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Thermal coal investments ‘high risk strategy’, say analysts

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When China’s rapidly transitioning energy sector is considered, investments in thermal coal assets are “high risk”, according to a new report from the Carbon Tracker Initiative and the Association for Sustainable and Responsible Investment in Asia (ASrIA).

The report – The great coal cap: China’s energy policies and the financial implication for thermal coal – argues that as demand decreases in China, investors that are not actively assessing their holdings could be left with stranded assets.

Thermal coal currently provides just under 80% of China’s power. However, according to the report, the country’s demand will peak between 2015 and 2030 due to a range of factors, including slowing GDP growth, strong growth in the nation’s renewables sector and discussions around a carbon tax increasing the perceived risk to the future competitiveness of coal power.

The week, China, the world’s biggest polluter, has said it wants to set legal limits on carbon emissions from 2016, signalling its commitment to moving away from coal and other fossil fuels towards cleaner renewable energy sources.

Carbon Tracker CEO Anthony Hobley said, “China’s ‘great coal cap’ could feasibly peak China’s thermal coal demand in the near-term, presenting a significant risk of asset stranding for those investing on a business as usual future. Questions need to be asked whether committing billions of capital to increase thermal coal supply in a shrinking market is a wise use of capital.”

The report urges investors to assess the risks within their portfolio when peaking demand scenarios are considered in order to calculate exposure. In also calls on investors to urge China’s coal companies to improve disclosure with regards to future capital expenditure.

Investors not directly investing in China’s coal companies could also be at risk, as exporters of coal will need to find another end market or be left with excess supply and potentially stranded assets. This risk is of particular concern for Australian and Indonesia exporters.

Luke Sussams, senior researcher at Carbon Tracker and lead author of the report, explained, “Investors in Australian and Indonesian exporters of coal, in particular, must factor much lower Chinese demand into their demand and price forecasts.

“If China becomes a zero impact market, which is possible, there could be a noticeable lack of any viable alternative growth market for seaborne traded coals. Where will Australia’s $50 billion (£29 billion) of thermal coal go instead?”

Carbon Tracker rose to fame in the financial world with its flagship 2012 analysis, Unburnable Carbon, that said as much as 80% of the world’s fossil fuel reserves cannot be burned.

It said oil, gas and coal had to be left underground if efforts to tackle climate change are to be considered serious, and that such investments could lose significant value in the future as a result.

Photo: walker_M via Freeimages  

Further reading:

Divestment: Stanford to shift investments in coal towards ‘sustainable’ solutions

World Bank announces plans to phase out investment in coal

Investors warned of ‘stranded’ carbon assets and working condition risks

MPs issue stark ‘carbon bubble’ warning to investors and finance world

Growing risk around fossil fuels, say 75% of US sustainable investment industr

Environment

These 5 Green Office Mistakes Are Costing You Money

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eco-friendly green offices
Shutterstock Licensed Photo - By Stokkete | https://www.shutterstock.com/g/cyano

The sudden interest in green business is very encouraging. According to recent reports, 42% of all companies have rated sustainability as an important element of their business. Unfortunately, the focus on sustainability will only last if companies can find ways to use it to boost their ROI.

Many businesses get so caught up in being socially conscious that they hope the financial aspect of it takes care of itself. The good news is that there are plenty of ways to go green and boost your net income at the same time.

Here are some important mistakes that you will want to avoid.

Only implementing sustainability on micro-scale

The biggest reason that brands are going green is to improve their optics with their customers. Too many businesses are making very minor changes, such as processing paperwork online and calling themselves green.

Customers have become wary of these types of companies. If you want to earn their business, you are going to need to go all the way. Bring in a green business consultant and make every feasible change to demonstrate that you are a green organization from top to bottom.

Not prioritizing investments by long-term ROI

It isn’t realistic to build an entirely green organization overnight. You will need to allocate your capital wisely.

Before investing in any green assets or services, you should always conduct a long-term cost benefit analysis. The initial investment for some green services may be over $20,000. If they don’t shave your cost by at least $3,000 a year, they probably aren’t worth the investment.

Determine which green investments will have the best pay off over the next 10 years. Make these investments before anything else. Then compare your options within each of those categories.

Implementing green changes without a plan

Effective, long-term planning is the key to business success. This principle needs to be applied to green organizations as well.

Before implementing a green strategy, you must answer the following questions:

  • How will I communicate my green business philosophy to my customers?
  • How will running a green business affect my revenue stream?
  • How will adopting green business strategies change my monthly expenses? Will they increase or decrease them?
  • How will my company finance green upgrades and other investments?

The biggest mistake that too many green businesses make is being overly optimistic with these forecasts. Take the time to collect objective data and make your decisions accordingly. This will help you run a much more profitable green business.

Not considering the benefits of green printing

Too many companies believe that going paperless is the only way to run a green organization. Unfortunately, going 100% paperless it’s not feasible for most companies.

Rather than aim for an unrealistic goal, consider the option of using a more environmentally friendly printer. It won’t be perfect, but it will be better than the alternative.

According to experts from Doranix, environmental printers have several benefits:

  • They can process paper that has been completely recycled.
  • They consume less energy than traditional printers.
  • They use ink that is more environmentally friendly.

You want to take a look at different green printers and compare them. You’ll find that some will meet your needs as a green business.

Poorly communicating your green business strategy to customers

Brand positioning doesn’t happen on its own. If you want to run a successful green business, you must communicate your message to customers as clearly as possible. You must also avoid the appearance that you are patronizing them.

The best approach is to be clear when you were first making the change. I’ll make an announcement about your company‘s commitment to sustainability.

You also want to reinforce this message overtime by using green labels on all of your products. You don’t have to be blatant with your messaging at this stage. Simply provide a small, daily reminder on your products and invoices.

Finally, it is a good idea to participate in green business seminars and other events. If your community has a local Green Chamber of Commerce, you should consider joining as well.

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Energy

Responsible Energy Investments Could Solve Retirement Funding Crisis

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Energy Investments
Shutterstock / By Sergey Nivens | https://www.shutterstock.com/g/nivens

Retiring baby-boomers are facing a retirement cliff, at the same time as mother nature unleashes her fury with devastating storms tied to the impact of global warming. There could be a unique solution to the challenges associated with climate change – investments in clean energy from retirement funds.

Financial savings play a very important role in everyone’s life and one must start planning for it as soon as possible. It’s shocking how quickly seniors can burn through their nest egg – leaving many wondering, “How long your retirement savings will last?

Let’s take a closer look at how seniors can take baby steps on the path to retiring with dignity, while helping to clean up our environment.

Tip #1: Focus & Determination

Like in other work, it is very important to focus and be determined. If retirement is around the corner, then make sure to start putting some money away for retirement. No one can ever achieve anything without dedication and focus – whether it’s saving the planet, or saving for retirement.

Tip #2: Minimize Spending

One of the most important things that you need to do is to minimize your expenditures. Reducing consumption is good for the planet too!

Tip #3: Visualize Your Goal

You can achieve more if you have a clearly defined goal in life. This about how your money can be used to better the planet – imagine cleaner air, water and a healthier environment to leave to your grandchildren.

Investing in Clean Energy

One of the hottest and most popular industries for investment today is the energy market – the trading of energy commodities. Clean energy commodities are traded alongside dirty energy supplies. You might be surprised to learn that clean energy is becoming much more competitive.

With green biz becoming more popular, it is quickly becoming a powerful tool for diversified retirement investing.

The Future of Green Biz

As far as the future is concerned, energy businesses are going to continue getting bigger and better. There are many leading energy companies in the market that already have very high stock prices, yet people are continuing to investing in them.

Green initiatives are impacting every industry. Go Green campaigns are a PR staple of every modern brand. For the energy-sector in the US, solar energy investments are considered to be the most accessible form of clean energy investment. Though investing in any energy business comes with some risks, the demand for energy isn’t going anywhere.

In conclusion, if you want to start saving for your retirement, then clean energy stocks and commodity trading are some of the best options for wallets and the planet. Investing in clean energy products, like solar power, is a more long-term investment. It’s quite stable and comes with a significant profit margin. And it’s amazing for the planet!

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