Global investors representing $13 trillion in assets called on the United States and other countries on Thursday to adopt policies to fight climate change they said would unleash a potential flood of private money into renewable and efficient energy.
“Without policies that create a stable investment environment our hands are tied,” Anne Stausboll, chief executive of the California Public Employees Retirement System, a pension fund with more than $205 billion in assets, said at a meeting called the Investor Summit on Climate Risk.
“We are ready and willing to up the ante to finance the transition to a low carbon global economy but you need to have the courage to act,” said Mindy Lubber, the president of Ceres, a coalition of investors and environmentalists which was hosting the meeting.
More than 20 countries, including China and the United States, agreed to a non-binding Copenhagen Accord at a U.N. climate summit last month. They are hoping at least 100 countries sign on to the accord by pledging carbon cuts or action on climate in order to show the momentum needed to form a binding global agreement, a Western diplomat said.
But the United States, the world’s second-largest emitter, has not formed a national plan to cut emissions as climate legislation has stalled in the Senate. And major developing countries want the United States to act first before agreeing to take binding action.
Opportunities for investing in the low carbon economy have been proven, investors said. A Deutsche Bank (DBKGn.DE) report released on Thursday found companies that specialize in renewable energy like wind, solar and geothermal power and energy efficiency outperformed peers across the wider global economy last year and expected that to continue in 2010.
“Until the U.S. Congress passes climate regulation, America will be at a competitive disadvantage in the development of renewable energy and other climate change industries,” said Kevin Parker, the bank’s head of global asset management,which had $695 billion in assets as of September 2009.
Environmental groups are mounting a last-ditch effort to derail key elements of the state’s first-in-the-nation green building code — a major initiative of Gov. Arnold Schwarzenegger’s administration.
The proposed code, likely to be adopted Tuesday, would slash water use, mandate the recycling of construction waste, cut back on polluting materials and step up enforcement of energy efficiency in new homes, schools, hospitals and commercial buildings statewide.
“It is going to change the whole fabric of how buildings are built by integrating green practices into our everyday building code,” said David Walls, executive director of the California Building Standards Commission. “The rest of the nation will be looking at what we have done.”
But critics say the rules fall short of rigorous standards adopted by Los Angeles, San Francisco and more than 50 California jurisdictions in league with the U.S. Green Building Council, a national nonprofit group of architects, engineers and construction companies.
The council’s voluntary Leadership in Energy and Environmental Design standards have become an industry norm in recent years, with architects and construction firms competing on four levels — LEED basic, silver, gold or platinum — to market their buildings as green.
In 2004, Schwarzenegger ordered that all new state buildings meet at least a LEED silver level.
But parts of the state’s new code, which would take effect in January 2011, would amount to “a setback for California’s leadership on green building,” according to a Dec. 22 letter from six groups. They included the Sierra Club, the Natural Resources Defense Council and Global Green, along with two nonprofit certification groups, the Green Building Council and Berkeley-based Build It Green.
The groups largely applaud the code’s mandatory rules as a baseline minimum standard.
Big, bad carbon dioxide gets most of the attention when it comes to greenhouse gases, but it’s not the only one that’s warming the earth. Methane “” a gas that is found in everything from landfills to cow stomachs “” also plays a big role. Although global methane-emissions levels are much lower than CO2 emissions, pound for pound methane is a more powerful greenhouse gas; a ton of it has 23 times the warming effect of a ton of CO2. And methane, like CO2, is on the rise thanks to us: about 60% of global methane emissions come from man-made sources, and the atmospheric concentration of methane has increased by around 150% since 1750, according to the Intergovernmental Panel on Climate Change. Now there’s new focus on a pair of methane sources that we usually don’t think of as natural polluters: wetlands and rice paddies.
Separating the factors that contribute to climate change from the things that help reverse it is not always easy because sometimes they’re one and the same. Trees sop up CO2, for example, but when they die and decay they release it back into the air. Wetlands and rice paddies serve a similarly dual role for both CO2 and methane, acting as sources and sinks simultaneously. The challenge has been trying to tease out how those two functions balance out, but a new paper in the Jan. 14 issue of Science has provided some hard numbers. Using satellite data, investigators determined that wetlands contribute from 53% to 58% of global methane emissions and that rice paddies are responsible for more than a quarter of that output. The study could help make climate-change models more accurate, and help scientists understand whether increasing temperatures will lead to even higher methane emissions down the road. “It’s all about more accurately describing climate in these models,” says Paul Palmer, a geoscientist at the University of Edinburgh and a co-author of the Science paper.
The warm, waterlogged soil of wetlands is prime habitat for the anaerobic microbes that produce methane “” and in general, the warmer and wetter, the more the methane. Since rice paddies are kept underwater during the wet growing season in Southeast Asia and other major rice producing areas, paddies too serve as ideal factories for methane. “[The farmers] use controlled floods, and that’s guaranteed to produce methane,” says Palmer.
The data Palmer and his colleagues used came from the Envisat satellite, launched by the European Space Agency, which gave them a rough picture of methane concentrations across the entire atmosphere. They then combined that with measurements from the multinational Gravity Recovery and Climate Experiment (GRACE) satellite, which gave them a broad estimate of planet-wide groundwater levels. Finally they added surface-temperature data from the U.S. National Center for Environmental Prediction/National CENTER for Atmospheric Research, because heat can increase methane emissions from wetlands as well.
This not only yielded the raw numbers on the amount of methane being produced, but also some information about emission trends. There has been a steady increase in wetlands methane emissions from 2003 and 2007 “” and most of that increase was due to wetlands in the temperate regions north or south of the tropics. Moreover, emissions from Arctic wetlands “” they do exist “” were increasing fastest of all, up more than 30% between 2003 and 2007. That could be due to overall warming. “Most climate models say the surface is going to warm at higher latitude, and this is going to have serious implications for emissions from wetlands,” says Palmer.
Indeed, many scientists worry that we could reach a tipping point at which warming could begin to melt the Arctic permafrost and unleash masses of buried methane “” which would then further warm the atmosphere, releasing more methane and continuing in a dangerous feedback cycle. But if we’re going to prevent that from happening, we’re going to have to find a way other than reducing methane emissions from wetlands. Global food requirements mean that we can’t cut back seriously on rice paddy cultivation, and wetlands are far too important to the environment as groundwater filters and buffers against coastal floods. “I just don’t see any way to control methane emissions from wetlands,” says Palmer. Instead, we’ll need to focus on methane emissions from man-made sources “” like landfills or natural gas drilling “” and cut what is still greenhouse gas No. 1: CO2.
Geothermal is boiling hot these days. Wind and solar might even want to watch out.
The industry is adding 144 geothermal power plants in 14 states, says Karl Gawell, executive director of the Geothermal Energy Association. That’s up from 121 projects on the books last March and a 73% increase from the 83 projects underway two years ago.
“We’ve added 200 megawatts in the last year,” said Mr. Gawell, during a stop at The Wall Street Journal’s New York office on Wednesday ahead of the industry’s big finance forum today. “Compared to wind, it’s not much. But it is a lot for a small industry with only 3,000 installed megawatts.”
One big shot in the arm: The federal stimulus, which is chanelling $400 million to the geothermal industry in the form of tax incentives and cash grants. The trade group has seen member ship swell to about 150 from just 30 members five years ago.
Another big key: Technology. Geothermal companies are developing new technologies that allow lower-temperature water in the earth’s core to be turned into geothermal energy. That makes development possible in more place, putting states such as Texas, Mississippi, and Louisiana on the map in addition to traditional geothermal heartlands such as California.
Geothermal’s potential, thanks to advanced technologies, could be huge. The U.S. Geological Survey notes about 6,000 megawatts of discovered geothermal supplies (that’s like six nuclear power plants), with undiscovered potential between 8,000 and 73,000 megawatts. New technology could””theoretically””open the door to a whopping 800,000 megawatts.
Geothermal is renewable energy, like wind and solar power””but with two big advantages: It provides continuous, baseload power, not just when the wind blows or the sun shines, and it is cheaper than wind or solar power.
“It’s being rediscovered in the U.S.,” Mr. Gawell says. While the U.S. is currently the world leader, the geothermal industry today is where the wind-power industry was 20 or 30 years ago, he says.
And given the role that big corporates””such as General Electric and Siemens””played in the explosion of the wind industry, the logical question is, when will big companies pile into geothermal? GE has been showing up at geothermal meetings lately, Mr. Gawell says, and GE Energy Financial Services finances some geothermal investments.
The global market for carbon offsets from planting trees and preserving forests, worth nearly $150 million to date, could stall without a U.S. climate bill or a successor pact to the Kyoto Protocol, a report said on Thursday.
“At the end of 2009, the market for forest carbon stands in an uncertain position on the verge of potentially enormous growth,” the State of the Forest Carbon Markets 2009 report said.
“Amidst this scene of opportunity and risk, investors are still eyeing forest carbon, though many are waiting on more definite regulatory signals before taking a financial leap.”
Although climate talks in Copenhagen in December failed to agree a new legally-binding global climate pact to cut greenhouse gas emissions, the U.S. pledged at the summit $1 billion toward a scheme to reduce emissions from deforestation and degradation (REDD).
Many countries have committed politically to the $3.5 billion scheme, of which Australia, France, Japan, Norway and Britain are also contributors.
A domestic U.S. bill to cut emissions has also stalled in Congress, with market players calling its passage this year vital for investment.
Regardless of this uncertainty, the forest carbon market grew nearly fivefold since 2006.