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Fighting Climate Change? We’re Not Even Landing a Punch

The last post is, of course, the reason this one is much delayed. This is good summary of the relentless trajectory of emissions and temperature increases in spite of a wide variety of efforts at many scales. The piece notes some potential alternatives and their challenges, as well as the need to make unpalatable decisions. What it does not do is frame up how much can be accomplished with redeploying capital to finance much larger scale adoption of current technologies. Perhaps an unfair criticism given column constraints, but an important topic for a follow-on one?

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New Climate Impact Fund Launched

Fondaction CSN and Coop Carbone Announce the Creation of One of the Largest Funds for GHG Reduction Projects Through Carbon Contracts in the World

MARRAKESH, Wednesday, November 16, 2016 — Fondaction CSN and Coop Carbone announced, in the presence of Quebec Premier Philippe Couillard, the creation of the Fonds Carbone, the first carbon contract fund to be created in Quebec and one which is destined to be among the most active in the world.

It will be a $20 million fund dedicated to financing projects to reduce GHGs in exchange for generated offset credits. The fund will be managed by an entity whose ownership will be split 50-50 between Fondaction and Coop Carbone.

“Today, we are pleased to announce the Fonds carbone, a financial innovation that will become a global model for GHG reduction project financing using the opportunities offered by Quebec’s participation in the carbon market. Last year, we made a commitment to the Quebec government that all eligible investments would promote, encourage and support sustainable development, thereby confirming Fondaction’s eminence in Quebec’s financial ecosystem. We are glad to see the Premier attend this announcement because we are proud to show him the initiatives we are developing to bolster the fight against climate change,” said Léopold Beaulieu, President and CEO of Fondaction CSN.

“Coop Carbone is proud to partner once again with Fondaction CSN to create the Fonds carbone. Quebec has chosen to set the price of carbon not through the creation of a new tax, but through the market. Today, we are showing that you can use the carbon market to further stimulate the emergence of GHG reduction projects by Quebec companies while promoting the purchase of green technologies. Carbon contracts round out the financial offer currently available in Quebec and will be a new way for us to stand out so we remain a leader in the fight against climate change,” added Jean Nolet, President of Coop Carbone.

The fund’s product is a financing offer for GHG reduction projects through a carbon contract. When a project is at the financing phase, the fund will offer a loan by which terms it will take the offset credits generated by the project as collateral for a fixed period. The loan will first be repaid using the offset credits generated by the project, and once it has been repaid, the fund may commit to purchasing the credits for the remainder of the project duration at a price previously set in the carbon contract and below market rates. The fund is set up to provide funding for 15 to 25 projects.

“The Fonds carbone will foster the emergence of the new and innovative market of carbon financing and accelerate the deployment of GHG reduction projects by rounding out the available financing offer,” said Mr. Beaulieu.

About Fondaction CSN

Fondaction CSN invests in Quebec SMEs to help create and maintain jobs in in the province with a view to sustainable development. It manages assets of close to $1.5 billion collected as retirement savings from more than 131,000 shareholders. Fondaction’s direct investments and commitments, and those made indirectly through partner or specialized funds, support the development of more than 1,050 SMEs that make a significant contribution to the economic, social and environmental development of Quebec, including many social economy enterprises. To learn more: www.fondaction.com

About Coop Carbone

Coop Carbone was created by its five founding members: the Fondaction CSN, Desjardins Group, La Coop fédérée, the Association québécoise pour la maîtrise de l’énergie (AQME) and the Centre of Excellence in Energy Efficiency. Its mission is to generate projects to reduce GHG emissions, contribute to the effective functioning of Quebec’s carbon market and encourage the creation of economic benefits in Quebec through the development of a green economy. To learn more: www.coopcarbone.coop.

 

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Stripping Away the Obsession with Climate Models

This note from the New England Complex Systems Institute and Nassim Taleb (Black Swan author)  appropriately asks:

what would the correct policy be if we had no reliable [climate] models?

And with just one planet and the potential for planet-scale impact impacts, the answer is straightforward.

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Vancouver Water Use Declines, Imagine What Is Possible With Substantial Market Incentives

Here’s the impressive point: “In 1985, there were about 1.3 million people living in the region, using about 1.9 billion litres of water a day. In 2015, after the population had risen to 2.4 million, overall water consumption was down to less than a billion litres a day.” This is postponing hundreds of millions of dollars in new infrastructure costs for ~40 years. And much more could be done in Vancouver – and more critically in drier areas (California, anyone?) with pricing that aligns with full costs.

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Investing & Sustainability: Myths and Realities

Excellent abstract of an equality good article. Worth including here:

  • Myth Number 1: ESG programs reduce returns on capital and long-run shareholder value. Reality: Companies committed to ESG are finding competitive advantages in product, labor, and capital markets; and portfolios that have integrated “material” ESG metrics have provided average returns to their investors that are superior to those of conventional portfolios, while exhibiting lower risk.
  • Myth Number 2: ESG is already well integrated into mainstream investment management. Reality: The UNPRI signatories have committed themselves only to adhering to a set of principles for responsible investment, a standard that falls well short of integrating ESG considerations into their investment decisions.
  • Myth Number 3: Companies cannot influence the kind of shareholders who buy their shares, and corporate managers must often sacrifice sustainability goals to meet the quarterly earnings targets of increasingly short-term-oriented investors. Reality: Companies that pursue major sustainability initiatives, and publicize them in integrated reports and other communications with investors, have also generally succeeded in attracting disproportionate numbers of longer-term shareholders.
  • Myth Number 4: ESG data for fundamental analysis is scarce and unreliable. Reality: Thanks to the efforts of reporting and investor organizations such as SASB and Ceres, and of CDP data providers like Bloomberg and MSCI, much more “value-relevant” ESG data on companies has become available in the past ten years.
  • Myth Number 5: ESG adds value almost entirely by limiting risks. Reality: Along with lower risk and a lower cost of capital, companies with high ESG scores have also experienced increases in operating efficiency and expansions into new markets.
  • Myth Number 6: Consideration of ESG factors might create a conflict with fiduciary duty for some investors. Reality: Many ESG factors have been shown to have positive correlations with corporate financial performance and value, prompting ERISA in 2015 to reverse its earlier instructions to pension funds about the legitimacy of taking account of “non-financial” considerations when investing in companies.
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Pollution Masks as Fashion Statements – Mitigation vs Adaptation

Human adaptability and creativity is limitless and to be cherished. However, when it comes to cities with appalling air pollution, reducing the pollution rather than adapting to it  by turning masks into fashion statements would seem to be the much more important path to take. I can appreciate the school director wanting to establish a ‘culture of acceptance’ to get children to wear the masks, but where is the outrage and the school’s contribution to help stop the poisoning in the first place?

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Conservation Carbon Finance – Important Step in the Right Direction

The Climate Trust’s launch of a $5.5M carbon offset investment program will be an important source of support for conservation carbon projects in the US. The US Department of Agriculture and the David and Lucille Packard Foundation deserve applause for their investments in the program – a signal to private capital that it is time to accelerate growth of carbon markets in North America.

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Perspective on BC’s Carbon Tax

Excellent op-ed on BC’s carbon tax from an outstanding retired civil  servant. He emphasizes both that the tax is a strong tool, but not an end in itself, and that to continue to have the necessary impact it needs to increase – as originally intended.

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Transportation Priorities in the CRD – Duelling

A column and an article in the past week’s Time Colonist starkly contrast visions on how to address transportation challenges in the capital region. On the one hand, the provincial government is trumpeting spending $85M to build a new interchange that does nothing to address the roots of the problem, is blind to those who don’t travel in vehicles and ignores climate change. At best, it buys commuters a few years before the traffic jams settle back in place. On the other hand, the city of Victoria is spending $8M to expand cycling infrastructure with a goal of “becoming the best small cycling city in the world”. We have a long way to go – and critically need to see similar leadership from the surrounding municipalities to have a true cycling network – but it is a big step towards transforming the region and a long way from the Province’s 20th century vision of transportation = single occupancy vehicles.

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New Federal Green Funds – The Right Approach or a Waste of Money?

There’s a great deal of enthusiasm for new and expanded green government funds (see Clean Energy Canada and Campbell Clark in the Globe and Mail). However, some of the justifications are suspect. Just how is a green infrastructure fund supposed to support “inter-provincial collaboration”? And excitement around “pockets of money to aid a deal [on climate change in Canada” doesn’t provide much confidence that the money will create rather than destroy value.

As Josh Lerner points out in Boulevard of Broken Dreams, governments often love to create funds to dole out money for innovation and entrepreneurs without doing the hard work of creating the right environment for innovation to thrive. Quite simply, “capital is only one of the many requirements for innovation”, it just happens to be the one that everyone loves. There’s a risk that we take that route again in Canada: “Consider the experience of the Canadian labor fund program. Not only did it end up backing mostly incompetent groups that did little to spur entrepreneurship, but it had the effect of “crowding out” some of the most knowledgeable local investors.” Now’s the time to think and act thoughtfully on the best measures to address our critical climate change, infrastructure and yes, investment needs, but not spread the dollars around the country in the hope of having a positive impact.

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Conservatives and a Carbon Tax

While not my favourite Charles River economist largely because of his role in the Bush administration, this is an interesting perspective on how to move forward with carbon pricing in the U.S.

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The End of Car Culture – Can’t Happen Soon Enough

Great to see US car ownership, especially by young people decline. And promising to see their demand for transportation as a service rather failing prey to owning a car. Cities and their peripheries have to make that transition. With planning and incentives, megacities in emerging markets can shift off of their much less entrenched car culture.

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Nature Boosts

Gazing at nature boosts performance. Summer is a great time to do more that gaze, perhaps a bit of grazing with berries in season is in order! Further studies, I suspect, will show that the real stuff vs. a screen saver has a far stronger impact.

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La Coop Carbone conclut une première transaction pour ses clients distributeurs de carburants

Great to see the links build between the California and Quebec cap and trade programs – and to be part of Coop Carbone’s first transaction.