regarding the production of energy, you can power your home with renewable energy. The most common way is to install rooftop solar panels. They can be used for producing electricity, as well as heat for the house. If powering the whole home is a big step for you, try with solar oven then – they trap the sunlight in order to heat food! Solar air conditioning is another interesting thing to try out – instead of providing you with heat, it cools your house!

2. Don’t be just another tourist

Think about the environment, as well your own enjoyment – try not to travel too far, as most forms of transport contribute to the climate change. Choose the most environmentally friendly means of transport that you can, as well as environmentally friendly accommodation. If you can go to a destination that is being recommended as an eco-travel destination – even better! Interesting countries such as Zambia, Vietnam or Nicaragua are among these destinations that are famous for its sustainability efforts.

3. Let your beauty be also eco-friendly

eco-friendly

Shutterstock / By Khakimullin Aleksandr

We all want to look beautiful. Unfortunately, sometimes (or very often) it comes with a price. Cruelty-free cosmetics are making its way on the world market but be careful with the labels – just because it says a product hasn’t been tested on animals, it doesn’t  mean that some of the product’s ingredients haven’t been tested on some poor animal.

To be sure which companies definitely stay away from the cruel testing on animals, check PETA Bunny list of cosmetic companies just to make sure which ones are truly and completely cruelty-free.

It’s also important if a brand uses toxic ingredients. Brands such as Tata Harper Skincare or Dr Bronner’s use only organic ingredients and biodegradable packaging, as well as being cruelty-free. Of course, this list is longer, so you’ll have to do some online research.

4. Know thy recycling

People often make mistakes while wanting to do something good for the environment. For example, plastic grocery bags, take-out containers, paper coffee cups and shredded paper cannot be recycled in your curb for many reasons, so don’t throw them into recycling bins. The same applies to pizza boxes, household glass, ceramics, and pottery – whether they are contaminated by grease or difficult to recycle, they just can’t go through the usual recycling process.

People usually forget to do is to rinse plastic and metal containers – they always have some residue, so be thorough. Also, bottle caps are allowed, too, so don’t separate them from the bottles. However, yard waste isn’t recyclable, so any yard waste or junk you are unsure of – just contact rubbish removal services instead of piling it up in public containers or in your own yard.

5. Fashion can be both eco-friendly and cool

Believe it or not, there are actually places where you can buy clothes that are eco-friendly, sustainable, as well as ethical. And they look cool, too! Companies like Everlane are very transparent about where their clothes are manufactured and how the price is set. PACT is another great company that uses non-GMO, organic cotton and non-toxic dyes for their clothing, while simultaneously using renewable energy factories. Soko is a company that uses natural and recycled materials in making their clothes and jewelry.

All in all

The truth is – being eco-responsible can be done in many ways. There are tons of small things we could change when it comes to our habits that would make a positive influence on the environment. The point is to start doing research on things that can be done by every person and it can start with the only thing that person has the control of – their own household.

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