Here is a story told by Professor Paul Bierman about divestment from fossil fuel how-to get rid of this earth’s malefic resource of easiness. In short, it is about salvaging what remains of the earth’s goodness and secure an unaltered future for the coming generations.
For over a century, burning fossil fuels has helped propel our cars, power our businesses, and keep the lights on in our homes. Even today, oil, coal, and gas provide about a lot of our energy needs.
Divesting is the act of removing any financing of the fossil fuel industry, increasingly found to be an unethical industrial human activity. The fossil fuel divestment movement that started gaining attraction in 2010 could not have begun if no palliative industry can procure all that necessary energy.
In recent years, the divest movement from fossil fuels has grown to a multi-trillion dollar movement involving numerous institutions worldwide. And thanks to stricter policies to address the climate crisis, fossil fuels are gradually becoming yesterday’s energy source. They could soon be considered, were it not for the Big Oils and their lobbies, as a nasty, dirty and nuisance liable to damage the planet’s soils, air and above all, its climate. Luckily, Fossil Fuel complicity being no longer hidden, divestment is gradually brought about and sustained by the likes of the professor here.
A fossil fuel divestment ‘how-to’
As a climate scientist, I find fossil fuel divestment to be critical low-hanging fruit, even if its effects are largely symbolic. But it never ceases to amaze me how we struggle to get it done.
At the University of Vermont (UVM) where I’ve taught since 1993, the divestment movement lasted a decade and got nowhere. Then — in less than a year — it happened. A growing student movement did the work. Emboldened by Mike Mann’s visit to campus and Greta Thunberg’s youth activism, students ramped up pressure on the University administration (which initially pushed back with standard lines about fiduciary responsibility). Some savvy students even noticed — buried deep on UVM’s web site — that the Green Fund, a small piece of our endowment, yielded better growth than the rest of UVM’s investment portfolio. Even that reasoned argument fell flat until public action by students and faculty allies threatened UVM’s well-manicured image as the “Environmental University.” In our image, and in the image of Williams College, lies the power for change.
When more than 100 students arrived with signs and speakers at the UVM fall Board of Trustees public comment period (scheduled at 8:30 a.m. on Saturday, October 26, 2019), the dialogue began to change. At the winter meeting several months later, I, along with students, appealed to the board to divest and diversify (to me, these are tightly linked). Hundreds of students cheered under the watchful eyes of several armed UVM police and through rope barricades isolating the board. Still nothing changed. But TV cameras rolled.
When the same students planned to disrupt admitted students’ day visits a month later (we need to convince students to attend UVM since their tuition pays our salaries), decision makers noticed. I was Nordic skiing at dusk when my cell phone rang. It was the provost. She asked, Would I stop the student “activists” from protesting tomorrow? I said no. But I advised that she call and speak to them directly — hear their voices. The students had an audience and the log jam began to break. The board got a new chair. A committee was formed. By summer, the president celebrated “our” decision to divest because it demonstrated UVM’s true environmental mettle.
Our actions may have had a price. In December, UVM proposed to terminate the geology department — one of the big players in climate-change research on campus. Soon after, I was told by a dean that some in the administration had labeled me a “troublemaker.” A few weeks later, the emails and phone calls began. I’ve now heard from staff, faculty, a dean, and a large donor that some of UVM’s leadership team doesn’t believe climate change is real. So far, UVM has declined Freedom of Information Act requests from reporters to release relevant emails. Change does not come easily and without a cost.
What is clear to me now is that concerted student action, in the public square and supported by faculty (and alums!), is key to making change. Divestment means challenging established economic and management power structures; it’s not easy, and it carries risks. But it’s the right thing to do. In the words of the late John Lewis, “Never, ever be afraid to make some noise and get in good trouble, necessary trouble.” The climate crisis mandates we make some noise and get in some good trouble. Every one of us.
Paul Bierman ’85 is a Professor of Geology at the University of Vermont. He lives in Burlington, VT.
Ian Simm, Founder & Chief Executive at Impax Asset Management, writes about achieving a Corporate net-zero possibly through a more sophisticated approach required of all, big or small corporations of all countries. So here it is.
Corporate net zero: we need a more sophisticated approach
The private sector holds the key to decarbonising the economy over the next quarter century. As countries set “net zero” or equivalent targets backed by carefully designed roadmaps for sectors such as energy, transportation and food, there’s a widespread assumption that “national net zero” should mean “net zero for all”, including “corporate net zero” (CNZ) for today’s businesses. Although there are some benefits to unpacking national net-zero targets in this way, there are also several important drawbacks. A more sophisticated approach is urgently required.
Ahead of the COP26 conference in Glasgow later this year, governments are likely to set or raise national targets for decarbonising their economies. In much of the world, the private sector will mobilise to serve rapidly expanding markets, for example for electric vehicles or plant-based food. Experience suggests that we’re about to witness a huge amount of creative destruction as entirely new industries are born, nascent sectors flourish and demand for products and services we once considered permanent fades, threatening or even destroying what have been large companies – a fate similar to landline-based telephony or, potentially, to cash-based transactions.
As the opportunities and risks linked to climate change become mainstream for many companies and their stakeholders, corporate net-zero targets have several attractions. Faced with a simple message that they should develop, analyse and act on specific climate change opportunities and risks, management teams will not only identify ways to improve the company’s risk-adjusted returns but may also produce or facilitate breakthroughs for their customers or suppliers, for example by placing bulk orders for low-carbon products.
Similarly, multiple CNZ commitments across a sector may enable discussions around possible collective action, for example the establishment of clusters to generate and consume “green” hydrogen. Early action by companies can encourage governments to develop further their policies to mitigate climate change, while corporate pledges may unlock capital to catalyse new climate-friendly activities, for example in nature-based solutions.
The drawbacks of a blanket adoption of corporate net zero
And yet there are several crucial drawbacks to the blanket adoption of corporate net-zero targets.
First, and most obvious, is the definition and interpretation of net zero. Apart from the ambiguity around each entity’s pathway to net zero (i.e. “how much, by when?”), the role for offsets is contentious – for example, should a cement manufacturer be able to account for the carbon benefits of its investments in peatland restoration, or if we allow this, does that create a moral hazard (to pollute)? And how should low-carbon technologies be treated: for example, when a new wind farm is built, does it really make sense that the entity purchasing the electricity gets the carbon benefit while the investor (or wind farm owner) receives no such boost to their own carbon accounting?
Second is capital inefficiency. To ensure there’s sufficient “creative destruction” as we reset our economy, we need to avoid hampering the essential sunsetting of certain activities in favour of new ones. The law of diminishing returns predicts that, as companies implement efficiency measures and cost-competitive technologies to reduce their emissions, they will need to consume more and more capital to save the next tonne of carbon, for example, steel manufacturers seeking to switch to direct hydrogen reduction. At the same time, companies producing alternative products, for example construction materials based on wood, may offer much higher financial returns on an equivalent amount of capital with much lower risk. Faced with a choice, investors are likely to prefer the latter.
Third, skills. To pivot successfully to entirely new activities, today’s companies need to harness alternative expertise. For example, can today’s oil majors with their competence in seismology and the handling of liquids, realistically develop a competitive advantage in the development of power projects and in electricity trading to outcompete today’s power generators?
Fourth, value chain effects. Notwithstanding the challenges of measuring so-called “Scope 3” emissions, a company that pursues a net-zero position without concern for its customers or even its suppliers may unwittingly hold back climate change mitigation across the “system” (i.e., the wider economy). For example, if the renewable energy supply required to enable a manufacturer of insulation material to become net zero costs significantly more than the fossil fuel supply it used previously, the price of its product will rise, thereby reducing its potential to assist customers with their energy savings.
Fifth, the “someone else’s problem” effect. It’s too easy for today’s management team to commit a company to long-term targets that they personally won’t be around to deliver on.
And lastly, confusing signals. As decarbonisation progresses, management teams may be faced with a conflict between achieving financial objectives and delivering on the company’s net-zero pledge. This may not matter at the outset, but once the “early wins” in emissions reduction have been secured, difficult conversations about the trade-off between financial and environmental outcomes are, in my view, inevitable.
Climate change resilience first
So, what’s to be done? A sound starting point is to use “corporate net zero” as an agenda item for a deeper discussion on climate change between companies and their investors. But rather than starting that conversation by simply insisting on the adoption of net-zero targets, investors should seek to assess whether the company is already or aiming to become “climate change resilient” using the framework recommended by the Taskforce on Climate-Related Financial Disclosure (“TCFD”) which covers both emissions reductions and physical climate risks.
This should cover the four areas outlined by TCFD:
First, governance: what changes has the company considered and made to ensure that climate change issues are managed comprehensively over a long timeframe?
Second, strategy: how has the company’s business strategy evolved in response, what alternatives has management considered and what will be the impact on the company’s expected return on invested capital?
Third, risk and opportunity: has the company mapped out the key changes in these areas arising from climate change and implemented programmes to monitor them over a long timeframe?
And fourth, metrics, targets and reporting: is the company’s planned reporting in this area likely to provide decision-useful information to shareholders and other stakeholders?
These conversations should lead to a comprehensive, rational plan for each company to manage climate change issues over time, tailored to its individual circumstances. For some, the optimal result will be to adopt a (simple to communicate) corporate net-zero target described in a way that avoids the drawbacks discussed earlier. For others (and in particular, in hard-to-abate sectors), a more appropriate response would be (a) a business plan focused on the efficient use of capital in the context of a wider set of risks, (b) imaginative and proactive collaboration with peers and government to shape new markets, and (c) clear communication with all stakeholders.
We need to be careful that “corporate net zero” does not turn into “one-size-fits-all”. The failure to take a thoughtful and sophisticated approach to these issues is likely to result in management confusion, muddled or misleading external communication and perhaps most significantly, the misallocation of capital. Now is the time to get our proverbial ducks in a row!Report this
The current enthusiasm for “corporate net zero” is understandable, but there are significant drawbacks that are set to lead to confusion and unintended consequences. My take on why, in the face of climate change, companies should follow TCFD guidance and reporting, prioritising sound strategy and resilience.
UN Climate Change News informs that Countries in Asia & MENA are Ready to Step up Climate Action. Details are per its article.
Countries in Asia, Middle East and North Africa Are Ready to Step up Climate Action
Most countries in Asia, the Middle East and North Africa aim to increase ambition to tackle climate change through new targets to reduce greenhouse gas emissions and are eager to share knowledge about how to best achieve the climate goals of the Paris Agreement.
This was the key finding of a virtual meeting, co-organized by UN Climate Change and NDC-Partnership, to share good practices about how countries can update their climate action plans under the Paris Agreement (NDCs).
Earlier this year, UN Climate Change published the initial NDC Synthesis Report covering NDCs from 75 Parties to the UNFCCC who communicated a new or updated NDC before the end of last year.
The report shows that governments are far from reaching their climate goals and urgently need to accelerate their actions to achieve these goals.
The recent virtual meeting in Bangkok to address the situation was attended by over 125 participants from 32 countries in Asia, the Middle East and North Africa (MENA), in addition to twelve development partners and development finance institutions.
UN Climate Change Director James Grabert warned that: “While it is encouraging to hear growing commitments to net-zero emissions by 2050 around the world, such long-term goals must be translated into immediate actions and NDCs”.
UK Ambassador Ken O’Flaherty highlighted the achievements of the Maldives in setting targets for net-zero emissions. In addition, he highlighted exemplary government consultations to enhance climate ambitions in the NDC in Pakistan, announcements on moratoriums to prevent the building of new coal power stations in the Philippines, and the planned increase of renewable energy share to 80% by 2030 in Sri Lanka, despite the challenges brought by the COVID-19 pandemic. At the same time, he urged governments to submit more ambitious NDCs.
Romeo Bertolini, Head of the Bonn Office, Support Unit, NDC Partnership stated that: “The Partnership is currently working with a number of countries in preparing their NDC action plans. These plans will shape the scale and reach of climate action in the global south in the years to come”.
Participants in the meeting heard that new and updated NDCs indicate that more governments have integrated strategies to build resilience to the unavoidable impacts of climate change into their climate action plans. This is significant, as adaptation to climate change is a central goal of the Paris Agreement.
Overcoming obstacles to climate action
Delegates described common and unique technical, financial, legal, political and cultural barriers that the countries face in their NDC implementation process. These can be overcome by learning from one another’s experience, where there are similar socio-economic national circumstances.
For example, introducing carbon pricing in developing countries and in countries whose economy is dependent on fossil fuels, requires reflection on the pros and consequences of such a tool and provide means of implementation to countries that will be impacted by it. Similarly, peer-to-peer learning can be part of the exercise on mapping availability of climate finance and building capacity to access climate finance.
The need to act swiftly to deliver climate commitments requires inclusive stakeholder engagement. This means incentivizing the private sector, mainstreaming gender inclusiveness in NDC planning and implementation, and empowering marginalized groups in societies.
Finance is key to climate action
Collaborating with development partners and development finance institutions can support the implementation of enhanced climate action plans. Twelve development partners and development financial institutions from Asia and MENA elaborated their support programs for NDC implementation, as well as stakeholder engagement and coordination.
For example, the Global Green Growth Institute (GGGI) is supporting NDC implementation through the development of NDC Roadmaps and financial planning – both carbon and climate finance. Green Finance is still at the margins, but needs to be mainstreamed into development programs. Further examples of how development partners have supported capacity building of different countries include the Climate Investment Platform, Green Investment Facility for Lebanon, and Global Environment Facility (GEF)- and Green Climate Fund (GCF)-approved projects for different sectors for countries in the region.
Country representatives agreed that climate finance is still a key factor in all regions to implement climate plans and policies. Innovative financing such as credit enhancement measures can be catalytic in removing barriers and stimulating investments. These funds must be channeled to build carbon-neutral and resilient societies, especially in developing countries, and planning processes such as the Regional Climate Weeks can provide the necessary momentum.
A particular world elite seems to take pride in their commitment to sustainability and the well-being of their peoples. Simultaneously, their respective government/businesses invest in those industries leading to the present climate change. It is undeniable that this is changing, with impacts such as extreme weather fluctuations and increased intensity of natural disasters. The hydrocarbon industries are directly involved, if not now, causing climate change. How can concerned citizens hold these elites and other civil societies to their sustainability standards? Divesting is the act of removing any financing of the fossil fuel industry, increasingly found to be an unethical industrial human activity. The fossil fuel divestment movement started gaining traction in 2010. Over 1,200 institutions worldwide have joined forces and proceeded into divesting. This movement could not have started if no palliative industry can procure all that necessary energy. And despite that, questions such as ‘Are Renewables a True Threat to Oil’s Long-Standing Reign?’ are still being posed.
Our question would be whether all this questioning affects these contemporary world trends of renewables combined with divestment from fossil fuels.
Are Renewables a True Threat to Oil’s Long-Standing Reign?
The pandemic has possibly provided the catalyst needed to accelerate a global shift toward renewable sources of energy by bringing this topic to the top of the agenda of discussions held by political leaders and lawmakers as the world witnessed how the atmosphere quickly reacted to a few months of lower carbon emissions.
As a result, the stock price of multiple companies in the clean energy space has taken a quantum leap, while oil prices have also managed to recover most – if not all – of their lost territory during the first quarter of this year.
How is it that the crude oil price keeps booming alongside the valuation of these green energy firms? Will fossil fuels continue to be a part of the future or is this perhaps the last bull run for oil as the world keeps heading to a greener future?
The following article aims to take a closer look at how threatening can these alternative sources of energy can really be for oil’s long-standing reign based on the rate at which these technologies are being adopted in the United States.
How does the United States generate the power it needs?
A study from Washington-based think tank Pew Research Center published before the pandemic struck indicated that petroleum continues to be the leading source of energy in the United States according to data from the country’s Energy Information Administration (EIA).
In the past 18 years, the market share of oil has only retreated 2.3%, sitting at 36.4% by the end of 2018.
Meanwhile, natural gas seems to be advancing as an important source, with its share jumping 6.5% during the same period while currently accounting for 30.7% of the country’s energy consumption.
So, what about biofuels and other alternative sources? According to the EIA, these sources of energy, including nuclear and hydroelectric, covered only 20% of the country’s needs, with coal being the source that has lost the biggest share dropping from 22.9% to 13.1% by the end of 2018.
That said, the rate at which solar power has grown is quite remarkable, jumping nearly five-fold in less than 5 years.
Realistically, it seems that although renewable sources are gaining more and more ground as time passes, it will take decades before fossil fuels, including oil, can be fully replaced by solar, wind, or nuclear energy.
This view is reinforced by a recent report from the Shell Oil Corporation. Although the company has already acknowledged that the world is heading to a future in which fossil fuels will become a smaller contributor to its energy needs, this future is still fairly distant as the required infrastructure that needs to be in place to fully power homes, industries, and other facilities is still in the earliest stages of their development.
In regards to the possibility of a fossil-fuel-free world in short notice the company stated the following: “despite more than a century of progress, electricity makes up only 20% of the final energy that society uses today and the rate of increase has been the same since the earliest days, about two percentage points of final energy share per decade”.
Shell added: “To achieve the goals of the Paris Agreement that pace of growth would need to rapidly increase”.
Therefore, if renewable sources of energy keep advancing at the current pace, chances are that crude oil prices will not be severely affected by the threat of a full-blown substitution of fossil fuels – or at least not in the next five to ten years.
Has the pandemic changed something about this outlook?
The pandemic has affected the public’s view about what has been for a while a seemingly inevitable shift towards environmentally-friendly sources of energy by bringing more attention to a topic that was not necessarily a top priority for lawmakers and political leaders prior to the health emergency.
Now, with clean energy companies becoming interesting targets for investors around the world as possibly the best next-generation bet, chances are that capital will start flowing to these ventures to help them to further accelerate their efforts.
If that continues to happen, these larger investments made in the technology and infrastructure required to accelerate the adoption of greener sources should perhaps put the world on the right track to achieve its net-zero carbon emission goal even before 2050 – the date set by the Paris Agreement as the milestone for a green world.
Riley Cooper is a UK-born writer and who lives in USA. Her work explores issues related to finance, business psychology, environment, and language.
The BBC‘s Could plastic roads make for a smoother ride? By Chermaine Lee is an eye-opener in one right way of ridding the World of those nasty tons of polymer derivatives that are encombering the World. When energy is transitioning from fossil fuels to renewables, it is more than reasonable to make fair use of that material. It would be even more useful if all those hydrocarbon related stranded assets have some usage in future infrastructural development. But that is another story.
On a road into New Delhi, countless cars a day speed over tonnes of plastic bags, bottle tops and discarded polystyrene cups. In a single kilometre, a driver covers one tonne of plastic waste. But far from being an unpleasant journey through a sea of litter, this road is smooth and well-maintained – in fact the plastic that each driver passes over isn’t visible to the naked eye. It is simply a part of the road.
This road, stretching from New Delhi to nearby Meerut, was laid using a system developed by Rajagopalan Vasudevan, a professor of chemistry at the Thiagarajar College of Engineering in India, which replaces 10% of a road’s bitumen with repurposed plastic waste.
India has been leading the world in experimenting with plastic-tar roads since the early 2000s. But a growing number of countries are beginning to follow suit. From Ghana to the Netherlands, building plastic into roads and pathways is helping to save carbon emissions, keep plastic from the oceans and landfill, and improve the life-expectancy of the average road.
It has the benefit of being a very simple process, requiring little high-tech machinery. First, the shredded plastic waste is scattered onto an aggregate of crushed stones and sand before being heated to about 170C – hot enough to melt the waste. The melted plastics then coat the aggregate in a thin layer. Then heated bitumen is added on top, which helps to solidify the aggregate, and the mixture is complete.
Many different types of plastics can be added to the mix: carrier bags, disposable cups, hard-to-recycle multi-layer films and polyethylene and polypropylene foams have all found their way into India’s roads, and they don’t have to be sorted or cleaned before shredding.
As well as ensuring these plastics don’t go to landfill, incinerator or the ocean, there is some evidence that the plastic also helps the road function better. Adding plastic to roads appears to slow their deterioration and minimise potholes. The plastic content improves the surface’s flexibility, and after 10 years Vasudevan’s earliest plastic roads showed no signs of potholes. Though as many of these roads are still relatively young, their long-term durability remains to be tested.
The plastic that goes into roads would otherwise go to landfill or the incinerator (Credit: MacRebur)
In the Netherlands, PlasticRoad built the world’s first recycled-plastic cycle path in 2018, and recorded its millionth crossing in late May 2020. The company shredded, sorted and cleaned plastic waste collected locally, before extracting polypropylene from the mix – the kind of plastic typically found in festival mugs, cosmetics packaging, bottle caps and plastic straws.
Unlike the plastic-tar roads laid in India, the UK and elsewhere, PlasticRoad doesn’t use any bitumen at all. “[PlasticRoad] consists almost entirely of recycled plastic, with only a very thin layer of mineral aggregate on the top deck,” says Anna Koudstaal, the company’s co-founder.
Each square metre of the plastic cycle path incorporates more than 25kg of recycled plastic waste, which cuts carbon emission by up to 52% compared to manufacturing a conventional tile-paved bike path, Koudstaal says.
Gurmel Ghataora, senior lecturer at the department of civil engineering at the University of Birmingham, agrees that using plastics in the lower surfaces of the road minimises the risk of generating additional microplastics. “It is inevitable that such particles may be generated [at surface level] due to traffic wear,” he says.
With India home to one of the world’s largest road networks, growing at a rate of nearly 10,000km of roads a year, the potential to put plastic waste to use is considerable. Though this technology is relatively new for India, and indeed the rest of the world, Vasudevan is confident that plastic roads will continue to gain popularity, not only for environmental reasons, but for their potential to make longer-lasting, more resilient roads.
The United Nations (UN) celebrated on May 10th, 2021, the first edition of the International Day of the Argan Tree, an endemic tree in Morocco.
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