Theories about ESG investing

This is some serious inside baseball. But it IS October:

If your basic theory of ESG investing is “we will avoid bad-ESG stocks in order to drive up the cost of capital of bad-ESG things,” it seems to be working:

Years of awful returns and pressure from clients to exit from the oil-and-gas business have left fewer and smaller firms able to take advantage of rising prices and help boost production. The unwillingness of some banks to make energy loans has compounded the challenges to boosting energy supplies.

Those left are moving to increase production, but they are relatively small players who won’t be able to make a significant impact on output. Investors are steering capital away from fossil fuels and toward companies that rank high in environmental, social and governance, or ESG, measures.

“Oil-and-gas has seen the worst returns of any sector over the past five years; the returns are volatile and investors feel ESG pressures,” says Wil VanLoh, who runs Quantum Energy Partners, which manages $18 billion, making it one of the few remaining big energy private-equity funds. “There’s been a huge retreat in available capital.”

That’s from Matt Levine’s Bloomberg daily newsletter, talking game about the game. But the idea that ESG investing is maturing, as he says, is an interesting one. If companies and the courts are no longer going to just line up on the side of fiduciary responsibilities as a way to protect shareholders – and hence, the companies that may continue to pollute and spew for profit – that’s at least a change.

Image: Abraham Lincoln: Baseball Theme Currier & Ives Cartoon, 1860.

I reckon

What’s the best way to get there? We need to start taking everything into consideration:

To help users find more sustainable travel options, Google launched a feature Wednesday that will show a carbon-emissions estimate for almost every flight in its search results. Now, along with price and duration, travelers will be able to use environmental footprints to compare and choose flights.

James Byers, a senior product manager on the Google travel team, said the emissions estimates are based on a combination of factors, such as the distance of a trip, the number of stops, the number and class of seats on board, the type of aircraft, and data from the European Environment Agency.

The feature, which follows another eco-friendly feature for Google’s hotel searches, could be valuable in the fight against climate change, suggests Katharine Hayhoe, director of the Climate Center at Texas Tech University.

It’s a shift in thinking, a pivot to including more of what has long been ignored. Will it catch on? Many right-wingers will surely choose the most rootin-tootin-pollutinest routes, rollin’ coal as much and for as far as they can. Many are certainly so inclined, and it may have just become easier to make them pay more for the pleasure.

For everyone else more sensible, this is potentially a good tool, allowing demand to push supply in a better direction.

Image: proposed rail network. (Not pictured, how to get North Americans to Europe, Africa, Asia)

Leaderless democracy

No, not the kind that continues to bottle us up in debt-ceiling kabuki. The other kind:

What was the occupiers’ one demand? They never said. And as they practiced a leaderless form of democracy, there was no one to say. The movement did have a slogan, “We Are the 99 Percent,” informed by recent economics research exposing the gap between the top 1 percent and everyone else. Yet the occupiers didn’t seem particularly inspired by the technical solutions that economists proposed. When Joseph Stiglitz, the World Bank’s former chief economist and a critic of unregulated capitalism, came to Zuccotti Park to complain about how financial markets had “misallocated capital,” he looked adorably out of place in his collared dress shirt and khakis, surrounded by activists in kaffiyehs, baseball caps, and hoodies.

Journalists trying to understand this inchoate insurgency turned for answers to Graeber, a seasoned veteran of the global justice movements of the late 1990s and early 2000s and a central figure in Zuccotti Park. It helped that he was a witty commentator with a knack for summing things up crisply. He’d been the one to suggest the language of “the 99 percent,” which he’d adapted from an article by Stiglitz. Graeber was also, as some of his fellow occupiers were surprised to learn, a major anthropological theorist. Starting as an expert on highland Madagascar, Graeber had become a free-range thinker specializing in questions of hierarchy and value but interested in virtually everything. He’d recently written a 600-page ethnography of the protests against neoliberal globalization—protests he’d joined himself.

Leaderless decision-making is the route to the real possibility, messy and littered with threat and chaos though it is. And that’s just the point – Graeber was absolutely correct about the limited political horizons [most] people come to expect. And of course we are taught this, to make nice, to play well with others, even if they actively mean us harm. And make no mistake, there are actual antagonists in our midst and we’re definitely not talking about the horn-hatted, shirtless spear holders. These are people in suits, and many of the issues that stir madness within those impatient with a complicit media or corrupt pols are seen only as rounding errors by the faceless conglomerati.

No one will be allowed – that is, given permission – to do anything about climate change, income inequality or anything else. Some call it anarchy, but being stuck with oppressive systems is a refusal to re-imagine. It’s fear – fear of messes, fear of change, fear of losing security – as if. Meanwhile, tides are lapping. Leave the grand historical narrative to Marx.

Brown ocean effect

What maps would look like if they showed only solid land. The light blue indicates swamps, marshes, and wetlands.

Hurricane Ida grew quickly powerful after just a couple of days before roaring ashore and inundating people who have seen it before and likely will again:

By the time Hurricane Ida made landfall in Port Fourchon, La., on Sunday, it was the poster child for a climate change-driven disaster. The fast-growing, ferocious storm brought 150-mile-per-hour wind, torrential rain and seven feet of storm surge to the most vulnerable part of the U.S. coast. It rivals the most powerful storm ever to strike the state.

“This is exactly the kind of thing we’re going to have to get used to as the planet warms,” said Kerry Emanuel, an atmospheric scientist at the Massachusetts Institute of Technology who studies the physics of hurricanes and their connection to the climate.

And the recent UN Climate report aside, scientists have been talking about this for years:

previous NASA-funded research by Theresa Andersen and J. Marshall Shepherd making the case that a “brown ocean effect” — evaporation from moist warm soils — can energize tropical systems.

A NASA news release on the 2013 research explained:

Before making landfall, tropical storms gather power from the warm waters of the ocean. Storms in the newly defined category derive their energy instead from the evaporation of abundant soil moisture – a phenomenon that Andersen and Shepherd call the “brown ocean.”

“The land essentially mimics the moisture-rich environment of the ocean, where the storm originated,” Andersen said.

The map above says it all, and when we look at the photos from Sunday-Monday, listen to what we tell ourselves about what we see.

Image via the New Yorker

The Arrogance of Power

With apologies to the accusers working hard to hold their abusers to account, the impacts of human activity on global warming are taking center stage this week:

The world’s leading climate scientists on Monday delivered their starkest warning yet about the deepening climate emergency, with some of the changes already set in motion thought to be “irreversible” for centuries to come.

A highly anticipated report by the U.N.’s climate panel warns that limiting global warming to close to 1.5 degrees Celsius or even 2 degrees Celsius above pre-industrial levels “will be beyond reach” in the next two decades without immediate, rapid and large-scale reductions in greenhouse gas emissions.

To be sure, the 1.5 degrees Celsius threshold is a crucial global target because beyond this level, so-called tipping points become more likely. Tipping points refer to an irreversible change in the climate system, locking in further global heating.
At 2 degrees Celsius of global warming, the report says heat extremes would often reach critical tolerance thresholds for agriculture and health.

U.N. Secretary-General, António Guterres described the report as “a code red for humanity.”

“The alarm bells are deafening, and the evidence is irrefutable: greenhouse gas emissions from fossil fuel burning and deforestation are choking our planet and putting billions of people at immediate risk,” Guterres said.

Every previous supposed estimate had been watered down to re-assure the consensus that all of this was far enough away in time not to worry about. A little tweak here or there was all that was needed, and no time soon. Well guess what? It’s no time – soon. What are we doing and how much more can we do must be the only questions. The Earth will change and re-establish some equilibrium, and humans may or may not be a part of that. We don’t seem to understand that last part, and we’re warning ourselves that we are running out of time.

Image: A couple rides a pedal boat as smoke from nearby forest fires hangs over the city of Yakutsk, in the republic of Sakha, Siberia, on July 27, 2021.
DIMITAR DILKOFF | AFP | Getty Images

Self-driving boats

Since he began scamming promising people – buyers and not just buyers, but BUYERS – that full self-driving would be available in six months (2016), Elon Musk has played a vital role in one of our great national pursuits. Yes, separating people from their money. But normalizing electric cars, even with the side auto-taxi fraud, is to be lauded. Tesla definitely got the other car makers to get some skin in the game.

There are and long have been many obvious reasons behind the difficulty of self-driving cars that Musk is now copping to, but again the Overton window has been effectively shifted. Quiet electric vehicles are turning up all over the place – on land, on sea, even in the fjords:

But they’ve already made Norway the most electrified shipping nation in the world, thanks to an aggressive government push to cut maritime emissions. The country is home to almost three-quarters of the 274 vessels globally that run at least partly on batteries, according to a state advisory body. Its fleet of 31 fully-electric car ferries is expected to nearly double by the end of the year, says the Green Shipping Programme, a public-private partnership that supports the transition. Even the sightseeing ferries that cruise Norway’s famous fjords are transitioning to battery power.

On a Saturday morning in Stavanger, along Norway’s west coast, a new ferry, the Rygerelektra, is in the harbor preparing for a tour of some nearby fjords. Measuring 42 meters long with seating capacity of nearly 300, the ferry, is owned and operated by Rødne Fjord Cruises. It is among a group of vessels from several of Norway’s leading maritime companies that are driving a shift towards zero-emissions fleet and supporting Norway’s ambitious economic reinvention away from oil and gas to alternative energy source.

They acknowledge the challenges of large-scale fleet charging, though promising technology already exists. And then, they can’t resist the temptation:

“In Norway, we need to transition from oil exports to sustainable products and services, while still utilizing the competence we have gained from the oil industry, says Pia Meling, vice president of sales and marketing at Massterly, the autonomous shipping company. “We would like to compete on the renewables and in clean shipping in particular.” Massterly’s vision is one of zero-emission, autonomous vessels moving everything from passengers around Norway to containers across oceans.

Emphasis added because I guess they can’t help it. But really, who knows where the over-promise of auto-taxis might lead? Self-driving boats are certainly more possible, if not theoretically easier – at least until you get to a crowded harbor. But hey, in the open water? Sure. In six months, we’ll be…

Clean up on Line 3

Because Line 3 is a crude oil pipeline, and pipelines leak because that’s what they do. McKibben, via LGM:

It’s easy to forget now how unlikely the Keystone fight really was. Indigenous activists and Midwest ranchers along the pipeline route kicked off the opposition. When it went national, 10 years ago this summer, with mass arrests outside the White House, pundits scoffed. More than 90 percent of Capitol Hill “insiders” polled by The National Journal said the company would get its permit.

But the more than 1,200 people who were arrested in that protest helped galvanize a nationwide — even worldwide — movement that placed President Barack Obama under unrelenting pressure. Within a few months he’d paused the approval process, and in 2015 he killed the pipeline, deciding that it didn’t meet his climate test.

“America’s now a global leader when it comes to taking serious action to fight climate change,” Mr. Obama said. “And frankly, approving this project would have undercut that global leadership. And that’s the biggest risk we face — not acting.”

And that’s what puts the Biden administration in an impossible place now. Enbridge wants to replace Line 3, which runs from Canada’s tar sands deposits in Alberta across Minnesota to Superior, Wis., with a pipeline that follows a new route and would carry twice as much crude. It would carry almost as much of the same heavy crude oil as planned for the Keystone XL pipeline — crude that is among the most carbon-heavy petroleum on the planet.

An environmental cause that is really an economic question. The slim chance of recouping the cost of building the pipeline before crude oil usage decline makes it no longer viable builds a strong case against pipeline, maybe even stronger than it leaking – which it WILL do, because…
Not easy, but becoming more clear as the science gets tangled with economics, in a good way!

World world

A theme park, opening soon along the gulf coast of Arkansas, promises visitors – and investors – more than just memories and a fun time with family.

Luring adventurers to the Land of All Time-themed playground, guests enjoy lily pad accommodations floating throughout the 38-square-mile park, on water and undulating, recycled “terrain.”

“It all started here – everything is from the closed loop, after all. So we just call it all natural,” said Stan Brimmingway, mastermind of the park and keeper of its honorary specimens. Modestly dressed in a smart Tyvex onesie, Stan pets a miniature bull before shepherding the creature back to its keeper. “Back when land was still bought and sold, people were fine with trading money for all of this,” he said and gestured broadly. “So we were glad to just get as much as we could – people thought they were losing land, but look at that view. The water is so much more alluring when its closer to the mountains anyway.”

And it’s unmistakable. A kind of Mediterranean vista, nestled in the Ozark foothills. Whether technology saved this landscape or invented it, it has definitely changed. “And that’s not new – and kinda the point,” Brimmingway said with a glint of enthusiasm not entirely absent of P.T. Barnum. “What is fitness after all other than the result of the effort it takes you to do normal things – otherwise it can be really hard to see this.”

Impossible, he means. Living in a moment most often means being defined by it. Unless you can imagine the Land of All Time, seeing today in context can be simply too much work. But that’s where the park comes in.

“It’s true that we brought ourselves to this place – totally our fault,” he said. “But imagine a glacier sitting on New York, or the invention of writing 3,500 years ago.” His voice trails off, galloping after his ow, quite visible sense of wonder.

“The thing about this is, it’s not only possible. It all happened. Check it out.”

Asset Class not in Session

Exotic financial instruments. Linking ‘investors’ and funding to projects to weave profits out of insurance or management strategies designed to ease or hasten climate adaptation… doesn’t actually work:

That’s because of the nature of the underlying “asset.” Sure, in theory, you could securitize the construction of a seawall and capture returns via fees from wealthy coastal dwellers or local councils. But seawalls are not widgets. Each has to be uniquely designed for a specific location and its conditions. There are few economies of scale.

There’s also no established norm about how the costs of climate adaptation projects should be shared among those who are being protected. Will enough residents willingly pay for our theoretical seawall, either directly or via their taxes? Who’s being protected, and at whose expense? Structures that protect one stretch of beach can often create problems further along the coastline.

Adaptation doesn’t fall into a neat category. It can mean investing in infrastructure or designing programs to protect nature. It can involve constructing big sea walls, but it can also be about retaining trees on city streets, or ensuring access to clean drinking water. Right now these measures are too small to interest big pension funds and asset managers. A report by UNEP and others found only about two dozen projects larger than $25 million over the last few years.

Important to separate the reality that climate measures are necessary, and will necessarily save money down the road, from the notion that they represent just another opportunity to build a new revenue stream. The article wisely links climate to justice, and as much as it pains many Americans, there is no way around that. It has been true for even longer than it’s been evident – and it’s been evident for a very long time: people cannot live without justice. Racial. Climate. Economic. These are non-negotiable bonds, in the common parlance. We will do it for its own sake, because it benefits people. THAT’s the return. Clean up the rentier class soiling the revenue stream, the water will run clearly.

Image: Photograph: Emory Kristof/National Geographic/Getty Images

Battery Plants

Saw a friend yesterday whose water business took a tumble thanks to the plague shutting down business offices in our small burg. And though that sounds like the plot for another episode of ‘Your Dystopia,’ he said things were looking up, thanks to a new battery plant opening up outside of an even smaller burg a half hour away. Fossil fuels are not ending, but largely over, we agreed. Electric vehicles are very much the present, I may have said, sitting in a late-model guzzler. My water friend went back to his not-so-late model pickup, but the battery plants hung in the air a little longer, walled gardens of Babylon, with added strife and wi-fi.

What if battery plants were literal? Plants are already perfect energy storage dynamos – we just don’t know how they do it. We understand, but it’s still largely alchemical to us. I looked it up:

Imagine if farmers could grow batteries in their fields. Researchers are taking steps towards at least partially making that green dream a reality by using plant materials to make key components of energy storage devices. Pen-Chi Chiang and colleagues at the National Taiwan University review developments in this adventurous ambition in the journal Materials Today Energy.

“We consider the state-of-the-art challenges and issues for using plant-derived biomass materials for various energy storage applications, such as batteries and supercapacitors,” says Chiang.

Energy storage is an essential requirement for modern life. Without it, we couldn’t have cellphones, laptops, or electric vehicles. From consumer electronics to transportation, electrical energy must be stored and be available at the flick of a switch. Current systems, such as the lithium-ion batteries common in many devices, are made from limited resources, and bring environmental problems associated with their disposal.

Chiang points out that a sustainable future will increasingly depend on replacing existing technologies with those using renewable materials that can readily be recycled without damaging the environment.

One of the most promising approaches towards sustainable energy storage devices is to convert plant biomass into a material called “porous carbon”. This is a form of carbon that can be fabricated into three-dimensional ordered “nanostructures” with a variety of useful electrochemical properties.

I guess nanostructures are going to be our best tickets to being able to produce the capacities of plant lignin. It’s the inverse of why biomass is so hard to breakdown, in efforts tap its energy by making fuel. Seems a folly when you think about it like that. Instead of making fuel, figure how they work as batteries – which we seem to already grasp.

As is so often the case, a matter of which word we emphasize. Thinking big does not have to only mean going to Mars. Maybe if ‘Native American’ were two of the words represented by NASA, we might have already figured this out, not to mention a few other things.