Biden wins, climate believers, pricing carbon and the Story of More
The newsletter for people "woke" on carbon and climate
|Nov 8, 2020||5|
(sources: Official White House photo/Official U.S. Senate photo)
Issue No. 51
Welcome to the latest issue of Carbon Creed - a curated newsletter for people “woke” on carbon and climate.
Well, now we know.
Although U.S. President Donald Trump wasn't conceding defeat, people across the country and around the world started celebrating Joe Biden's election victory Saturday and expressed hope that the Democrat will quickly set to work on a topic that wasn't vital in the White House for the past four years: combating climate change.
“Welcome back America !" tweeted the mayor of Paris. Referencing the Paris climate accord that Trump pulled out of, Anne Hidalgo called Biden's victory "a beautiful symbol to act more than ever together against the climate emergency."
While some of Biden’s most sweeping programs will surely encounter stiff resistance from Senate Republicans and conservative State attorneys general, the United States is poised to make a 180-degree turn on energy and environment. So, get ready for what promises to be an epoch 4-years of carbon and climate policymaking!
IN THIS ISSUE our first post examines the dramatic shift in thinking about climate sweeping across religious America. Next, we proffer our first policy recommendation to the incoming Biden administration - price carbon. Our third post exhorts the new Biden administration to make clean technology a top funding priority. Finally, we review Hope Jahren’s new book chronicling what has led us to today’s climate crisis.
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Religious Americans believe climate change is a real threat, not a controversy
Values are shifting towards stewardship over utilization
People of all faiths, including white evangelicals, are convinced that climate change is real and a threat, according to a new poll conducted by the Yale Program on Climate Change Communication and the George Mason University Center for Climate Change Communication.
But whether they believe it’s caused by humans depends on the denomination. The online poll asked respondents to identify their faith.
Climate change doesn’t seem to be controversial among Roman Catholics. According to the poll, a majority of Catholics not only believe that climate change is happening, but that it is caused by humans and they are worried by it.
Although 63% of white evangelical Protestants said climate change is happening and a majority believe it is a somewhat serious or very serious problem, only 44% believed it is caused by humans.
Notably, a majority of all other affiliations, with the exception of “other,” believed the cause is human behavior.
Overall, nearly three-quarters of 1,884 registered voters said they believe climate change is happening, and a majority said it is a very serious or somewhat serious problem. And 58% said climate change is “caused mostly by human activities,” with 71% supporting at least some government action, presumably including those who believed it is caused by “natural changes in the environment.”
“This is more evidence that there’s this dawning awareness within people of faith communities that climate change is in fact a moral and religious issue,” said Anthony Leiserowitz, director of the Yale program. “And that’s totally new.”
There has been a sharp shift in interpreting the Bible to support concern over the environment, according to Leiserowitz. He cites the passage in Genesis: “And God said to them, ‘Be fruitful and multiply and fill the earth and subdue it, and have dominion over the fish of the sea and over the birds of the heavens and over every living thing that moves on the earth.’”
The term dominion had traditionally been interpreted to mean that God gave humans the right “to do whatever you want.” Now the view is that humans are stewards of the earth, and is viewed in conjunction with the biblical passage stating humans were given the Garden of Eden to “tend and watch over it,” he said.
“This is a fundamental shift in the underlying cultural understanding of the human relationship to the earth.” Leiserowitz said. “And what you also see in these numbers is that overwhelmingly over 80% of Americans say that we should be taking care of the earth, and that the earth has its own inherent goodness.”
That thinking is being expressed in more sermons, he said. It also puts a majority of Americans of faith at odds with those who take a utilitarian view of the earth.
Creed Comments: I am intrigued by the way that religion influences a persons views on carbon and climate. This poll by Yale/GMU provides a fascinating glimpse into how those views are changing as people accept the overwhelming visual evidence of climate change on our planet. Increased media coverage of fires, hurricanes and floods has enabled a shift by religious Americans towards belief in human-induced climate change. Kudos to Yale and George Mason for their excellent work in this field!
Pricing carbon is the way
The market is smarter than bureaucrats in Washington
(image: PAE Engineers)
Democratic nominee and former Vice-President Joe Biden's campaign website calls climate change "the greatest threat facing our country and our world." He promises to invest $2 trillion dollars into infrastructure, manufacturing, and "environmental justice" to ensure that "communities who have suffered the most from pollution are first to benefit."
Biden also plans to refit thousands of homes, even though the costs for that are significantly higher than the benefits. He pledges to reduce carbon emissions to zero, which Bjorn Lomborg, a visiting fellow at the Hoover Institution, projects would cost $5 trillion dollars. Overall, Biden's plan would cost thousands of dollars per taxpayer every year, according to Lomborg.
Meanwhile, incumbent President Donald Trump's environmental agenda consists primarily of hoping that climate change goes away. His campaign website describes his second-term agenda as promising to "Continue to Lead the World in Access to the Cleanest Drinking Water and Cleanest Air" and to "Partner with Other Nations to Clean Up our Planet's Oceans"—admirable goals, sure—but does not mention climate change or outline any concrete plan for reducing carbon emissions.
Reducing carbon emissions requires recognizing that the market can do a better job than bureaucrats in Washington—but also that doing nothing isn't a good option. Failing to act on climate change presents significant economic costs as well. According to the Congressional Research Service, even a small increase in global temperatures could lead to a 2 percent annual loss in gross domestic product, with that number increasing alongside the rate of warming.
A new study from the Niskanen Center, a centrist think tank, offers a middle ground that more politicians should be willing to consider: carbon pricing.
Joseph Majkut, director of climate policy, argues in a recently published report that carbon pricing could be an effective policy for curbing emissions while preserving markets. Under Majkut's proposal, the federal government would price carbon at $50 per ton, and return that revenue to taxpayers. This would create a market incentive for corporations to implement clean energy plans. It would discourage investment in fossil fuels, and likely encourage firms to start the process of moving toward clean energy sources. But it wouldn't cost trillions of dollars, nor would it absolutely destroy the American economy. There would be costs, just as with any tax—but not to the degree that Biden's plan would entail.
It would not, Majkut notes, "entirely fix underinvestment in scientific research" nor "eliminate the cost premium and limited selection facing prospective buyers of electric vehicles." But, he argues, it is a valuable first step that would still meaningfully contribute to working against climate change.
Corporate decarbonization can only come from regulatory predictability, and "regulatory predictability and market certainty come from a carbon price, not from continually changing command-and-control measures," Majkut writes. It's a plan that has support from stakeholders in the fossil fuels industry, including energy companies like ExxonMobil and BP, as well as automakers like General Motors and Ford.
The support by the energy sector for carbon pricing has led to some pushing back against it. According to Bloomberg, the projected $40-50 price for carbon may be too low to actually trigger changes in the marketplace. Bloomberg notes that climate activist groups like the Natural Resources Defense Council argue that carbon pricing would effectively price out coal, but would boost the market for natural gas.
Carbon pricing is a plan that relies on letting market mechanisms sort out the costs of pollution that affect the climate. Unfortunately, implementing it would be tough as it would require our politicians to admit they don't have all the answers.
Creed Comments: Assuming a split U.S. Congress and a Democrat in the White House, leadership must priorities policies that have bipartisan appeal. Carbon pricing is one such policy. Coupled with a dividend component, a carbon tax has broad industry support, and you can expect it to find traction among independents and moderates. Yes, the time has come to price carbon.
Spend more on clean tech to decarbonize the U.S.
Increase government investments in innovation and price carbon now
Governments are lining up to set new climate targets for the middle of the century. This week Japan said that it would eliminate all greenhouse gases. In the past month or so China and South Korea have declared that their economies will be carbon-neutral, meaning that they will put no more carbon dioxide into the atmosphere than they take out. In March the European Union unveiled a “net-zero” plan of its own. Britain and France have enshrined their targets into law. A victory for Joe Biden could put America on a similar path.
Targets are easier set than met. Today around 85% of the world’s industrial energy comes from fossil fuels. Getting consumption to near zero will involve enormous economic shifts. It will require huge changes in how energy is generated and used. And it will also require a sustained barrage of innovations to improve how steel or cement are made, say, or how buildings are designed and managed.
The world’s green-innovation machine likes to make a big noise about its successes. The share prices of firms with climate-sustaining technologies have soared. Tesla’s value has reached $385bn, overtaking the combined total of the next three biggest carmakers. The value of BYD, a Chinese competitor, has more than tripled this year. This month NextEra, a clean-power utility, surpassed ExxonMobil to become America’s biggest energy firm. In the past four years venture-capital (VC) deals have more than doubled.
Increase government clean tech spend
Yet too little capital is being channelled into energy innovation. Spending on R&D has three main sources: venture capital, governments and energy companies. Their combined annual investment into technology and innovative companies focused on the climate is over $80B. For comparison, that is a bit more that twice the R&D spending of Amazon.
One of the world’s most pressing problems thus receives perhaps just 4% of the global total spent on R&D. Governments are falling short of their targets. VC investment in green startups accounts for about a tenth of all VC investment and firms which sell goods or services that cut emissions made up just five of the top 100 firms in this year’s public-listing bonanza. The private sector’s record on climate innovation has been a hit-and-miss affair, at best. Having boomed in the mid-2000s, green VCs went bust a few years later.
What can be done? The first step is to think clearly about the division of labor between governments and the private sector. Governments need to get involved in several ways, because the market on its own will not do enough to bring about the shift from fossil fuels. It starts with the state funding not just basic research but also some development and the deployment of technologies. Some projects are too risky, too large, or both, to be countenanced by private investors on their own.
In practice that means the government should expect to foot some or all of the bill for new nuclear power plants, new charging grids for electric vehicles, or thorough investigations of new technologies such as geoengineering.
Implement a price on carbon
Governments also need to enact policies that encourage greener consumption. Pricing carbon is an essential step, forcing firms, and ultimately consumers, to bear the cost of their emissions, and in turn leading investors to allocate capital more efficiently.
The good news is that governments may be at last changing their tune. Carbon taxes are spreading and will soon cover over a fifth of global emissions. A slice of the EU’s €750B ($880B) recovery plan is likely to be directed towards R&D that is related to reducing greenhouse-gas emissions and their effects. If he is elected, Mr Biden plans to spend $300B on R&D over four years, with an emphasis on renewable-energy technology. At the moment, the federal government spends less than $7B a year on such green R&D.
The private sector still has a crucial role to play. Investors and entrepreneurs are best at commercialising new ideas, from efficient grids to hydrogen-powered forklift trucks. The public markets provide a vast source of capital for more mature firms, helping them scale up fast, as Tesla has demonstrated. Yet so far the asset-management industry has stuck to marketing its green credentials in superficial ways. In the latest quarter the net inflows of cash into “sustainable” funds, which often track the shares of big firms that have little effect on climate change, were twice the size of the annual investments into green VC.
More companies and billionaire-backed funds are eyeing up climate-friendly VC. But institutional investors, who have far larger sums to play with, need to embrace the opportunity, too. The forthcoming energy transition will be one of the biggest business opportunities of the next decades. Instead of piling into Tesla’s shares 17 years after the company was founded, investors should be striving to find the next superstar.
Source: This post is adapted from the original published in The Economist.
Creed Comments: This post hits on 2 climate priorities I see for the next administration: clean technology and monetary policy. Two statements in the post say it best, 1) “Pricing carbon is an essential step, forcing firms, and ultimately consumers, to bear the cost of their emissions, and in turn leading investors to allocate capital more efficiently” and 2) “Governments need to get involved in several ways, because the market on its own will not do enough to bring about the shift from fossil fuels. It starts with the state funding not just basic research but also some development and the deployment of technologies.”
The Story of More
a book written by Hope Jahren
A simple message lies at the centre of geochemist Hope Jahren’s sweeping examination of how we found ourselves in the middle of a climate crisis: “Use less and share more”. The Story of More explores how the ingenuity that has allowed humans to extract ever more resources from the Earth has also set the stage for environmental catastrophe. What’s more, this rampant consumerism is costing us our happiness too. The only way to solve one problem, Jahren suggests, is to solve both.
The Story of More illustrates the enormous scale of human consumption through compelling statistics. Jahren highlights the developed world’s responsibility for the crisis by observing that if everyone consumed resources on the same scale as the US, carbon dioxide emissions would be more than four times higher. This book does not pummel readers with a sense of guilt, but asks how we can learn to live on a finite planet. “Using less and sharing more is the biggest challenge our generation will ever face,” she says.
Creed Comments: While reading “The Story of More,” you might become aware of a curious omission: Until about three-quarters of the way into the book, there is no direct mention of climate change. Instead, after introducing the problem of global warming in the first chapter, Jahren takes a step back.
She leads us on a journey across time and space, outlining thoughts and beliefs from Mesopotamia to her tiny Minnesota hometown. Along the way she discusses the impact of everything from population growth to Norwegian fishing to nuclear power. She takes this approach in order to present climate change as a result of broader dysfunctions having to do with consumption habits that, she says, don’t even make us happy. The only way to solve one problem, she suggests, is to solve both.
If you lean more towards a Prophet on carbon and climate, you will love this book.
The Keeling Curve a daily record of global atmospheric CO2 concentration.
Congressional Policy Tracker a summary of current federal energy legislation.
Click Clean your favorite apps and tech company clean power rankings.
Advancing Inclusion Through Clean Energy Jobs a report by the Brookings Institute.
Understanding ESG a series of ESG-focused thought leadership webinars for business and investors, presented by Baker McKenzie.
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