Climate Change Update

| December 12, 2019
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For the first time, a highly respected periodical, “The Economist,” has dedicated an entire issue to climate change. My perspective is that this subject matter surrounds all of us; it is undeniable and it touches each of us in various ways. The impact is not only financial, it’s emotional, depressing, and disappointing. This post will discuss the contents of the previously mentioned issue of “The Economist” and will hopefully leave you with an ability to ask additional questions and seek answers to a very complex challenge. 

In 2015, the United Nations adopted the 2030 Agenda for Sustainable Development through its General Assembly. This created 17 sustainable goals. What is important to realize is that three quarters of emissions come from just 12 economies. One issue is the fact that many economies grew out of the machinery, innovation, creativity and structures that improved their GDP and standards of living. But at what cost? It is not the time to tear away and dispose of these facts, it is time to understand that we must all “up our game.” Is our love of growth and progress counter to a stable climate? There is a way out of this mess.

As the chart below indicates, we know who the major contributing economies are in terms of CO2 emissions…

 

The growth of fossil fuels being burned and tracked since 1900 produced two billion tons of carbon dioxide. In 1950, those emissions were three times that much and now they are 20 times that much. But there is more to this in terms of predictability in that methane and nitrous oxide trap heat as well, making it difficult to be accurate in measuring the expected amount of warming. 

Global Temperatures Have Been Changing

An Earth Summit was held in 1992, where various models were considered to possibly reduce global emissions to zero by 2050, which means we would need to halve current emissions by 2030. At the Earth Summit, nations of the world signed the UN Framework Convention on Climate Change. But there still isn’t a nation on the path to attain this goal yet. 

It is frightening to read article after article on the subject of our society not completely understanding the “multiple impacts” of miniscule changes in the environment and their minute impacts on plants, animals, and even people. Sure, the changes and impacts are small now, but this evidence makes it hard not to ask, at what point do we create such a magnitude of pollution that a cycle of events begins to unfold like a virus that cannot be contained?

Another dilemma is that developed nations have used fossil fuels to grow their economies over the last century. If you were a developing country, would you not wish to utilize the same resources to grow your own prosperity? So, if we curtail emissions of the developed nations, will that not be at the expense of non-developed economies?

Bottom line: we need to explode renewable energy. Wind and sun generated energy now account for only 7% of the world’s total generation. Here are some reality checks that might help you understand the importance of using more renewable energy sources…

Problems in Panama

The Panama Canal provides one eighth of the national government’s revenue. Water levels in the canal are now six feet lower than normal. Because of this, ships are carrying less than max loads, causing revenue to drop. This is a few million dollars now, but large ships are risking running aground in the canal. What we all may not understand is that the global supply chain is dependent upon the consistency of the depth in the canal. Climate change and the dramatic reduction in rain is causing droughts and therefore changing transportation routes. If the ice-clogged Northwest passage through the Artic becomes passable, a trip from Shanghai to New York would be reduced from 19,500 kilometers to 4,000 kilometers. To curtail the drop in canal depth, the Panama Canal Authority is shutting down hydroelectric plants and curtailing local growth. They are also piping water from surrounding lakes which will ultimately cause a redistribution of populations in those lake regions. 

Jakarta and Singapore

In Jakarta, the sea is rising 0.8 centimeters per year and in some coastal areas the land is sinking by 25 centimeters per year. Why? 40% of the residents are tapping into aquifers because of not being connected to good water sources and having access to only dirty or contaminated water. Draining the water compresses the soil which is part of why 40% of the country’s land is below sea level. There is now a plan to restructure the entire water supply system by setting aside 2,000 hectares of land. 

Sumatra and Borneo

3,300 square kilometers of land in Sumatra and Borneo are in flames due to converting forests into palm oil plantations. This has created a haze causing 200,000 respiratory infections and 1,500 schools in Malaysia to close. The peat in the ground continues to burn long after the surface trees and vegetation are consumed by fire. Preparing land for plantation use comes at a cost of $300-$400 a hectare. Burning the land has a cost of $0 as pronounced by the Centre for International Forestry Research in Indonesia. The country is now fining and arresting people who start these fires. As of February of this year, $220 million in fines have not been paid. The task to change this deforestation is immense.

Hope in China

One third of the world’s electricity generating capacity from wind is now in China. The energy for the country created from coal has been reduced by 10% over the last decade and is now below 60%. There is great push back in China now from state owned companies that wish to build between 300 and 500 coal fired power stations by 2030, representing a 30% increase in capacity. What will officials recommend?

What Can Be Done?

The International Energy Agency believes that investing in offshore wind will reach one trillion US dollars by 2040. It will become the largest source of energy generation in Europe by 2040 with a share of 255 versus 2% NOW. Globally, it is predicted that there will be an installed base by 2050 of 1,000 gigawatts versus 0.25 gigawatts today. What is a gigawatt (GW)? It is a unit of power equivalent to one billion watts. One GW could power approximately 700,000 homes.

Here at InTrack, we know the companies that are impacting the environment and have a history of investing in that space for over 20 years. Technology, innovation, creativity and leadership in the SRI/ESG space is growing. Let us provide a way for you to be a part of it.

Myron Sopher is the managing partner of InTrack Investment Management. He is a tireless advocate for renewable energy and searches for investments that support his goals and the goals of his clients from his office in Burlington, Vermont.  

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