Paris Climate Agreement Is A Start Toward The Renewable Energy Future

The news has been occupied by many stories regarding the changes that are being carried out by the current Trump Administration under Executive Order by the President himself.  In the beginning, clearly the executive orders have been aimed at reversing any environmental regulation that his predecessor put into motion.  One might think that these actions are fueled by partisan momentum with a Republican congress in place.  If this were true, then our status in the Paris Climate Agreement would have already been reversed.  Recently, large corporations have signed onto the idea of staying committed to that agreement.



Below is a letter written to President Trump which represents more than just sticking with an agreement.  The letter also represents a shift to investments in a renewable energy based future -- a sustainable future.  Additionally, international corporations and private entities also encourage the United States to stay in the Paris Climate Agreement for obvious reasons which will be briefly discussed below.  Furthermore, in the paragraphs below, the argument will be introduced that staying in the Paris Climate Agreement is in line with future investments into a renewable (sustainable) energy future -- not just as a nation -- but as a world.

Big Oil Says "Stay In Paris?"

With congress passing the legislature for coal companies to resume blowing up (with explosives) the tops off mountains for search of coal without the fear of contamination of the water ways (rivers, streams, lakes, etc.), we find ourselves under an environmental assault from congress.  You might be wondering the following right about now:


How do normal citizens let these decisions occur?



On a national level, an election just occurred in which a significant amount of Americans decided at the ballot box that Mr. Donald Trump (a candidate then) would be a good President.  As a President, he has tried to undo any progress forward that his predecessor (President Obama) had made over the earlier 8 years.  This is truly disappointing, but not expected given the rhetoric that he displayed during his campaign.



Congress has followed his lead by passing a couple of important pieces of legislation early on to undue environmental progress accomplished under the Obama administration.  The first was to repeal the Clean Power Plan while the second was to reverse the Clean Water Act.  Both of these pieces of legislation will have real world consequences (unfortunate consequences).



Additionally, I have written recently about a new piece of legislation that Congress has passed called the "HONEST ACT".  At first sight, this appears to provide more transparency.  But if you read my blog post on the subject, you will quickly realize that the opposite is true of the act.  In fact, the HONEST Act will limit the amount of information (evidence) which is under consideration for future policy decisions.



After each passage of legislation, scientists started to worry about the reverse of climate change policy under this administration.  I shared in a recent post a letter from a couple of hundred scientists which was sent to the president to persuade him to think critically about climate change decisions.  Additionally, in a follow up post, the scientists share there thoughts about the importance of climate change policy at the university level in the form of quotes.



Based on the news coverage of the developments in the Trump Administration over the last couple of months, the validity of science (especially climate science) is not held high.  In fact, after receiving these letters along with others, threats of removing our status (as a nation) from the Paris Climate Agreement is still being entertained.  Even if President Trump wants to ignore the voices of science (e.g., letters, science march, etc.), it is surprising to see him disregard letters from other sectors with opposing interests.  What letters do I speak of?  For one, I was surprised that 'big oil' companies still want the United States to stick to the Paris Climate Accord.  On April 26th (of 2017), a few HUGE companies sent President Trump a letter regarding the Paris Climate Change Agreement.  Below is the letter:

Dear Mr. President,

We write to express our support for continued participation by the United States in the Paris climate change agreement.

Climate change presents U.S. companies with both business risks and business opportunities.  U.S. business interests are best served by a stable and practical framework facilitating an effective and balanced global response. We believe the Paris Agreement provides such a framework. 

Companies based or operating in the United States benefit from U.S. participation in the agreement in many ways:

• Strengthening competitiveness – By requiring action by all parties, developed and developing countries alike, the agreement ensures a more balanced global effort, reducing the risk of competitive imbalances for U.S. companies.

• Supporting sound investment – By setting clearer long-term objectives, and by improving transparency, the agreement provides greater clarity on policy direction, enabling better long-term planning and investment.

• Creating jobs, markets and growth – By committing all countries to action, the agreement expands markets for innovative clean technologies, generating jobs and economic growth. U.S. companies are well positioned to lead, and lack of U.S. participation could put their access to these growing markets at risk.

• Minimizing costs – By encouraging market-based implementation, the agreement helps companies innovate to achieve environmental objectives at the lowest possible cost.

• Reducing business risks – By strengthening global action over time, the agreement will reduce future climate damages, including physical harm to business facilities and operations, declining agricultural productivity and water supplies, and disruption of global supply chains.

As businesses concerned with the well-being of our customers, our investors, our communities, and our suppliers, we are strengthening our climate resilience, and we are investing in renewables, efficiency, nuclear, biofuels, carbon capture, sequestration, and other innovative technologies that can help achieve a clean energy transition. For this transition to succeed, however, governments must lead as well. We urge that the United States remain a party to the Paris Agreement, work constructively with other nations to implement the agreement, and work to strengthen international support for a broad range of innovative technologies.

We believe that as other countries invest in advanced technologies and move forward with the Paris Agreement, the United States can best exercise global leadership and advance U.S. interests by remaining a full partner in this vital global effort.

We appreciate the opportunity to share our views and would welcome the opportunity to provide further input as the Administration continues to shape its climate policies.

Sincerely,

Apple

BHP Billiton

BP

DuPont

General Mills

Google

Intel

Microsoft

National Grid

Novartis Corporation

PG&E

Rio Tinto

Schneider Electric

Shell

Unilever

Walmart

The companies listed above are big time players in the United States economy.  Their monetary investment/profits in the United States annually combined alone is staggering.  Not to mention the combined amount of employees that are employed throughout the world.  This indicates a shift in the type of employee that is going to be hired in the future and present through a clean energy transition.  No where in the letter above does there indicate that support exists to leave the Paris Climate Agreement to invest in coal.  Wonder why?



Upon inspecting a few of the names, you should notice that a few of them are big oil corporations who are heavily invested into fossil fuels.  You should ask yourself the following question:



What motivation do these oil corporations have in signing an agreement which would eventually put greater restrictions on their fossil fuel business interests?



The question is valid considering the letter above. To help explain (in an easy manner) the Paris Climate Agreement, I inserted a short (less than 2 minutes) video by the Council of the European Government shown below:

As you can see after viewing the explanation surrounding the agreement, the terms are quite broad.  Furthermore, the terms are dependent (subjective) to each government.  The ability to gather 195 nations into one building and agree on making changes (sustainable decisions) toward a more healthier environment is of paramount importance.  The summary of the Paris Climate Agreement is as follows:


1) Each nation defines own objectives to work towards.


2) Every 5 years, a review of the goals and actions to meet goals will occur.


3) Global investment will help even (level) out the playing field for developing nations in need of support.


4) The agreement is a massive move toward a broad economic movement toward a more sustainable environment.



For a more in depth explanation of the emergence and importance of the Paris Climate Agreement, see the video below.  The video is a 15 minute presentation of a TED talk by Christiana Figueres -- whose introduction from her "Wikipedia" page is shown below:

 Karen Christiana Figueres Olsen (born 7 August 1956) is a Costa Rican diplomat with 35 years of experience in high level national and international policy and multilateral negotiations. She was appointed Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC) in July 2010,[1] six months after the failed COP15 in Copenhagen.[2] During the next six years she dedicated herself[3] to rebuilding the global climate change negotiating process based on fairness, transparency and collaboration, leading to the 2015 Paris Agreement, widely recognized as a historical achievement.[4] Over the years she has worked in the fields of climate change, sustainable development, energy, land use, technical and financial cooperation.

Without further ado, here is her TED talk below:

One cannot help wonder why any nation would not want to be part of such a global and exciting agreement.  Getting 195 nations in one room is a task that is difficult in of itself.  Now, getting each of them to work toward change by implementing sustainable measures is huge (unheard of).



In her talk shown above, she mentions that other nations are willing to invest in each others development or transition toward renewable energy sources.  Meaning that measures which promote more sustainable measures will be received well and invested in.  Further, economic opportunity exists from big players.  The players I mention are not just those who sent the president a letter above, but global players -- from other nations.  Below is a letter from those investors - 409 of them with $20 trillion dollars in assets.  WOW!

Global Investor Statement On Climate Change

As if the businesses (in the U.S.) above do not carry enough weight to encourage President Trump to stay in the Paris Climate Change Agreement, investment companies from around the world released a statement on climate change.  The statement is titled: Global Investor Statement on Climate Change is shown below:

GLOBAL INVESTOR STATEMENT ON CLIMATE CHANGE

Developed by the following groups Institutional Investors Group on Climate Change

This statement is signed by 409 investors representing more than US $24 trillion in assets.

We, the institutional investors that are signatories to this Statement, are acutely aware of the risks climate change presents to our investments. In addition, we recognize that significant capital will be needed to finance the transition to a low carbon economy and to enable society to adapt to the physical impacts of climate change.

We are particularly concerned that gaps, weaknesses and delays in climate change and clean energy policies will increase the risks to our investments as a result of the physical impacts of climate change, and will increase the likelihood that more radical policy measures will be required to reduce greenhouse gas emissions. In turn, this could jeopardize the investments and retirement savings of millions of citizens.

There is a significant gap between the amount of capital that will be required to finance the transition to a low carbon and climate resilient economy and the amount currently being invested. For example, while current investments in clean energy alone are approximately $250 billion per year, the International Energy Agency has estimated that limiting the increase in global temperature to two degrees Celsius above preindustrial levels requires average additional investments in clean energy of at least $1 trillion per year between now and 2050.

This Statement sets out the contribution that we as investors can make to increasing low carbon and climate resilient investments. It offers practical proposals on how our contribution may be accelerated and increased through appropriate government action.

Stronger political leadership and more ambitious policies are needed in order for us to scale up our investments. We believe that well designed and implemented policies would encourage us to invest significantly more in areas such as renewable energy, energy efficiency, sustainable land use and climate resilient development, thereby benefitting our clients and beneficiaries, and society as a whole.

HOW WE CAN CONTRIBUTE

As institutional investors and consistent with our fiduciary duty to our beneficiaries, we will:

■ Work with policy makers to support and inform their efforts to develop and implement policy measures that encourage capital deployment at scale to finance the transition to a low carbon economy and encourage investment in climate change adaptation.

■ Identify and evaluate low carbon investment opportunities that meet our investment criteria and consider investment vehicles that invest in low carbon assets subject to our risk and return objectives.

■ Develop our capacity to assess the risks and opportunities presented by climate change and climate policy to our investment portfolios, and integrate, where appropriate, this information into our investment decisions.

■ Work with the companies in which we invest to ensure that they are minimizing and disclosing the risks and maximizing the opportunities presented by climate change and climate policy.

■ Continue to report on the actions we have taken and the progress we have made in addressing climate risk and investing in areas such as renewable energy, energy efficiency and climate change adaptation.

SCALING UP INVESTMENT: THE NEED FOR POLICY ACTION

We call on governments to develop an ambitious global agreement on climate change by the end of 2015. This would give investors the confidence to support and accelerate the investments in low carbon technologies, in energy efficiency and in climate change adaptation.

Ultimately, in order to deliver real changes in investment flows, international policy commitments need to be implemented into national laws and regulations. These policies must provide appropriate incentives to invest, be of adequate duration to improve certainty to investors in long-term infrastructure investments and avoid retroactive impact on existing investments. We, therefore, call on governments to:

■ Provide stable, reliable and economically meaningful carbon pricing that helps redirect investment commensurate with the scale of the climate change challenge.

■ Strengthen regulatory support for energy efficiency and renewable energy, where this is needed to facilitate deployment.

■ Support innovation in and deployment of low carbon technologies, including financing clean energy research and development.

■ Develop plans to phase out subsidies for fossil fuels.

■ Ensure that national adaptation strategies are structured to deliver investment.

■ Consider the effect of unintended constraints from financial regulations on investments in low carbon technologies and in climate resilience. 

The signatories of the letter above can be found at the end of the attachment hyperlinked - here.  The investor statement on global climate change came out of an organization -- investors on climate change.  The names mentioned on the letter above represent a wide range of government agencies to private sector agencies spanning the globe (the world).  Switching to a clean energy based future is occurring now, not in 50 years.  Therefore, the investment and policy making decisions need to reflect this change in the present workings of various governments.  Change will take a long time -- seeing the size of the problem.  Therefore, jumping on the wagon sooner rather than later will ensure that the transition runs smoothly.



Otherwise, the adverse environmental effects of not recognizing that climate change is real and there is a need to transition toward clean energy -- renewable energy, sustainable energy -- will drive up the cost dramatically in the future.  Possibly to the point where the cost to change will exceed the money available and the time allotted.  The mindset of relying on 'coal' is going out the door.



As an example, a recent document titled "CAN COAL MAKE A COMEBACK?"  illustrates with statistics the current state of 'coal' in the current energy climate.  Furthermore, there are explanations (reasonable ones) which highlight the decline of coal in the future decades to come.  Here is an executive summary on the current state of coal in the energy consideration in the future:

Six years ago, the US coal industry was thriving, with demand recovering from the Great Recession, and global coal prices at record highs along with the stock prices of US coal companies. By the end of 2015, however, the industry had collapsed, with three of the four largest US miners filing for bankruptcy along with many other smaller companies. While coal mining employment has been on the decline for decades – from a peak of more than 800,000 in the 1920s to 130,000 in 2011 – the pace of job loss over the past six years has been particularly dramatic. After campaigning on a promise to end what he called his predecessor’s “War on Coal,” President Donald Trump signed an Executive Order in March 2017 ordering agencies to review or rescind a raft of Obama-era environmental regulations, telling coal miners they would be “going back to work.”

This paper offers an empirical diagnosis of what caused the coal collapse, and then examines the prospects for a recovery of US coal production and employment by modeling the impact of President Trump’s executive order and assessing the global coal market outlook. In short, the paper finds:

• US electricity demand contracted in the wake of the Great Recession, and has yet to recover due to energy efficiency improvements in buildings, lighting and appliances. A surge in US natural gas production due to the shale revolution has driven down prices and made coal increasingly uncompetitive in US electricity markets. Coal has also faced growing competition from renewable energy, with solar costs falling 85 percent between 2008 and 2016 and wind costs falling 36 percent.

• Increased competition from cheap natural gas is responsible for 49 percent of the decline in domestic US coal consumption. Lower-than-expected demand is responsible for 26 percent, and the growth in renewable energy is responsible for 18 percent. Environmental regulations have played a role in the switch from coal to natural gas and renewables in US electricity supply by accelerating coal plant retirements, but were a significantly smaller factor than recent natural gas and renewable energy cost reductions.

• Changes in the global coal market have played a far greater role in the collapse of the US coal industry than is generally understood. A slow-down in Chinese coal demand, especially for metallurgical coal, depressed coal prices around the world and reduced the market for US exports. More than half of the decline in US coal company revenue between 2011 and 2015 was due to international factors.

• Implementing all the actions in President Trump’s executive order to roll back Obama-era environmental regulations could stem the recent decline in US coal consumption, but only if natural gas prices increase going forward. If natural gas prices remain at or near current levels or renewable costs fall more quickly than expected, US coal consumption will continue its decline despite Trump’s aggressive rollback of Obama-era regulations.

•While global coal markets have recovered slightly over the past few months due to supply restrictions in China and flooding in Australia, we expect this rally to be short-lived. Slower economic growth and structural adjustment in China will continue to put downward pressure on global coal prices and limit the market opportunities for US exports. Indian coal demand will likely grow in the years ahead, but not enough to make up for the slow-down in China. The same is true for other emerging economies, many of whom are negatively impacted by decelerating Chinese commodities demand themselves.

• Under the best case scenario for US coal producers, our modeling projects a modest recovery to 2013 levels of just under 1 billion tons a year. Under the worst case scenario, output falls to 600 million tons a year. A plausible range of US coal mining employment in these scenarios ranges from 70,000 to 90,000 in 2020, and 64,000 to 94,000 in 2025 and 2030 -- lower than anything the US experienced before 2015.

These findings indicate that President Trump’s efforts to roll back environmental regulations will not materially improve economic conditions in America’s coal communities. As such, the paper concludes with recommendations for steps that the federal government can take to safeguard the pension and health security of current and retired miners and dependents and support economic diversification. Attracting new sources of economic activity and job creation will not be easy, and even at its most successful will not return coal country to peak levels of past prosperity. But responsible policymakers should be honest about what’s going on in the US coal sector—including the causes of coal’s decline and unlikeliness of its resurgence—rather than offer false hope that the glory days can be revived. And then support those in America’s coal communities working hard to build a new economic future.

The executive summary above highlights the reality that as more companies transition toward using renewable energy, the coal industry will see a reduced increase.  Furthermore, the two letters drive home the point that investments are not being directed toward the fossil fuel industry.  Natural gas is taking over the coal industry.  Renewable energy is being developed in tandem which will off-set the use of natural gas as the percentages start to shift in the decades to come.  President Trump should welcome the Paris Climate Agreement and send the coal miners to work in other sectors of the gas and oil industry.

Conclusion...

Over the last year, two large pipelines have been in production and vision in the United States.  One which is running through North Dakota and has been the subject of controversy by the Trump Administration.  I wrote an article about the absurdity about the project from the potential for accident (i.e. oil spill potential).  Further, the project needs to use the most current technology to ensure that spills do not occur.  This is of course taking into account the assumption that our demand for fossil fuels requires us to keep pumping them from the ground.  That was the subject of another blog post.


Instead of having to write a blog post asking why there is another oil spill in our beautiful nation, we should be investing in renewable energy and profiting (building our economy) -- an idea promoted and implemented during the administration of California Governor Arnold Schwarzenegger's time in office.  Transitioning toward natural gas as a major source of energy is better than relying on fossil fuels.  The second major pipeline being built involves the movement of large amounts of natural gas across the Eastern part of the United States and could provide a wealth of jobs for American fossil fuel workers.  In a previous post, I suggested that part of the process of encouraging job growth could be accomplished by putting to work existing gas and oil workers to inspect/repair the millions of miles of pipeline which exist in the United States.



Our reliance on oil (94 million barrels a day) globally is astounding to say the least.  Moving toward renewable energy sources will take a massive shift in mindset.  Just read the dimensional analysis of 94 million barrels -- which will blow your mind.   The investments mentioned above by the international community indicate a shift away from regions built on top of oil (like Los Angeles = 5,000 wells in region) to regions built around sustainability and promote renewable energy are presently being entertained.  The beautiful shores of California have seen a dramatic (adverse - ill affects) shift in health as a result of the 'off-shore' drilling by big oil companies.  Last year, I visited a beach and found a 'tar ball' which I was unaware of to be quite common to the residents of Santa Monica and Venice beach.  This blew my mind.  Furthermore, the realization drove home the point of needed action by the community and region through politics.  The process is slow.  Although, when the populations speak, policy decisions follow.



The time to change is now.  The call to action is forming.  Ask yourself, what are you doing to help the environment?  If the answer is 'nothing', then read some of the links to my previous blog posts and revisit the question above.  Additionally, read Republican Senator Susan Collins decision to vote "no" on President Trump's nominee for the Environmental Protection Agency sent a few months ago.  The more education which is disseminated on the reasons why the Paris Climate Agreement is important, the more likely our government is to hear from the majority of the people their decision to stay in the important international agreement.  More is at stake than just the United States.  The world is shared by everyone on the planet.  Until next time, have a great weekend.