Posts Tagged ‘fossil fuels’
Private Equity Exacerbates the Climate Crisis
The following is a Press Release from the Private Equity Stakeholder Project. If you are unfamiliar with Private Equity and how it works I suggest you read Cory Doctorow on the subject.
Pension Forum Investigates the Role Private Equity Plays in Exacerbating the Climate Crisis
The University of Washington’s Harry Bridges Center for Labor Studies hosted a forum Wednesday that explored the relationship between pension funds and other institutional investors, the climate crisis, and the impacts on communities and the environment. Trustees and representatives of dozens of investors with more than $10 trillion in assets combined participated in the forum.
Moderated by Michael McCann, the University of Washington Gordon Hirabayashi Professor for the Advancement of Citizenship, panelists spoke of the growing urgency to interrogate the role private equity plays in exacerbating the climate crisis, often using pension fund capital.
Treasurer of the British Columbia Government and Service Employees’ Union Paul Finch said at the forum, “What doesn’t get measured doesn’t get managed. And we need to better understand what the risk is and we need better measurements of investment risk. We need less blind trust of investment agents. We need to appoint more critical thinkers to these pension boards who are equipped and educated with the tools to be able to understand the risks that exist.”
Panelist Sleydo’ (Molly Wickham) – Gidimt’en Checkpoint Spokesperson on Wet’suwet’en Territory, British Columbia, said, “Our resistance creates huge instability and risk to investors. We know that [KKR’s] Coastal Gas Link project has been delayed for at least one year and many seasons due to direct action and the requirement of added infrastructure throughout the pipeline route.
“We will never stand down and will continue to resist this project and others like it that do not gain consent from our people. It is a bad investment that will never see the returns that pensioners deserve.”
Participants discussed how labor unions, pension fund trustees, and Indigenous rights and grassroots organizations are working to encourage climate-safe investment practices and explore avenues for further collaboration.
Finch said, “What we found is that if people don’t have the tools to properly measure what’s happening in the markets, then they’re not able to make informed decisions in the best interest of their members or their beneficiaries. Across the board, the risks associated with these [fossil fuel] investments are not being properly analyzed or understood. Since divesting [from fossil fuels] our union has approximately earned, net of fees, 12.5 percent on the market, on average, every year.”
Even as the US has rejoined the Paris Agreement, and the Biden Administration is advocating for greater investment in clean energy infrastructure, and as publicly traded companies begin to commit to net-zero emissions, private equity firms – such as the Blackstone Group, KKR & Co., and the Carlyle Group – continue to acquire fossil fuel assets, contributing to the climate disaster we are experiencing.
Earlier this week, the International Energy Agency (IEA) released a groundbreaking report that stated that in order to achieve a net zero energy system by 2050, from today, there should be “no investment in new fossil fuel supply projects, and no further final investment decisions for new unabated coal plants.”
Private Equity Stakeholder Project Climate Director Alyssa Giachino told forum attendees, “There is a universe of economic actors outside of the public markets – like private equity — that are finding buying opportunities in assets shed by publicly traded companies. Absent pressure and real accountability, private funds managers will continue to invest institutional investors’ capital in oil and gas despite the risks. The public needs real information to hold private equity accountable to the impacts they have already had on the environment and marginalized communities.”
Mitch Vogel, Trustee of the Illinois State Universities Retirement System and Eileen Moran, member of the Environmental Justice Working Group of the Professional Staff Congress – CUNY also participated on the panel.
You can watch the recording of the forum here.
The “Forces of No” are Market Forces
Christy Clark is worried about the opposition her increasingly inappropriate policy direction has created
“There are people who just say no to everything, and heaven knows there are plenty of those in British Columbia,” said Clark.
Well, she has been pretty good at saying no herself: no to doing something about child poverty, for instance, or funding transit expansion. The real big issue she faces is the one she created for herself by going all in on LNG. The opposition to that is mainly due to local environmental impacts, but what is most likely to stop these projects is the way that demand for LNG has dropped while supplies are flooding on to the market. The prospects for any of the BC proposals being financially viable are somewhere between slim and none. Don’t take my word for it: read this report from The Brattle Group.
increasing competition has significant ramifications for the many LNG export projects now in development across North America and for buyers of LNG that have signed long-term contracts for export capacity from new North American LNG export projects. Many of the proposed projects that are not yet under construction are already facing an uncertain future due to the collapse of global oil and LNG prices. Additionally, the start-up of several new LNG projects in the next few years is likely to result in an over-supplied LNG market. LNG export developers and buyers of LNG that have signed long-term contracts for LNG export capacity are hopeful that the worldwide LNG supply glut is temporary and that market conditions in the post-2020 time frame will improve.
The Brattle Group are not in business just to say No to projects in BC.
And Scotiabank agrees with them, too!
And it is not just that the costs of wind and solar generation are falling, it is also that the problems of storing that power are getting solved too.
“Solar storage will become more competitive as new battery technology drives prices down, and wind storage more attractive as technical advances in areas such as composite materials enables the power generated by wind turbines to increase.”
That report is mainly about how to evaluate batteries, but there are other promising energy storage solutions too – like pumping water uphill, or pumping air into gas bags under a lake. There’s a good summary at The Guardian examining the options, from a UK perspective, of course.
And if the market forces are not convincing enough, there is also the impact of that agreement we signed in Paris to try to reduce global warming to no more than 1.5ºC. The physics of that mean that there cannot be any more new fossil fuel based power generation added by 2018. It is not just the LNG plants and the pipelines that cannot be built if we are to hit this target.
Well-established science that says global CO2 emissions need to peak and decline before 2020. Wait until after 2020 and the costs of reducing emissions rise rapidly, as does the risk of exceeding 2°C. The 2018 deadline is consistent with this. It just happens to be a more meaningful way of looking at where we stand, and the consequences of the decisions being made today to build a school, a data center, or 10,000 diesel-powered farm tractors.
UPDATE And it would seem that the same Brattle report is inspiring Merran Smith to write about the possible impact of renewables too.
Vast majority of carbon reserves must stay in the ground to meet 1.5C target.
The current news about the PM and the Mayor of Montreal having meetings about pipelines – and the not public hearings into Kinder Morgan’s desire to exapnd the TransMountain pipeline – both miss the most important point. These things must not be built. They are both designed to increase the use of the tar sands, and thus are not consistent with the undertakings Canada made in Paris. The following is a News Release put out by GreenPeace which I doubt will be printed by much of the mainstream media, so I am putting it here.
NEWS RELEASE
Seventy-four North American groups call on the prime minister and premiers to take swift action to meet Canada’s new climate goal.
Vast majority of carbon reserves must stay in the ground to meet 1.5C target.
January 27, 2016
On the eve of a meeting of Canada’s environment ministers in Ottawa to talk about the national climate strategy, 74 organizations – representing millions of people in Canada and the U.S. – sent an open letter to Prime Minister Justin Trudeau and Canada’s premiers outlining the steps Canada needs to take to fulfill its international commitment to limit global warming to 1.5 C, as agreed to by 195 countries at the Paris climate summit.
The letter explicitly states that new tar sands pipelines like Energy East and Kinder Morgan cannot be built if Canada is to meet its commitment. Instead, the prime minister and the premiers must work to decarbonize Canada’s economy and speed the rapid uptake of renewables, efficiency and sustainable transportation options.
“Canadian decision makers have the opportunity to be real climate leaders in the clean energy era – but they must accept the science to do it. There is simply no room for major new pipelines in a safe climate future,” says Steven Guilbeault of Équiterre. “The science is demanding we keep the carbon in the ground and start the transition. That is a reality that our premiers and the prime minister need to embrace.”
“We’re reminding the Canadian and provincial governments of the tremendous work that needs to be done for Canada to meet its global climate commitment,” said Mike Hudema, Climate and Energy campaigner with Greenpeace Canada. “One and a half degrees Celsius is a level vital for the survival of millions of people and the safety of all life on the planet. We don’t have much time to make the transition to 100% renewable energy and we can’t afford to build new pipelines that send us in the opposite direction.”
As the federal and provincial governments collaborate on the design of a new national climate plan in the 90 days following the Paris Agreement, the repositioning of Canada as a global climate leader has never been more important. An ambitious, just, science-based plan aligned with limiting global warming to 1.5 degrees will require all provinces and the country to decarbonize their economies and keep the vast majority of remaining carbon reserves in the ground.
“To have a decent chance at limiting global warming to even 2 degrees, 80% of fossil fuel reserves globally must stay in the ground. The 1.5 degree limit requires us to go even further faster,” says Hannah McKinnon of Oil Change International. “This is especially true in a country like Canada that is home to the third largest oil reserves in the world. We cannot lock ourselves into decades more of unwanted pollution by expanding pipelines and production in places like the Alberta tar sands. Instead, we need to move the other way.”
“What we need now is leadership on a pathway towards energy and economic diversification, not more short-sighted attempts to force pipelines across our country – Canadians didn’t stand for it before and we won’t stand for it now,” says Graham Saul, Executive Director of Ecology Ottawa. “Canada has exceptional opportunities in the clean energy economy. We could completely redefine ourselves as a renewable energy superpower, create tens of thousands of jobs from coast to coast to coast, and show the world what it means to responsibly transition to zero-carbon within a few short decades. This is what will build a strong economy, not saddling ourselves to decades more of last century’s dirty energy.”
The letter concludes with the signatories stating their commitment to working with federal, provincial and municipal governments, along with First Nations, Metis and Inuit leaders and the growing climate movement to meet these challenges and move beyond oil.
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The full letter and signatories can be seen here www.one-point-five.ca
Divestment
The Guardian is currently running a campaign to try to get the Bill Gates and Wellcome Foundations to divest from fossil fuels. This is running concurrently with other campaigns to try to get institutions to divest including Harvard University. Yesterday the Guardian’s campaign included a tweetstorm, and I got an email from Alan Rusbridger suggesting I write to one of the directors of the Wellcome Trust to explain why I thought divestment is a Good Idea. In fact this idea came from the people who had signed up to the Guardian’s petition who thought that individual letters might be more persuasive than just signatures.
The Guardian is, of course, owned by a Trust, which is why it can be independent. And they have already divested. As have I. Here is some of what I wrote to the Chair of the Wellcome Trust.
As a former non-executive member of the board of BP, I sure you recall when that organisation called itself “Beyond Petroleum”. I wonder if you share the great disappointment many of us felt when that approach was abandoned. In retirement, I have an investment portfolio, managed by professional brokers and owned by one of the big Canadian banks. I have been talking to them about the importance of divestment from fossil fuels. I was particularly concerned that my fund manager seemed completely unaware of the investment opportunities in renewable technologies such as wind and solar power generation. I have also been very much aware that many of the companies my funds were invested in were supporting climate change denial and through the activities of people like the Koch brothers, who are heavily invested in the Alberta tar sands, actively working to frustrate changes to cleaner technologies. I have divested my funds from pipelines and fossil fuel power generation companies and instructed my brokers to buy stock in cleaner energy companies. I think that this has had the useful effect of changing my broker’s range of reading materials, and not focussing so closely on short term market fluctuations.
In Vancouver we are currently fighting against expansions of port facilities to allow for more export of diluted bitumen. Our provincial government is encouraging the expansion of LNG exports by reducing taxes and royalties in an attempt to make financially dubious investments look more attractive. A recent fuel oil spill in the harbour here has concentrated attention on how ill equipped we would be to deal with a dilbit spill on our coast, especially in view on ongoing cut backs by the Canadian government in our Coast Guard. I am sure your experience of the impact of the Deepwater Horizon disaster must make you concerned too about the threat that increased oil exploration and exploitation poses to all life on earth.
I am sure by now you will have read the following paragraph many times. Please take the time to read it again.
“Your organisations have made a huge contribution to human progress and equality by supporting scientific research and development projects. Yet your investments in fossil fuels are putting this progress at great risk, by undermining your long term ambitions. Climate change poses a real threat to all of us, and it is morally and financially misguided to invest in companies dedicated to finding and burning more oil, gas and coal. Many philanthropic organisations are divesting their endowments from fossil fuels. We ask you to do the same: to commit now to divesting from the top 200 fossil fuel companies within five years and to immediately freeze any new investments in those companies.”
Thank you for reading my note. I hope the Wellcome Trust will divest from fossil fuels, as so many other academic organisations are doing.
I do not expect that he will change his mind just because he reads my letter. In fact I already have had a response which you can read here. I think it probably reflects the fact that this is an organisation based in the UK, where there is not quite the same direct influence of corporate funding of politics as there is now in the United States thanks to Citizens United. I also do not believe that Shell, BP and Koch Industries (and so on) are run by “fair minded people”. Quite the contrary. I think that they are using the funds invested in their companies to defeat any serious efforts to change the current trajectory of increasing fossil fuel consumption. The possibility of there being some significant shift at the upcoming Paris conference must be alarming them as they hold huge amounts of what will become stranded assets – essentially valueless – if there is a determined move to limit fossil fuel extraction.
I hope that as a reader of this blog you too will consider what you can do to help towards reducing the use of fossil fuels – transit expansion and better land use being two of the most effective. If you are an alumnus, and you get the steady stream of begging emails that I do from your alma mata, perhaps you too can add your voice, or sign up to the Guardian’s campaign. Individually we probably will have an infinitesimal impact: but collectively it will be a mighty roar, that will be hard to ignore. I hope so, for all our sakes.
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