Monthly Archives: October 2020

Updated Future Energy Trends – Oct. 2020

According to several recent articles, investments in energy have been level at about US $2 trillion per year over the last two decades. However, forecasters believe it will rise soon to at least US $2.7 trillion because of the interest in getting reliable energy to the developing world and the interest in clean energy and the major infrastructure changes that would have to be implemented to achieve this.

Studies and recent efforts indicate that coal-fired utility-sized power plants are still relatively economical because the price of coal has declined a lot recently because so much is available as more is mined globally, yet more coal-fired plants are closing or converting to other fuels. However, the most economical way of developing energy, in terms of capital cost of building a utility plant, availability of the source and conversion of the source to electricity, and long-term O&M costs is wind power, particularly offshore wind, even ahead of solar technology.

Offshore wind technology is becoming more attractive to investors and governments. China and the European Union are moving to install more offshore wind plants. Offshore wind has the highest capacity of any energy technology, about 50% of the energy hitting a wind turbine is converted to electricity, comparable to a gas-fired plant and superior to solar PV panels.

If renewable technologies, such as wind and solar, become more prominent, utility executives understand that this will mean that more upfront investments will be needed for building power plants and the proper infrastructure. These projects tend to be higher cost upfront, but lower costs to maintain and the “fuel” is free. Finding investors for such outlays may be difficult. However, the long-term payoffs could be significant.

CCES has the experts to help you determine whether renewable energy is right for your facility or what your best options are for determining where your electricity and fuels are coming from. We can analyze and provide cost-effective options. Contact us today at karell@CCESworld.com or at 914-584-6720.

Can Clean Technology Be Incentivized With Carbon Credits?

How does someone make money on any technology he/she invents? Well, one gets revenues and, hopefully, profits from selling the technology or get royalties and revenue from licensing agreements – a percentage of future sales. These are ways to make money from selling the technology. But if you really believe your technology will be effective in reducing greenhouse gas emissions and will benefit the buyer financially that way, might there be other ways to profit? Some are considering contract provisions that will enable the owner of a patent to also make money on how the technology functions – how many tons of GHG emissions are reduced or how many credits (and revenue) the equipment can create. In other words, include in the contract a provision for future revenue based on potential future environmental benefits or revenue based on these benefits. Law firms are looking into these questions to potentially help their clients generate significant future revenue from the technology’s future value to the buyer. As a longer term benefit, if this principle becomes commonplace it may create significant new incentives for companies and individuals to develop innovations related to climate change – something that is desperately needed.

Can this work in real life in the US? There are issues, such as the fact that in the US there is no agreement for the price of GHGs. There is no national tax or trading program that might set a price or a baseline price. Who would set the price? In the US, one can set a price based on the Regional Greenhouse Gas Initiative or California’s AB 32, but these are regional and specific programs. Voluntary carbon markets exist but are not regulated and may breed fear of the carbon market and distrust. Also, how do we keep the price reactive to the times and markets, but relatively stable?

Therefore, we need a national policy to regulate the carbon market and provide a value for GHGs. This will not only allow companies to plan their GHG emission reductions, but also unlock innovation in the climate change industry. The results of the US Presidential election soon will tell whether we move toward these principles or stay in denial of the problem. Not only will an aggressive policy toward reduction in GHG emissions be better for the planet and for industry in most cases, but can unleash innovative and creative technologies to aid us even beyond carbon in the future.

CCES has the experts to help you assess your “carbon footprint” and energy usage and develop cost-effective strategies to reduce your GHG emissions and energy usage to maximize the financial benefits. Contact us today at 914-584-6720 or at karell@CCESworld.com.

SEC Commissioner Lee Makes Case For Climate Disclosure

SEC Commissioner Allison Lee has been speaking up about climate change and the need to make communication of climate change and risk factors more transparent to shareholders. Commissioner Lee has written about the need for the SEC to do more to establish specific climate disclosure standards that investors, the consumers of this information, would eventually establish a balance between useful and superfluous information. This has been backed up by many letters and other comments from the investor public, hoping to expand climate disclosures.

However, Commissioner Lee was outvoted and new final rules do not address climate risk communication, ignoring overwhelming investor comment.  The SEC voted to maintain a principles-based disclosure system. Disclosures would be made about climate change only if the topic was material. Investors must trust that each company understands whether issues affect the climate and estimate how greatly. But given the large number of companies that continue to not disclose any information about climate change, can it be assumed that it has no issues on the subject? Commissioner Lee estimates that over 90% of U.S. companies are potentially exposed to material financial impact from climate change. Yet potential investors are not getting that information.

According to Commissioner Lee, much of the private sector accepts climate change and is preparing for a future low-carbon economy given the large potential impact on business by climate change, such as the intensive fire and hurricane seasons. Since this is the future, potential investors need transparent information about businesses’ greenhouse gas emissions and how they are managing climate risks. This can only happen by mandatory public disclosure, which is currently not happening. A secondary benefit of greater public disclosure is this will be a wellspring of information that governments can use to manage their own nation-wide risks. The nation, including companies, must price climate risk accurately to drive investment toward a transition to green energy rather than up and down cycles timed around climate disasters.

CCES can help you determine your greenhouse gas emissions, both direct and indirect and determine cost-saving measures to reduce GHG emissions, which will have added benefits for you. Contact us today at karell@CCESworld.com or at 914-584-6720.

 

New Science-Based Targets Initiative Framework for Financial Institutions

The collaborative efforts of environmental disclosure organization CDP, the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF) has developed a new system to determine appropriate carbon reduction targets for different entities. The Science Based Targets Initiative (SBTI) emphasizes the role of engagement with underlying assets to encourage companies to reduce their emissions and ignite climate action in such a way that is beneficial to them as well as the planet.

Nearly 1,000 companies in 50 sectors from coal and gas to pharmaceuticals have pledged to align their carbon reduction plans with the Paris Climate Accords by adopting science-based greenhouse gas reduction targets (SBTs).

A target framework has just been developed for banks and other financial institutions. SBTI has launched its first science-based target framework and validation service for financial institutions. Many of them encourage financial institutions to use what they have the most of – money – to effect a decrease in GHG emissions by, for example, using their large stock offerings to put pressure on heavy GHG emitting companies to reduce emissions permanently.

This has been well received. Dozens of banks worldwide previously declared they would work with SBTI standards, when finalized, to give them a framework to meet climate targets. SBTI uses the power of financial institutions to redirect capital to companies contributing to the clean energy and low-carbon, and away from those companies that adversely contribute to climate change.

Banks and financial institutes must also reduce their own GHG emissions. To be validated as meeting SBTI, Scope 1 and 2 GHG emissions of a financial institution must meet an average annual decline at least 2.5%.

CCES has the experts to help you determine your carbon footprint, your greenhouse gas emissions from all sources, direct and indirect and develop cost-effective strategies to reduce these emissions in the future. Contact us today at 914-584-6720 or karell@CCESworld.com.