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Burning off fossil fuel investments
Victoria Thieberger
43 min ago
Industries
Resources and Energy
Climate
Markets
Be afraid. Be very afraid. That’s the message to companies involved in the exploration, extraction and production of fossil fuels following the sudden snowballing effect of funds announcing divestments from these industries just this week.
Investment bank UBS says in a new report that, following a series of meetings with clients, it sees the fossil fuel divestment campaign as significant and potentially effective.
“Many of those engaged in the debate are the consumers, voters and leaders of the next several decades. In our view, this single fact carries more weight than any other data point on the planet for this issue,” UBS said in the report out of London.
In just one week, more than $40 million has been earmarked to be pulled out of target companies.
The latest mandates from three key sectors of the Australian institutional investor landscape – university, local government and church funds – have decided to opt out of some or all of their coal and fossil fuel related investments.
So far, the dollar amounts are modest. But they may multiply as the divestment movement gains momentum.
In the past week, the Australian National University has said it will sell its stakes in seven resource companies after a student-led campaign that lasted several years. While press reports have bandied about the $1.1 billion total value of the ANU’s investment portfolio, it is actually selling a total of $16.025 million worth of shares, or 5.5 per cent of the Australian equities component of its entire portfolio.
At the weekend, the Anglican Diocese of Perth said it would switch its investments from fossil fuels and towards renewables instead. The Uniting Church has taken a similar stand.
The New South Wales local council employees’ super fund, Local Government Super, says it will sell $25 million of shares in companies that derive over a third of revenue from coal mining or coal-fired electricity generation, including AGL Energy and Whitehaven Coal.
Last month, HESTA, the super fund for health and community services with $29 billion in funds under management, announced it is progressively implementing a restriction on investments in thermal coal, becoming the first major Australian super fund to do so across all of its investment options.
So while each super fund’s investment decision will have a negligible impact on any single resource company’s share register, this appears to be the start of a structural shift out a sector based on ethical investment principles.
“There is a massive increase in public scrutiny from the members of super funds and the clients of financial advisers,” said Simon O’Connor, chief executive of the Responsible Investment Association Australasia.
RIAA is the peak industry body for responsible investors, claiming some 160 members that manage a collective $500 billion and include the country’s 50 largest super funds.
In some ways, this is a logical progression from the trends towards conscientious consumption (fair-trade coffee, free-range eggs) as well as the move by super funds out of other ethically dubious investments in gambling or tobacco. University endowment funds in the US such as the one run by Stanford and more than 30 cities including Seattle and San Francisco have made such ethical calls.
Figures from the RIAA show that 16 Australian super funds divested a total of $1.2 billion from tobacco stocks over a two-year period.
Ten years ago, fund managers argued that pulling out of tobacco would be costly and interfered with modern portfolio theory. Now, advisers at Mercer believe that the key argument for super funds to divest out of a sector is connected with the reputation of the fund.
The risk is that the super fund will be perceived to be disconnected from their members’ attitudes if they continue with status quo investment practices.
When UniSuper refined its approach to its $1.4 billion sustainable investment options last month, it added alcohol, gaming, weapons and companies involved in fossil fuel exploration and production to its screening of tobacco, as exclusions from its funds.
While it is too early to aggregate industry figures from the fossil fuel divestment campaign, it’s clear that companies are feeling the pressure to respond.
The Minerals Council has set up a committee to develop low emissions technologies for fossil fuels.
Sandfire Resources, one of the companies to lose ANU as an investor, has threatened to sue the advisers behind the decision, according to media reports.
“It’s basically a Pandora’s box,” one fund manager told me. The question is whether investors wanting to take the ethical high ground avoid pure-play fossil fuel producers, explorers, and/or mining services companies. Or is it companies with a certain threshold of revenues from these activities? What about diversified miners?
He added, with a note of cynicism, that it is “easy to make these investment decisions” with coal prices where they are now. Investment returns are unlikely to be damaged by such decisions taken at the low point of the cycle.
But for the longer term, there is a greater issue at play. Australia’s superannuation system holds around $1.8 trillion in funds, and about 40 per cent of the super savings are managed by investment managers.
If domestic institutional investors, pressured by their members, systematically withdraw from certain sectors over time, those companies will have a diminishing pool of domestic capital on which to rely. And that may create an opening for investors from other countries, with different thresholds and different long-term goals, to move in.
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There’s a lot to like about solar power: It’s clean, it’s getting less expensive, and it’s probably the most sustainable form of energy available. But conventional solar cells have their drawbacks, and one is that up to 20 percent of the Sun’s energy they capture is lost when the electrons move from the solar panel to its storage battery.
Now a team of researchers at Ohio State University (OSU) working under Yiying Wu, a professor of chemistry and biochemistry, has devised a hybrid solar battery that not only can capture solar energy but store virtually all the energy it collects.
At the heart of the solution is a solar panel in mesh form, which permits a free flow of air, and a new technique for transferring electrons from the solar panel to the battery’s electrode. In the device, oxygen and light work to enable the multiple chemical reactions necessary to charge the battery.
Related: Could Solar Provide 27% Of World’s Energy By 2050?
“The state of the art is to use a solar panel to capture the light, and then use a cheap [lithium-ion] battery to store the energy,” Wu said in an interview with the OSU Newsroom. “We’ve integrated both functions into one device. Any time you can do that, you reduce cost.”
By how much? By one-fourth, Wu says.
The OSU technology, described in detail in the Oct. 3 issue of the journal Nature Communications, works this way: The solar panel allows sunlight captured by the solar cell to be converted into electrons inside the battery, a process that wastes virtually none of the electrons. These electrons are produced from sunlight that shines onto the mesh of the solar panel.
The built-in battery, meanwhile, contains lithium peroxide, which decomposes into lithium ions and oxygen. The oxygen is released into the air that flows through the mesh, while the lithium ions are transformed into lithium metal and stored safely in the battery.
The current design is based, at least in part, on a high-efficiency, air-powered battery developed previously by Wu and a doctoral student, Xiaodi Ren. That battery feeds power through a chemical reaction between oxygen and potassium.
Related: How A Mistake May Lead To More Efficient Solar Power
“Basically, it’s a breathing battery,” Wu explained. “It breathes in air when it discharges, and breathes out when it charges.”
That design was awarded the $100,000 clean energy prize from the U.S. Department of Energy in 2014, allowing Wu to form KAir Energy Systems LLC to develop the new technology. And that development was to combine the KAir battery with a solar panel.
Conventional solar cells, however, are made of solid panels, which keep air away from the battery. So another of Wu’s doctoral students, Mingzhe Yu, developed the mesh for the hybrid, made from titanium gauze on which he managed to grow vertical rods of titanium dioxide as if they were blades of grass on a lawn. Air flows through the gauze while the rods capture the sunlight.
By Andy Tully of Oilprice.com
More Top Reads From Oilprice.com:
Read scientific analysis on Arctic sea ice conditions. We provide an update during the first week of each month, or more frequently as conditions warrant.
ABOUT THESE IMAGES
The sun has set over the central Arctic Ocean and Arctic sea ice extent is now increasing. Sea ice extent in Antarctica appears to have passed its seasonal maximum. The peak Antarctic value recorded so far of over 20 million square kilometers (7.7 million square miles) sets a new record over the period of satellite observations.
Following the seasonal daily minimum of 5.02 million square kilometers (1.94 million square miles) that was set on September 17, 2014 (6th lowest in the satellite record), Arctic sea ice has started its seasonal cycle of growth. Arctic sea ice extent averaged for the month of September 2014 was 5.28 million square kilometers (2.04 million square miles), also the 6th lowest in the satellite record. This is 1.24 million square kilometers (479,000 square miles) below the 1981 to 2010 average extent, and 1.65 million square kilometers (637,000 square miles) above the record low monthly average for September that occurred in 2012.
Because ice extent falls through the first part of September and rises in the latter part, statistics on the average daily rate of ice loss or gain through the month are largely meaningless. More relevant is the total ice loss through the melt season. Between the seasonal maximum extent that occurred on March 21, 2014 and the September 17 minimum, the Arctic Ocean lost a total of 9.89 million square kilometers (3.82 million square miles) of ice, which is the 9th largest in the satellite record, but the least amount of seasonal loss since 2006. This year’s loss was 1.92 million square kilometers 741,000 square miles) less than the total loss that occurred in 2012.
Through 2014, the linear rate of decline for September Arctic ice extent over the satellite record is 13.3% per decade, relative to the 1981 to 2010 average. The ten lowest September ice extents over the satellite record have all occurred in the last ten years.
Weather conditions prevailing over the summer of 2014 were unremarkable. Compared to the long term (1981 to 2010) climatology, sea level pressure over the period June through August was higher than average over much of the central Arctic Ocean, the Atlantic sector of the Arctic, and Greenland. While air temperatures at the 925 hPa level (approximately 3000 feet altitude) were slightly above average over part of the central Arctic Ocean, they were below average over the Kara Sea and just north of Alaska. The summer of 2013, which is now the 7th lowest ice extent in the satellite record, was also generally unremarkable in terms of temperature. Both of these years contrast sharply with 2012, which saw unusually warm conditions across the Arctic Ocean. The one significant weather pattern over the summer was a larger than normal pressure gradient over the Laptev Sea that drove southerly winds, brought warmer air, and helped drive sea ice northward. This led to the tongue of open water that reached to within 5 degrees latitude of the pole. However, this pressure gradient was not particularly extreme so thinner ice cover in the area was also a significant contributor to the open water near the pole. Sea surface temperatures may also have played a role, as we discussed in a previous post.
The distribution of sea ice age at the time of the minimum provides some insights into the summer evolution of the ice cover. For ice that is three years and older, the distribution is similar to recent years, with most of this ice along the northern coast of Greenland and northwestern coast of the Canadian Archipelago. Through the winter, older ice moved across the Beaufort and Chukchi seas due to the typical clockwise circulation of the Beaufort Gyre. Similar to recent summers, much of this ice melted away, though this year it lasted through most of the summer, contributing to the relatively late development of open water along the Alaskan coast.
One notable feature this year compared to last year is that a tongue of second-year ice (ice that is 1 to 2 years old) persisted north and east of the East Siberian Sea. This likely helped limit the loss of ice in this region and kept the ice edge much farther southward than in the neighboring Laptev Sea to the east. The predominance of thinner first-year ice in the Laptev region, along with persistent southerly winds, led to seasonal retreat of the ice edge to north of 85 degrees North latitude.
As we reported in our Arctic minimum announcement, sea ice in Antarctica has remained at satellite-era record high daily levels for most of 2014. On September 22, 2014, Antarctic ice extent increased to 20.11 million square kilometers (7.76 million square miles). This was the likely maximum extent for the year.
This year’s Antarctic sea ice maximum was 1.54 million square kilometers (595,000 square miles) above the 1981 to 2010 average maximum extent, which is nearly four standard deviations above this average. The 2014 ice extent record is 560,000 square kilometers (216,000 square miles) above the previous record ice extent set on October 1, 2013. Each of the last three years (2012, 2013, and 2014) has set new record highs for extent in the Antarctic.
The monthly average Antarctic ice extent for September 2014 is 20.03 million square kilometers (7.73 million square miles). This is 1.24 million square kilometers (479,000 square miles) above the 1981 to 2010 average for September ice extent. The Antarctic sea ice trend for September is now +1.3% per decade relative to the 1981 to 2010 average.
Monthly averaged ice extent for September is well above average in the western Pacific (northern Ross Sea) and Indian Ocean (Enderby Land) sectors.
A comparison of ice extent (Figure 6a) with ice concentration trends (Figure 7) illustrates that the areas of unusual ice growth are in the same places that have been showing ongoing trends of increased ice extent. This suggests that wind patterns play a significant role in the recent rapid growth in Antarctic ice extent. However, another possible reason is that recent ice sheet melt, caused by warmer, deep ocean water reaching the coastline and melting deeper ice, is making the surface water slightly less dense. While the change in saltiness is too small to significantly affect the freezing temperature, the increase in slightly less dense water surrounding Antarctica inhibits mixing, creating conditions that favor ice growth (as we discussed in our July 17 post).
The period between September 10 and September 22 saw very rapid late-season ice growth in Antarctica, pushing the total sea ice extent upward by nearly 60,000 square kilometers per day (23,000 square miles). An animation of Antarctic sea ice concentrations from AMSR2 satellite data shows that a pulse of increased sea ice growth in several areas, but especially in the northern Weddell Sea, was the cause of the rapid rise in extent. A look at the weather for mid-September in the south indicates that a band of southerly winds swept from west to east across the northern Weddell Sea, favoring both ice growth and ice advection to the north.
For the mid-winter period, climate patterns for 2014 evolved in a similar way to 2013, as discussed in previous posts and in a paper led by our colleague, Phillip Reid. Sea ice growth in the Ross, Amundsen, and Bellingshausen seas for the austral winter of 2014 was favored by moderately strong low pressure anomalies in the Amundsen Sea, the northern Weddell Sea, and the central Indian Ocean region in mid-winter (late July and August). But at the period of the sea ice maximum, higher pressures over the continent reduced the intensity of westerly winds, and resulted in cooler southerly winds over the Weddell Sea and the Amundsen Sea. This helped to create the very large ice extent values seen in September. The Antarctic sea ice maximum period, as described above, had a further push from southerly winds over the far southern Atlantic (northernmost Weddell Sea) and Indian Ocean regions.
A related note
Last year, a vessel became trapped in ice south of Australia in an incident that highlighted the need for better local ice forecasts. The International Ice Charting Working Group will meet later this month in Punta Arenas, Chile. Members will work on improving the collective capability of ice services to provide ice information in the interests of marine safety.
Reference
Reid, P., S. Stammerjohn, R. Massom, T. Scambos, and J. Lieser. 2015, in press. The record 2013 Southern Hemisphere sea-ice extent maximum. Annals of Glaciology 56 (69), doi:10.3189/2015AoG69A892.
By Dr. Alvin Simms & Jamie Ward
Department of Geography, Faculty of Arts, Memorial University
Declining population growth is not a new trend in this province. In fact, from 1951 to 2001, this province saw significant slowdowns in population growth, and even population decline in the 1990s during the early days of the Cod Moratorium, which saw much of the province’s young workforce leave to look for work in places like Alberta and Ontario.
Pair this mass exodus of young workers with the duel phenomena of aging post-War baby boomers and declining birthrates—two things that plague most Western countries—and the population pyramid of the province has become inverted.
But now, 22 years after the Moratorium, the economic tides of the province have turned, and Newfoundland & Labrador is experiencing a period of unprecedented economic prosperity, and for the first time in over 60 years, population growth.
This growth, however, is small (just 1.8 per cent from 2006-2011), and is certainly not consistent across the province. In rural Newfoundland & Labrador, the story of population decline remains much the same, with some regions’ populations shrinking by 15 per cent from 2006 to 2011, while the population of the Northeast Avalon—St. John’s and surrounding areas—grew by more than 10 per cent over the same time. This shift is creating a very different province than the one founded upon the vitality of remote fishing villages and a rural way of life. Currently, approximately 80 per cent of the population of the province lives within an hour of the Trans-Canada Highway.
“The challenge now is managing economic growth, supporting innovation, and diversification so the growth of the province can be sustained over time and no one gets left behind.”
This increased urbanization brings with it two sets of additional challenges. For urban areas like the Northeast Avalon, and other areas benefiting from the economic boom, there is more crime, more traffic, less affordable housing, and so on. For rural parts of the province that do not have access to the benefits of the drivers of our newfound prosperity— offshore oil, mining, and energy mega-projects—it is a struggle to attract the industry and employment needed to keep young families from leaving, and to provide access to services to an aging population.
The challenge now is managing economic growth, supporting innovation, and diversification so the growth of the province can be sustained over time and no one gets left behind. If there is one thing we can learn from our history, it is that dependence upon one or few industries is a recipe for uncertainty. As a large proportion of the people and wealth of the province gravitate towards urban centres, it would be very easy for the rural way of life to be left behind, but with regional collaboration and innovation, this does not have to be the case. The challenge for rural communities across the province now is to look to their neighbours, build upon their collective strengths, and work together to build strong, economically diverse regions—it’s not about getting bigger, it’s about getting together.