B4E, the Business for Environment Global Summit, is the world's leading international conference for dialogue and business-driven action for the environment. The summit addresses the most urgent environmental challenges facing the world today. Important topics on the agenda include resource efficiency, renewable energies, new business models and climate policy and strategies. CEOs and senior executives join leaders from government, international agencies, NGOs and media to discuss environmental issues, forge partnerships and explore innovative solutions for a greener future.
Guy has been involved in the energy sector since 1984 working initially in the oil and gas industry as an exploration geologist for Amoco before joining the newly formed PowerGen in 1990. At PowerGen Guy worked initially in the UK core business before transferring to be part of the International expansion of developing conventional power stations in Portugal, Germany and Eastern Europe.
Pete is the Programme Director for Transport at the European Climate Foundation, where he has worked since 2011. Prior to that, he spent 10 years analysing and reporting on politics, business and markets for the international newswire Reuters. Since 2008, he has been living in Brussels, focusing on the European politics of climate and energy. He has published several books and papers on ecology, travel and communications.
Aled has 15 years’ experience in the development of regional sustainability policies and programmes in the UK and Europe. He started his career in local government working on the EU Structural Fund programme for West Wales and the Valleys before moving to the Wales office in Brussels as a policy adviser on regional and environmental policies. He returned to the UK to work for the Regional Development Agency for the West Midlands on its low-carbon development projects.
By Alastair Bland
Northern California has become the center of the state’s cannabis-growing industry, with inevitable environmental consequences. Will legalization and new regulations ease its impact or make the situation worse?
IN NOVEMBER 2016, California legalized recreational marijuana. The decision, supported by 56 percent of the state’s voters, allows marijuana to be shared, traded, grown at home and smoked without a medical reason. Using it medically has been legal for 20 years.
Anthony Viator hangs harvested marijuana buds for drying on grower Laura Costa’s farm near Garberville, Calif., in October 2016.Rich Pedroncelli, AP
Though complex and strict regulations still apply to growing, selling and buying marijuana, things will probably simplify over the next year. The heart of the state’s industry has long been in the north coast region known informally as the emerald triangle. Most growers – thousands of them in the heavily wooded counties of Humboldt, Trinity and Mendocino – currently operate illegally. However, many are now lining up at county offices to apply for cannabis production permits, and conservationists, growers and scientists are asking how the new era of pot production will affect the environment.
It may have positive effects. For instance, a grower seeking a commercial production permit must install a water storage system that can be filled in the wet winter season. Such a system would allow growers to keep plantations lush and green all summer without drawing water from creeks, which can easily be pumped dry during California’s hot and mostly rainless summers.
Mikal Jakubal, a Humboldt County resident who has grown marijuana for years at his residence alongside a tributary of the Eel River called Redwood Creek, believes cannabis can be grown sustainably, by capturing and storing water in the winter and minimizing the erosion from earth-moving activities such as building roads and clearing land to plant. Sediment that washes into creeks can smother the gravel beds where adult salmon and trout spawn, killing the unborn fish.
But Jakubal suspects many growers who apply for permits might make the required improvements only temporarily, reverting to less sustainable – and illegal – activities once they are on the books as legal growers.
Anthony Viator carries a bin filled with marijuana buds harvested from the farm of grower Laura Costa, near Garberville, Calif. (Rich Pedroncelli, AP)
“There is minimal ability to enforce standards beyond the initial inspection,” he says. “That’s just the reality. If you have hundreds or thousands of growers, all up dirt roads behind locked gates, and [authorities] have to give them advance notice of any site visit, it’ll be super easy to save your stored water, pump out of the creek all summer and then keep your tanks as back-up.”
Scott Bauer, a senior environmental scientist with the California Department of Fish and Wildlife, promises his department will be on close watch.
“The paperwork of getting permits is not just a formality,” he says. “You have to abide by it and we’re going to be checking on people. Someone who doesn’t follow the rules could lose their permit and would have to start over.”
Humboldt County’s planning and building department has received more than 2,300 applications for new growing permits since the November election. Already, the forests of the county may support somewhere between 8,000 and 10,000 pot growers, according to rough estimates.
The stress on the environment generated by cannabis farming has long been discussed by media and scientists, and while it is generally agreed that pot growing isn’t helping water resources or fish, no one is certain how harmful the industry actually is.
“It’s really important that the state regulates the industry, but it’s also important not to take our eye off the ball,” says Van Butsic, a researcher with University of California, Berkeley’s Department of Environmental Science, Policy and Management. “The north coast’s salmon were mostly gone long before cannabis got here, and you’re not going to get them back by regulating it.”
Other impacts must be mitigated, too, he says; logging, dams, riverside development and large-scale public water diversions have all had great impacts on salmon runs.
Still, there is no doubt pot growing is having an impact on what remains of the region’s salmon runs. Bauer says he has seen streams that should have had water in them but had been emptied by just one grower’s irrigation line.
“A lot of these growers are diverting straight from the headwaters of small creeks that are the beginnings of our larger rivers, and we’ve seen them pumping these little streams dry,” he says. “Sometimes it’s one grower doing it, other times it’s 10 of them along a whole stream.”
Scott Greacen, executive director of Friends of the Eel River, is convinced new pot-growing operations, legal or not, will worsen conditions for fish in places.
“How many regulated operators can you have along Redwood Creek and still have coho salmon in it?” says Greacen, referring to the Eel’s south fork tributary alongside which Jakubal, for one, grows his marijuana
California is the fifth state to legalize recreational pot, and it was the first state to legalize medical marijuana in 1996. Most growers in California operate at small production levels, often on rural mountain homesteads, and often using organic growing methods.
But Greacen discounts popular notions that pot is a low-impact crop. “All the talk about how this is a sustainable industry – it just doesn’t add up,” he says.
Butsic coauthored a paper published in 2016 in Environmental Research Letters in which he concluded that the legal marijuana industry poses a considerable potential threat to Chinook salmon and steelhead in the emerald triangle region.
Greacen says many northern California populations of coho and Chinook salmon and steelhead trout were barely clinging to existence in the years leading up to the drought, and the recent surge in marijuana growing activity has wiped them out. “This is what the process of extinction looks like. It’s really scary.”
Jakubal argues that the marijuana industry’s environmental problems are ultimately the result of economics – not necessarily anything fundamentally unsustainable about the crop. In the interest of healthy waterways, he says, pot must become cheap through widespread production and, probably, federal legalization.
“As long as it’s profitable, greedy people will do whatever it takes to make that money,” he says.
Butsic reckons the jury is still out on just how harmful the marijuana industry is to the environment – an area of research he says he is closely studying. But Greacen feels more certain that fish and pot cannot coexist under current circumstances.
“Maybe making Humboldt County the epicenter of legal weed isn’t the best idea if we also want to have salmon in our rivers,” he says.
By Richard Mattison
This article was originally published on TRUCOST and is republished with permission.
2016 was undoubtedly a year of change. Aside from major political shifts, there were also significant shifts in climate action. The implications of the Paris Agreement at COP21 filtered through to both businesses and investors, leading to a number of breakthroughs in policy and behavior.
However, the fundamental fact is that we are still consuming natural capital — the limited stock of natural resources on which business and society depend for well-being, security and prosperity — at an alarming and unsustainable rate. Nearly half of the world’s 1,200 largest companies would be unprofitable if they had to pay their fair share of the $3.4 trillion environmental and social costs of their resource consumption and pollution in 2015.
The good news is that our State of Green Business Index — a review of corporate sustainability performance over the last five years shows — without a doubt that many companies and investors genuinely understand the fundamental importance of sustainable business and are taking action to reduce environmental impacts.
During 2016, the CEO of ExxonMobil, Rex Tillerson, pushed for a tax on carbon emissions, joining a growing chorus: So far, more than 1,200 companies have either set an internal price on carbon or committed to using one, according to the CDP. Setting an internal carbon price helps companies better understand future policy scenarios and informs the capital allocation process — for example, in decisions regarding investment in carbon-efficiency projects.
These insights should help companies prepare for business in an environmentally constrained world by guiding them towards low-carbon, resource efficient technologies and business models.
The Natural Capital Protocol was launched in 2016 to extend these benefits across other environmental and social costs not yet fully priced by the market. A growing number of companies are adopting this approach and putting “shadow prices” on a range of natural capital impacts and dependencies, from carbon and other pollutant impacts to water and other natural resource dependencies, to inform decisions and get ahead of the regulatory trend.
2016 was also a pivotal year for sustainable finance. Total assets invested that consider environmental issues have grown 77-fold since 2010 and now exceed $7.79 trillion in the United States. Investment focused on renewable energy and technology was more than $285.9 billion in 2015, and China recently announced that it will invest $361 billion in renewable energy by 2020. By then, renewables will make up half of all electricity generated in China. The growth of innovative financial instruments also accelerated, with the total value of the green bond market doubling in 2016 to $81 billion.
Investors are increasingly divesting from the fossil fuel industry. The latest thinking is that if climate policy is effective it is likely that many assets in industries reliant on fossil fuels could be impaired or worthless — known as “stranded assets.” Investors do not want to be exposed to the risk that equity holdings lose value as a result of action to tackle climate change. The amount of assets under management that investors have committed to divest from fossil fuel companies reached a record $5 trillion in 2016.
Last September’s G20 Summit, under the leadership of China, concluded that the adverse effects of climate change threaten economic resilience, growth and financial stability, and capital markets are best placed to finance the transition to the low-carbon economy, given the scale of investment required. The synthesis report called for accelerated integration of green finance into markets to finance a range of environmental initiatives, from pollution control to climate change mitigation. This was the first time that G20 Leaders referenced the importance of greening the financial system in the summit’s annual communiqué.
There are also positive signals in the key performance indicators of sustainable business among the world’s largest companies. Corporate carbon emissions are at a five-year low, down more than 10 percent since 2011. Water use is following a similar trend. Water pollution has fallen even more quickly, down more than 25 percent since 2013. Total waste generation is down 11 percent. Two thirds of U.S. companies and four-fifths of global companies now disclose data on their environmental impacts. Overall, the cost of natural capital impacts has fallen by more than 15 percent since 2013.
But it is important to reality-check these findings. Reductions in natural capital impacts have taken place alongside falls in corporate revenue, suggesting that decoupling economic growth from resource use and pollution remains challenging for most companies. Although more than half of companies have targets for reducing carbon emissions, they account for only a fraction of the annual reduction needed by 2050 to keep global temperature increases to less than 2 degrees Celsius, as committed to under the Paris Agreement. Moreover, less than a quarter of companies are disclosing carbon emissions embedded in the goods and services they purchase and the capital investments they make — so-called scope 3 emissions — which account for around 90 percent of indirect emissions.
In December, the recommendations of the G20 Financial Stability Board’s Task Force on Climate-related Financial Disclosure provided a clear signal to companies and investors to ramp up climate risk reporting. The international body, chaired by Michael Bloomberg and comprising senior figures from business and finance, states that climate change poses a serious risk to the global economy. It recommends that all organizations, including companies and financial institutions, provide information about climate risk and opportunities in their approaches to governance, strategy, risk management, metrics and targets.
The recommendations further advise companies to integrate climate-risk management in forward-looking business strategies and financial planning, such as scenario analysis to align with government commitments to 2-degree Celsius energy transition pathways. Investors are advised to disclose the greenhouse gas emissions associated with each fund or investment.
The shifts in climate action are compelling. Companies will need to embed sustainability at the heart of business strategy to deliver shareholder value, while ensuring that their relationship with society is a positive one.
The challenge of 2017? To identify business models that decouple growth from resource use and pollution. Rigorous measurement and disclosure will be key.
By Tom Sanzillo
IEEFA published a report this last week that highlights how Norway is at a historic crossroads in how it manages some of its vast national wealth bound up in the Government Pension Fund Global (GPFG).
Indeed, GPFG is facing an unusually opportune moment this summer, as Parliament considers whether to enact a mandate that would have the fund put up to 5 per cent of its $900 billion in wealth into unlisted infrastructure holdings.
Such a move would allow the fund to capture value and reap stable returns especially from the fast-growing global renewable energy sector.
The fund would be joining an investment trend that is gaining momentum – 62 per cent of sovereign of wealth funds held infrastructure investments in 2016 and an additional 7 per cent were considering doing so.
Our report outlines how GPFG can proceed and describes the opportunity in renewable-energy infrastructure in detail. One of our core findings is that assets bought and sold across this space now—in wind farms and solar plants – yield returns and retain value.
A mandate by Parliament would mirror a recommendation already in place by Norges Bank.
While Norway’s Finance Ministry has been reluctant to approve such a move, citing concerns over assorted risks, Parliament has the authority to advance such a move.
Skeptics may very well argue that renewable energy comes with too much risk. And indeed, while renewable energy is no more immune to regulatory and political risks than investments that that include telecommunications and transportation holdings, these risks can be mitigated, as has been demonstrated for quite some time now by well-managed funds that have developed robust methods do just that. Our report shows how risk mitigation can be accomplished through a combination of in-house expertise, co-investment and strategic investment strategies.
Infrastructure is a long-established asset class embraced by many of the world’s leading investment funds, and renewable energy accounts for roughly 42 per cent of all unlisted infrastructure transactions. It is practically becoming a separate investment vehicle unto itself.
The industry outlook is positive. Government regulators and energy ministries in most countries are finding that wind and solar developers are offering competitive prices for power generation. This lowers the cost of electricity for host-country businesses and households and makes such investments that much more appealing. More and more governments recognize also that technology-driven, market-based renewable energy solutions will help address climate change – a fact that increases their appeal further and that adds to the growing global momentum around renewables.
Growth across the global economy over the next several years is expected to create demand for $3.3 trillion in various infrastructure investments, particularly in emerging economies.
Well-managed infrastructure investments bring returns of 12 to 15 per cent annually, with investments in renewable infrastructure producing steady, returns that exceed expectations. Brookfield Asset Management, among the models mentioned in our report, operates exemplary funds that return 10 to 20 percent annually.
The renewables sector is no longer the experimental space it once was, having entered a long-term growth cycle with a strong outlook driven by low costs, competitive prices, policy advances and rapid uptake. The sector is also diversifying by adding wind and solar investments to long-held hydropower portfolios.
Our report includes five recommendations on how Norway can move forward on this front:
These five moves would allow the fund to capture value from a growing market that offers reliable returns. These investments would not be correlated to the fund’s equity and bond portfolio, which is to say they would add risk diversification. They would provide steady cash flow and they would be anti-inflationary.
The opportunity in infrastructure investment is enormous and immediate – in developed and emerging economies alike – and the risk is manageable.
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