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Forget oil prices, chaos in metals markets holding back electric vehicle surge

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Source: RoschetzkyIstockPhoto / iStock Editorial via Getty Images

By David Callaway, Callaway Climate Insights

The surge in oil and gasoline prices worldwide since Russia’s invasion of Ukraine should be the perfect opportunity to make the switch to that new electric vehicle you’ve seen in your neighbor’s driveway. But rollercoaster oil is nothing compared to the chaos in metals markets the past few weeks in London.

Prices of copper and nickel, which are used in EV batteries and much of which comes from Russia, have been swinging wildly since the invasion. Nickel prices doubled last week in the space of a few hours to more than $100,000 a ton, forcing the London Metals Exchange to close for several days. It reopened yesterday and prices promptly collapsed, last trading at about $41,000.

Those of you who’ve tried to buy EVs and been subjected to lengthy waits for delivery will know the frustration. As the world finally sees a chance to ditch oil and gas and help transition to renewable energy, the same supply-and-demand constraints that provide periodic oil shocks are appearing in metals.

The supply issues feed into the anti-climate argument put forth by politicians such as Sen. Joe Manchin (D-W.Va.), who came out against EVs this week, along with everything else President Joe Biden has proposed on climate. Supply chain issues, alas, are a long-term game.

Meanwhile, the eyes of the $17 trillion ESG investment world will be on the Securities and Exchange Commission in Washington next week to see if its proposed new rule on climate disclosure for public companies will be strong enough to match international standards.

More on the SEC rule, and other insights below . . . .

Zeus: Two years later, climate change flipped on its head

. . . . When we launched Callaway Climate Insights two years ago today, Covid lockdowns were just starting and ESG investing momentum was in full swing. What a difference 24 months makes, writes David Callaway. From the devastating pandemic to the Russian invasion of Ukraine, we’re thinking about our energy challenges differently now. We can’t use sanctions or send weapons against climate change, but it is still a war, and one we can still win if we use the current crisis to act quickly. . . .

Read the full Zeus column

Can short selling help fix climate change? The debate rages.

. . . . A raging debate over whether divestment of oil and gas stocks by large institutions actually helps prevent climate change spilled over into the controversial world of short selling this week, writes Mark Hulbert. Some of biggest names in the investing world weighed in on both sides of the argument of how shorting big stocks such as ExxonMobil (XOM) or Chevron (CVX) can or can’t move the needle in terms of shareholder action against Big Oil. And what does this have to do with cutting greenhouse gas emissions?. . . .

Read the full story

EU notebook: Germany falls back on coal as Russian gas crisis worsens

. . . . Europe’s frantic attempts to find more energy in the wake of Russian oil boycotts and the invasion of Ukraine led to unthinkable diversions from the push to renewable energy this week. UK Prime Minister Boris Johnson traveled to Saudi Arabia to (unsuccessfully) grub for more oil, while Germany abandoned its pledge to end coal usage by re-activating coal plants in the face of gas shortages. From Spain to Denmark, gas pipeline deals are back. Alisha Houlihan reports from Dublin. . . .

Read the full EU notebook

Thursday’s subscriber insights: What’s at stake in SEC climate disclosure rules meeting next week

. . . . After several delays, the Securities and Exchange Commission will propose new rules next week on climate disclosure by public companies, seeking to catch up with Europe and the UK while avoiding litigation from climate-denying politicians in Washington D.C. At stake is President Biden’s increasingly weak climate agenda, which has been battered from all sides in recent weeks. The $17 trillion investment universe tied to environmental, social and governance (ESG) strategies will be watching closely to see how tough Wall Street’s stock cop will be. Read more here. . . .

. . . . Lost in Europe’s race to grab more energy from oil and gas in the wake of Russia’s Ukraine invasion is the formal passage this week by the European bloc to impose a regional carbon border tax on imports of polluting products. The controversial tax, which Brussels argues will help reduce harmful emissions and make it more expensive for polluters, won’t go into effect until 2026. But the debate about how to implement it and who gets caught up in it begins now. . . .

. . . . Russian misinformation on social media isn’t just all about support for its invasion or U.S. midterm elections. This week it crept into a letter by GOP members of the House energy committee who alleged that Russian money was finding its way into a California environmental charity, Sea Change, and spread out to other non-profits to encourage anti-fracking advocacy. A routine fact-checking dismissed the info out of hand, but it is distressing to see it finding its way to Congress. . . .

. . . . Surging demand for electric vehicles in Europe and Asia has led to a case of EV-envy in the U.S., where narrower demand and the desire for larger cars have left consumers with less choices. That will someday change, but a lot of that will depend on fixing supply chains, as well foreign EV makers meeting tougher U.S. emissions standards. In the meantime, we’re stuck with Teslas. Read more here. . . .

. . . . Let’s face it, most of the anger around the U.S. Postal Service choosing gas-powered vans over electric ones is that the standard fossil fuel models are hideous by comparison. Some of the newer EVs in use by Amazon (AMZN), and Federal Express (FDX) and UPS are much more pleasing in design, as are the ones the Biden Administration wanted the service to choose. Don’t believe us? Take a look for yourselves right here. . . .

Editor’s picks: Coal mine methane emissions top those of oil, gas

Report: Coal mine methane emissions exceed those of oil or gas

So much methane is released from coal mining, the Global Energy Monitor says, that it exceeds the carbon dioxide emissions from burning coal at over 1,100 coal-fired power plants in China, according to a report by Phil McKenna reports for InsideClimate News. According to Global Energy Monitor, the world’s coal mines emit 52.3 million tonnes of methane per year — more than annual emissions from oil (39 million tonnes) or gas (45 million tonnes). “A slate of new coal mine projects currently under development would further emit 11.3 million tonnes of methane per year if the projects proceed as planned, and would effectively lock in new emissions equivalent to the coal-based CO₂ emissions of the U.S.,” the GEM report says. Global Energy Monitor’s analysis is, the organization says, the first assessment to estimate coal mine methane emissions worldwide at the asset level, using its newly enhanced Global Coal Mine Tracker in combination with the Model for Calculating Coal Mine Methane (MC2M). Read more of the report’s key findings.

Microsoft leads $34 million funding for startup Nautilus Labs

Nautilus Labs this week announced that it has received $34 million in Series B funding, with M12, Microsoft’s (MSFT) venture fund, and the Microsoft Climate Innovation Fund co-investing for the first time. This round brings Nautilus’s total raised capital to over $48 million. Nautilus Labs uses data and AI to increase shipping efficiencies and decarbonization efforts. The company says its collaborative flagship solution, Voyage Optimization, “is transforming how voyages are run by addressing long-standing inefficiencies and creating a pathway to lower emissions that the ocean shipping industry at-large can immediately adopt.” Nautilus Labs says Voyage Optimization “leverages machine learning-based predictions to reduce fuel waste and emissions while maximizing commercial returns by analyzing IoT data, weather patterns, arrival and departure times, and commercial needs.”

Words to live by . . . .

“All human beings are born free and equal in dignity and rights. Yet, when it comes to the effects of climate change, there has been nothing but chronic injustice and the corrosion of human rights.” — Mary Robinson, former president of Ireland and author of Climate Justice: Hope, Resilience, and the Fight for a Sustainable Future.

Callaway Climate Insights Newsletter

By David Callaway

Amazing Child Actor Performances of the Past 100 Years

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Source: Courtesy of Netflix

Fame can be a double-edged sword for those in the entertainment world. The attention, the glamor, and the adulation are great, but the pressure of staying on top is enormous. And it weighs even more heavily on child actors, who get saddled with descriptions like “prodigy” and “precocious” when they turn in a spellbinding performance. A breakout role for child actors has been a blessing for some, a curse for others.

To compile a list of more than 50 of the best child actor performances of all time, 24/7 Tempo gathered information from IMDb, an online movie database owned by Amazon, as well as various entertainment industry media sources. 

Some of the breakout roles for child actors can be considered harrowing, such as the possessed girl played by Linda Blair in “The Exorcist” and Heather O’Rourke’s character who is tormented by malevolent spirits in the Poltergeist movies. Isabelle Fuhrman’s performance as a sociopathic girl in “Orphan” was so disturbing, one critic wasn’t sure she would ever get another role.

Some young actors performed convincingly in themes about the effects of dislocation caused by war, such as Brigitte Fossey and Georges Poujouly in “Forbidden Games,” Edmund Moeschke in “Germany Year Zero,” and Nikolay Spiridonov in “Come and See.”

A great performance as a child actor doesn’t mean a long career, such as those enjoyed by Drew Barrymore or Christina Ricci. Actors such as Moeschke and John Howard Davies had a brief movie career and either disappeared or they switched to film production. Others resumed their film pursuits later in life. Fossey chose to focus on school, and Indian actor Subir Banerjee went 57 years between film credits before appearing in the movie “Achal: The Stagnant” in 2012.

Click here to see amazing child actor performances of the last 100 years

Critically acclaimed performances by child actors have been an indicator of Oscar-winning roles to come for Christian Bale, Jodie Foster, and Natalie Portman. For  Anna Paquin, her screen debut in “The Piano” at age 11 earned her a Best Supporting Actress Oscar, making her the second-youngest actress to win a competitive Academy Award (Tatum O’Neal at 10 years old was the youngest). (These actors won an Oscar before the age of 30.)

We can only speculate about the careers of Heather O’Rourke and River Phoenix, actors who distinguished themselves in their formative years and died too soon. (These are 20 movie and TV stars who died far too young.)

Can short selling help fix climate change? The debate rages.

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Source: chinaface / E+ via Getty Images

By Mark Hulbert, Callaway Climate Insights

(About the author: Mark Hulbert is an author and financial markets columnist. He is the founder of the Hulbert Financial Digest and his Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at [email protected].)

CHAPEL HILL, N.C. (Callaway Climate Insights) — Might short sellers have a positive role to play in cooling the climate?

It’s an intriguing possibility, since short sellers otherwise have a terrible reputation. Corporate CEOs hate them, and many investors consider them to be immoral. Fighting climate change could be just the opportunity for short sellers to redeem their sullied reputation.

But just as short selling is itself controversial, its role in fighting climate change is proving to be surprisingly contentious as well. The debate recently erupted into full view with an op-ed in the Financial Times in which Jason Mitchell, co-head of responsible investment at Man Group, argued that “Short selling does not count as a carbon offset.”

This prompted an immediate counterpoint from Richard Slocum, Chief Investment Officer for the Harvard Management Company, the manager for Harvard’s endowment, and Michael Cappucci, Managing Director for Sustainable Investing at Harvard Management Company. They argued that Mitchell’s argument was “disappointing” and “unhelpful.”

Cliff Asness, founder of AQR Capital Management, also took issue with Mitchell. In a blog post titled “Shorting Counts,” he argued that Mitchell’s logic leads to “full-on ESG nihilism” in which climate-friendly investors should simply give up.

Divestment versus shorting

To appreciate what’s at stake in this debate, it’s helpful to step back. When you sell a stock short, you borrow shares from your broker and sell them in the open market —and commit to return to your broker an equivalent number of shares in the future, hopefully at a lower price. The stock exchanges have no way of knowing whether the shares you’re selling were owned outright (whether you’re divesting, in other words) or borrowed, so the act of short selling exerts just as much downward pressure on a stock’s price as divestment.

So if selling ExxonMobil (XOM) shares short doesn’t “count,” then divesting yourself of the ExxonMobil shares you own outright also doesn’t count. This is the ESG nihilism to which Asness is referring.

Needless to say, however, Mitchell undoubtedly knows this about the mechanics of short selling. Instead, I believe he is arguing that the mere act of selling shares (whether owned outright or borrowed) does very little to reduce carbon in the atmosphere. (In response to an email, he declined to comment.)

So the real issue is not whether short selling “counts” as much as divesting, but how much real-world effect either activity has.

What really ‘counts’?

If selling of any type is to have a real-world impact, it will be by increasing a company’s cost of capital. And, in theory, every share sold will marginally increase that cost.

In practice, however, that increase is minimal until the investors who are selling (or shorting) reach a critical mass. Absent that critical mass, selling the shares of a GHG-emitting company has little real-world impact other than enabling other investors who don’t care about the climate to purchase the shares at better prices.

This is a point that many have made before, of course. Tariq Fancy, who until 2019 was the chief investment officer for sustainable investing at investment firm BlackRock (BLK), the world’s largest asset manager, recently made this argument in an interview in the Wall Street Journal:

“There is no compelling empirical evidence that ESG investing mitigates climate change. Outside of a very small minority of private, long-term funds, such as venture-capital funds that back promising technological solutions to the climate crisis, the vast majority of funds marketed as ESG and sustainable funds today — as well as the non-binding practice of ESG integration into existing investment processes — can’t point to any real-world impact that would not have otherwise occurred.”

A counterargument that often comes up when discussing these issues is the campaign in the 1970s and 1980s to divest South African equities in protest of that country’s apartheid policies. While that campaign was ultimately successful, Lawrence Tint said that what made it successful was that the divestment effort eventually reached critical mass. Tint is the former U.S. CEO of BGI, the organization that created iShares (now part of BlackRock).

In an interview, Tint said that it took more than a decade of a broader social and political campaign against South Africa, including a boycott of South African company products, before the divestment effort began to have teeth. He said that he’s unaware of any other divestment campaign that was as successful as in the case of South Africa, so in that sense it is the exception rather than the rule. We’re kidding ourselves if we think that, absent critical mass, our individual efforts at divesting or selling short will have any impact on corporate behavior.

Fancy generalizes this point: “Divestment, which often seems to get confused with boycotts, has no clear real-world impact since 10% of the market not buying your stock is not the same as 10% of your customers not buying your product. (The first likely makes no difference at all since others will happily own it and will bid it up to fair value in the process, whereas the second always matters, especially for a company with slim profit margins and high fixed costs.)”

Two kinds of carbon offsets

With this discussion out of the way, we can return to this recent debate over whether shorting counts as a carbon offset. It turns out that there are two types of carbon offsets, and it’s important to keep them distinct.

The first type of carbon offset is what allows a money manager to tell the world that his portfolio is carbon neutral — a claim that an increasing number of managers are making. In this context, selling shares short can count as a carbon offset.

To illustrate, let’s say that a manager wants to continue owning Apple in his portfolio, even though the company says it won’t reach carbon neutrality until 2030. By shorting the shares of a big polluter — say ExxonMobil (XOM) — the manager can offset Apple’s carbon emissions and claim to be carbon neutral now — rather than in a decade’s time.

I’m fairly cynical about this type of carbon offsets, which strike me as being more about bragging rights and marketing than about changing the world. It’s not that such offsets have no impact whatsoever; it’s just that their impact is too little and too late to reduce carbon emissions by what’s needed to live up to the IPCC’s carbon budget for what will keep the climate from warming more than 2°C. above pre-industrial temperatures.

The second type of carbon offsets are those that at least hold out the hope of actually reducing the amount of carbon in the atmosphere: These are the projects in which corporations invest that sequester carbon from the atmosphere and permanently store it. Firms invest in these projects in order to offset the carbon emissions of their regular operations that they aren’t otherwise able to eliminate.

I hasten to add that many of the carbon offsets in this second sense are ineffectual—or worse. As I’ve written before, the vast majority — 82% in one study — of these offsets do not represent true emissions reductions. But at least offsets in this second sense are asking the right question, even if they come woefully short of answering it.

The bottom line? I come down on the side of those in this recent debate who believe that short selling “counts.” But I suspect that the victory they win is largely a Pyrrhic one, since in most circumstances what they count for is very little.

Callaway Climate Insights Newsletter

By David Callaway

Zeus: Two years later, climate change flipped on its head

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Source: KevinCass / iStock via Getty Images

By David Callaway, Callaway Climate Insights

(David Callaway is founder and Editor-in-Chief of Callaway Climate Insights. He is the former president of the World Editors Forum, Editor-in-Chief of USA Today and MarketWatch, and CEO of TheStreet Inc.)

SAN FRANCISCO (Callaway Climate Insights) — Two years ago on St. Patrick’s Day 2020, the first day of what would become a global Covid lockdown far longer than anyone imagined, we launched Callaway Climate Insights to chronicle the fascinating shift of international investment toward renewable energy to save the planet.

I chose St. Patrick’s Day because, well, its color is green. And I’m mostly Irish. And my friend and business partner, Stephen Rae, lives in Dublin. But really because I hoped that each year on our anniversary as we toasted our progress, we would also have great new opportunities in clean technology to celebrate. Opportunities that would drive a new bull market in environmental, social and governance investing.

Instead, as so often happens in markets, the world was flipped on its head. . . .

To read the full column, all our insights, news and in-depth interviews, please subscribe and support our great climate finance journalism.

Callaway Climate Insights Newsletter

By David Callaway

These renewable stocks are rare winners in the Russian global meltdown

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Source: marufish / Flickr

By David Callaway, Callaway Climate Insights

For all the devastating impact Putin’s War is having on the environment global and global energy prices, it’s amazing that renewable energy stocks are the big winners in the past month.

Yet it’s precisely the war and the surge in oil and gas prices worldwide that is causing investors to flock to renewable energy stocks such as solar, wind, tidal, and nuclear. For all the damage, it may take such a shock to the world to jolt it into finally getting serious about transitioning off fossil fuels. That’s the bet at least, especially in Europe.

Among the biggest winners on the Callaway Climate Index since Russia’s invasion last month are Fusion Fuel Green Plc (HTOO), a Dublin-incorporated green hydrogen company; mineral miner Piedmont Lithium (PLL); and Maxeon Solar Technologies (MAXN), the Singapore-based maker of solar panels.

Of course, the oil stocks such as ExxonMobil (XON) and Chevron Corp. (CHV) are higher also, reflecting the surge in oil prices to above $120 a barrel last week. They have since come down and were last trading just under $100 a barrel.

Investors are pushing the renewable play, however, and big wind companies in Europe, which have faded in popularity in the last year, are suddenly hot again. Almost $900 million was pumped into clean energy ETFs last week alone, according to Bloomberg. with such funds as the Invesco Solar ETF (TAN) and the iShares Global Clean Energy ETF (ICLN) attracting hundreds of millions of dollars in new funds.

Whether that money will stay in clean energy when the rest of the market begins to bounce back, whenever that is, remains to be seen. But for a clear sign of what happens in the markets when the world faces an energy emergency, as we will certainly do again, this is a rally worth remembering.

More insights below . . . .

Carbon price plunge on war highlights huge disclosure gaps

. . . . For most of the past two years, the emerging carbon credit markets have been a one-way bet: higher. That’s changed with Putin’s War, which led to a spike in oil prices and, unexpectedly, a collapse in carbon credits. David Callaway looks at what happened and why it highlights an urgent need for better transparency and corporate disclosures in these new markets. . . .

Read the full column

This is what college activists want from universities in 2022

. . . . More than 1,500 universities have promised some sort of divestment from fossil fuels in their portfolios in the last several years, representing almost $40 trillion. But university activists want more, writes Abigail Weiss from New York. To begin with, they want proof the colleges are divesting as they say they are. With oil prices all over the map, 2022 is going to be a landmark year. . . .

Read the full story

Tuesday’s subscriber insights: It ain’t easy being green

. . . . It ain’t easy being green, but at least you’re lucky in love. That’s the finding of online dating site OKCupid, which found that more than 80% of potential matches are looking for some sort of environmental awareness in their partners. And watch out, guys, it’s the ladies who are most concerned about warming. Read more here. . . .

. . . . As the Ukraine crisis grows, investor focus is intensifying on tidal energy, particularly in Britain and France. And the often-forgotten renewable has many advantages that wind and solar don’t, as in it never stops. Investors are wading in, with funds going to tidal strategies up more than 50% last year. Read more here. . . .

. . . . China’s renewables schizophrenia continues. On the one hand it now leads the world in many renewable spaces, such as wind. On the other it ramps up its commitment to coal to feed the energy needs of its massive population. Can one country be both a leader in renewables and in fossil fuels? Read more here. . . .

. . . . It’s the flickering. Real or imagined, residents living near wind turbines don’t like what’s called ‘shadow flicker,’ which happens when shadows from moving wind turbines are cast upon homes and offices. And it’s going to grow as more turbines are erected. But a new study finds that the critics of the phenomenon are a small but vocal minority. Still, an unexpected challenge as the world gears up for more wind, and the inevitable protests that will accompany it. Read more here. . . .

Editor’s picks: Deadly flooding from Cyclone Gombe,

New York girds for climate change sea-level rises

In anticipation of sea-level rises and the resulting flood risks, New York City has partnered with federal agencies to create a $1.45 billion resiliency and flood protection area as part of the East Side Coastal Resiliency Project. A city official told ABC News that “through science-based analysis, policy and program development, and capacity building, the city’s resiliency efforts are ensuring that New York City is ready to withstand and emerge stronger from the multiple impacts of climate change, including from more frequent hurricanes, higher sea levels, extreme precipitation and more extreme temperatures.” The report also noted the project is expected to be completed by 2025 and will result in a 2.4-mile system of flood walls and floodgates, as well as elevate parts of the region by up to 9 feet, to keep the storm surge out of the neighborhood.

Cut (out) the lawn

Lawns are taking up about half the water used in Colorado’s cities, and state lawmakers are working on a bipartisan effort to launch a “statewide turf replacement program, which would pay homeowners and business owners to replace their non-native, ornamental lawns with plants and landscapes better adapted to the state’s dry climate,” The Associated Press reports. According to the report, 19 Colorado cities, utilities and water districts already have turf replacement programs. The proposed bill would offer matching dollars for those programs, adding to the rebate property owners would receive, and help governments launch programs of their own.

Callaway Climate Insights Newsletter

By David Callaway

The Most Import-Dependent Economy in the World

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Source: Art Wager / Getty Images

The lines of trade around the world have just become more complex. Sanctions against Russia because of its invasion of Ukraine have immediately affected the movement of oil, semiconductors, and, to some extent, money. Russia’s exports of oil have slowed substantially. Its ability to import goods from most of the Western economies has diminished sharply. The effect on energy prices, particularly in Europe, has already begun.

Even huge economies like the U.S. rely on imports, despite the country’s ability to build everything from cars to commercial airplanes. America relies on electronic components for a long list of consumer and business technologies. Some food products not grown in the U.S. also get imported. The global economy relies tremendously on trade, and the most import-dependent country in the world is Hong Kong.

The COVID-19 pandemic has affected the world in many ways, including global trade. Many of the nations whose economies have struggled most during the pandemic are heavily dependent on international trade. Some are low-income countries like Somalia, while others may be geographically small but have among the highest global per-capita incomes, like Luxembourg. (Somalia ranks among the poorest countries in the world.)

To find the most trade-dependent economy in the world, 24/7 Wall St. ranked countries by imports as a percentage of gross domestic product, using data from the World Bank. Additional data is also from the World Bank for the most recent year available and in current U.S. dollars. Exports and imports of goods and services include merchandise, freight services, communications services, banking, insurance, royalties, licensing fees but not factor services, like the cost of employee compensation, investment income, or international money transfers.

Smaller countries lacking in natural and human resources tend to be more reliant on trade due to limitations of their size. Larger countries may be dependent on trade due to their stage of economic development as they work toward industrialization and diversification. Being reliant on trade makes these economies more vulnerable to global trade downturns.

Hong Kong imports are valued at $606 billion, or 175% of its GDP of nearly $347 billion. The special administrative region of China also exports about as much, with total trade worth over 351% of its GDP. This means that while the country has the 35th largest economy by GDP, it has the second highest total trade value at $1.2 trillion. A portion of trade in Hong Kong consists of transshipment, or goods that travel through the country. (Find out if Hong Kong is among the 25 richest countries in the world.)

Click here to see the most import-dependent economies in the world

Carbon price plunge on war highlights huge disclosure gaps

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Source: AndresGarciaM / Getty Images

By David Callaway, Callaway Climate Insights

(David Callaway is founder and Editor-in-Chief of Callaway Climate Insights. He is the former president of the World Editors Forum, Editor-in-Chief of USA Today and MarketWatch, and CEO of TheStreet Inc.)

The European carbon credit market had for most of the past two years been a one-way bet. But Putin’s invasion of Ukraine changed all that.

Carbon prices that had closely correlated with rising oil prices ahead of the invasion — reaching a record of €95 ($104.29) the day before Putin’s troops entered Ukraine last month — suddenly tanked, a victim of a short squeeze in oil markets that forced big carbon polluters to sell credits to grab liquidity as global markets reeled.

The decline to as low as €58, and the subsequent bounce back to about €76 as of the end of last week, highlights the fragility of a new market that had been riding high on Europe’s move toward de-carbonization and renewable energy ahead of the war over Ukraine. It also is an early indication of the need for more transparency and disclosure among companies, banks, and other financial firms about potential risk.

A new report out this week from the European Central Bank highlights that while about three-quarters of European banks are making some progress disclosing parts of their climate governance practices, the majority . . . .

To read the full column, all our insights, news and in-depth interviews, please subscribe and support our great climate finance journalism.

Callaway Climate Insights Newsletter

By David Callaway

This is what college activists want from universities in 2022

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Source: lucentius / Getty Images

By David Callaway, Callaway Climate Insights

By Abby Weiss

(Abby Weiss is a journalism major at Syracuse University, has served as the Digital Managing Editor for The Daily Orange and a as reporter for InsideClimate News.)

SYRACUSE, N.Y. (Callaway Climate Insights) — In 2021, a decade after the first student divestment campaign launched at Swarthmore College in Pennsylvania, a series of big-name universities, including Harvard University and the University of Michigan, made some type of commitment to clean their investment portfolios of fossil fuel holdings, marking last year as what some experts would call a tipping point for fossil-fuel divestment.

But student activists want more in 2022, including regular disclosure of progress, elimination of fossil fuel research funding and stricter carbon neutrality goals.

“It’s fundamentally bizarre that institutions of higher education are effectively lending out their own credibility to companies that, time and again, have just shown that they have no interest in being part of a just energy transition or not taking it seriously enough,” said Ilana Cohen, a member of Harvard University’s class of 2023.

Cohen, an organizer of Fossil Fuel Divest Harvard, which successfully convinced Harvard to fully divest in September, said she thinks 2022 will be the year the divestment movement moves to the next level. This means pushing administrators to reinvest in businesses that support frontline communities most impacted by the climate crisis and to dismantle other ties to the industry, including allowing fossil fuel companies to fund research.

Harvard University, which has the largest endowment of any university, announced that it will allow its investments in the fossil fuel industry to expire and will not form any future partnerships with private equity funds in the fossil fuel industry. Harvard declined an interview with Callaway Climate Insights.

In total, as of October 2021, roughly 1,500 institutions worldwide have pledged to divest as much as $39.2 trillion in fossil fuel assets, a number that tops the annual GDP of China and the U.S. combined. Nearly 15% of that number are educational institutions, the second largest group behind faith-based organizations, according to the Global Fossil Fuel Divestment Commitments Database.

Cohen said she and Fossil Fuel Divest activists want Harvard to strip the fossil fuel industry’s influence and funding of its curriculum. For example, Shell (SHEL) funds climate economics research and ExxonMobil (XOM) is listed as a supporter for corporate social responsibility initiatives.

“When fossil fuel companies are funding research at Harvard’s campus, they’re doing it with a very clear agenda,” she said. “It’s fundamentally problematic that the university is allowing these companies which we know have records of deceiving the public, which are not aligned with the Paris Agreement, which are clearly at odds with Harvard’s own espoused climate-action commitments, to have that rule in the production of knowledge that goes on to shape public policy that affects all of our futures.”

Cohen said she and Fossil Fuel Divest Harvard activists will also push officials to disclose Harvard’s fossil-free portfolio and provide a more expedited timeline on when Harvard’s divestment is going to happen.

Adam Aron, a University of California San Diego professor and member of USCSD Green New Deal, also demands a full listing of investments and more progress updates from the University of California system, to ensure UC doesn’t reinvest. The UC system announced in June 2020 that it has completely divested from fossil fuels, having sold $1 billion in assets from all its investment portfolios.

But the University of California confirmed to Callaway Climate Insights that it instead de-risked fossil fuels, meaning the removal of stocks and bonds from fossil fuel companies may be temporary, not permanent.

The University of California has 10 campuses, 280,000 students, 227,000 faculty and staff, with 2 million alumni.

Aron said without full transparency, he cannot be sure whether or not UC will reinvest. Aron wants UC to pledge to make a declaration to permanently divest from fossil fuels.

“I don’t think it’s done, even if much of the wider world thinks, ‘Hey, UC has divested.’”

He said heading into 2022, UC should focus on cutting off ties with banks and insurers that are heavily implicated in fossil-fuel extraction. He said this move may be more impactful to America’s use of fossil fuels than the stocks and bonds business.

“I don’t think there’s anything symbolic about the banks, right? If the University of California would announce that it is no longer going to use banks that are involved in fossil-fuel extraction, it’s going to go with other banks that aren’t, with credit unions. And that happens, you know, enough around the country, you can bet that the banks will change their tune pretty quickly and stop financing fossil fuel extraction.”

Eric Halgren, a UCSD professor and Academic Senate member, said the organization’s members are asking UC to give an accounting yearly of its stocks and bonds, both public and private, as well as carbon reserves and carbon exploitation.

Another goal is to make climate education part of the general curriculum, which he believes will be achieved within a year and will also inspire more students to become climate activists. The movement will also work towards the electrification of University of California’s 10 campuses.

“The University of California is an enormous institution with an enormous number of employees and students. And we have big campuses and we burn a lot of methane. So, we want to make it carbon free,” he said.

Electrify, don’t just divest

Robert Pollin, an economics professor at the University of Massachusetts Amherst and founding co-director of its Political Economy Research Institute, said that electrifying campuses should be the focus of universities, not divestment.

While he supports the spirit of the divestment movement, these commitments have minute impact in the path to net zero emissions because private equity firms and hedge funds will buy and profit off those assets. Universities can make more of an impact by pledging to stop burning fossil fuels altogether rather than sell their stocks, he said.

“We’re not really interested in universities divesting from fossil fuels, we’re interested in ending that fossil fuel as a source of energy,” he said. “What we really need to do is see institutions that have ethical motivations to just stop buying fossil fuels, and do it as quickly as possible.”

Major universities have set goals to make their endowment carbon neutral. University of Michigan pledged to eliminate direct, on-campus (Scope 1) emissions by 2040 and achieve net-zero purchased power (Scope 2) emissions by 2025.

Jonathan Morris, a PhD candidate at University of Michigan and former organizer of the Climate Action Movement, said the movement wants the university to aim for carbon neutrality by 2030 instead of 2040 to coincide with the city of Ann Arbor, where it is located. He said the university’s CO₂ emissions targets should be stricter than the Intergovernmental Panel of Climate Change’s goal of 50% reduction by 2030.

“[University of Michigan] has one of the biggest endowments. We should be exceeding that curve and doing it as fast as possible, faster than other institutions to sort of show them what’s possible, and to show others that we’re actually taking it seriously,” he said.

Activists also see the divestment movement growing stronger in the coming years, where administrators begin to listen to their students more closely than they do with CEOs of fossil fuel companies.

Connor Chung, a junior at Harvard and Fossil Fuel Divest Harvard organizer, said their victory in 2021 was a vindication for student activists who spent a decade telling Harvard that these fossil fuel investments are not only immoral, but financially imprudent.

“Students predicted the market trends that Harvard did not. And as a result, eventually, as a result of this activism, eventually Harvard had to move,” he said.

One of the obstacles to further divestment is the fact that oil prices have soared in recent months as global economies have come out of the COVID-19 pandemic and Russia continues to invade Ukraine.

As of early Tuesday, the front-month contract for West Texas Intermediate Crude futures was trading at $102.31.

Universities may be hesitant to sell winning and money-making assets, but reports show that in the long-run divestment from these companies is better business. A decade ago, the energy sector made up 15% of S&P 500. As of April 2020, that number has lowered to 3%.

BlackRock (BLK), the world’s largest asset manager, also said in its 2021 report that “no investors found negative performance from [fossil fuel] divestment; rather neutral to slightly positive results.”

“Fossil fuels are already experiencing significant long term losses in the market. And there’s every reason to think that trend will continue in the long run,” Chung said.

Callaway Climate Insights Newsletter

By David Callaway

Cities Emitting the Most Carbon Dioxide in the World

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Source: Sean Pavone / iStock via Getty Images

Though the threat of climate change has been looming for decades, the reality that it does, in fact, represent an existential crisis did not hit home for most people until quite recently. Just in the last few years, huge temperature swings, extreme weather events, large-scale flooding, and wildfires are disrupting the lives and livelihoods of people around the world in terrifying ways.

This past summer, the UN once again sounded the alarm about the immediate imperative to take action to reduce the emission of heat trapping gases, with the Secretary General calling the report a “code red for humanity.”  While it is now too late to reverse climate change, governments can still slow its pace and work to avoid increasingly more devastating consequences.

Countries around the world are revising their climate action plans in light of frightening new data, tightening their emission goals and reinvigorating their energy greening and efficiency programs. Most have set a target of either 80% reduction or net zero carbon emissions by 2050, but, still, most are not on track to meet those goals, as their governments struggle with economic realities and lack of momentum.

Fortunately, cities everywhere are also taking up the challenge, often surpassing their national leadership in planning and innovation. While they are usually burdened with energy systems and policies under the control of their country’s leadership, with limited opportunity to change course, many cities have taken citywide and community based measures to lower emissions, often pairing these efforts with economic and social goals.  

Because humanity has been slow to address climate with the urgency it requires, it is difficult to know how well currently revised plans and good intentions will play out. The best and most grounded national and municipal plans provide for close monitoring and plan revisions, however, allowing for the measuring of progress and the kind of reality check crucial to actual success.

Click here to see the cities emitting the most carbon dioxide in the world

To identify the cities with the worst CO2 emissions in the world, 24/7 Wall St. reviewed Nangini, C et al. (2019): “A global dataset of CO2 emissions and ancillary data related to emissions for 343 cities,” published in 2017 and available through data publisher Pangaea. Emissions data were collected in each of the cities on this list between the years of 2011 and 2017, in each case the most recent year for which CO2 emissions data is available. 

Emissions figures from transport, industrial, waste, and local power plants within city boundaries, as well as emissions (when available) from grid-supplied energy used by cities and produced by power plants outside city boundaries, were also obtained from the study.

As world kickstarts oil again, climate is destroying Australia under our noses

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Source: namchetolukla / iStock via Getty Images

By David Callaway, Callaway Climate Insights

(David Callaway is founder and Editor-in-Chief of Callaway Climate Insights. He is the former president of the World Editors Forum, Editor-in-Chief of USA Today and MarketWatch, and CEO of TheStreet Inc.)

Without a doubt the most under-reported story of the past month, as Russia started a new war, has been the impact of devastating floods in Australia and some of its largest cities. As the U.S. and European governments prepare to dramatically increase usage of oil and gas and coal to fight crippling energy price increases, what may be the worst climate disaster yet is laying waste to the eastern half of an entire continent.

Thousands were hit with mandatory evacuations this week in Sydney, Australia’s financial capital. Insurance companies report being buffeted with claims, as streets are turned into rivers and an overflowing dam threatens hundreds of homes in Sydney suburb Manly. Entire small towns in New South Wales and Queensland have been submerged, according to reports.

The floods, caused by torrential rains dubbed “bomb rains” because of the speed and intensity of the downpours, are set to be the most costly natural disaster in Australian history. The costs to business, insurance, and the associated rise in inflation are changing the political and financial dynamic in a country known for its anti-climate-change government and historic reliance on energy and mining.

Coming just a few years after a series of wildfires laid waste to millions of acres, the floods are a dramatic example of how climate change — unchecked — will soon hit other parts of the world, such as Africa, and Latin America.

The irony of the rest of the world doubling-down on oil and gas as global warming takes another victim won’t be lost on historians. Climate change is no longer a slow-motion disaster, but even in the face of a major national emergency such as the floods in Australia, the rest of the world still seems to find some reason to look the other way.

More insights below . . . .

Brussels kickstarts Green New Deal to ditch most Russian fuel by end of year

. . . . The European Union kickstarted its Green New Deal this week to move faster to transition to renewable energy with plans to ditch up to two-thirds of Russian oil and gas by the end of the year, writes Alisha Houlihan from Dublin. Climate Commissioner Frans Timmermans conceded, though, that quickly moving away from Russian gas would likely result in a jump in coal usage, something the European block had been firmly trying to avoid. Ministers must now debate regulatory measures to shield some member countries from crippling price increases. . . .

Read the full EU notebook

Ukraine war throws lifeline to Big Oil

. . . . Putin’s War may yet be the catalyst for the world more quickly adopting renewable energy, but in the short term it’s driving energy prices higher worldwide, throwing a lifeline to big oil companies and effectively crippling President Joe Biden’s climate agenda, writes Bill Sternberg from Washington, D.C. The potential for shortages of gas and oil is also enhancing the argument for nuclear energy as a renewable transition fuel, despite the potential dangers, illustrated just last week with the Russian attack on the Zaporizhzhia plant in southeastern Ukraine. . . .

Read the full EU notebook

Thursday’s subscriber insights: Record offshore wind auction turns political

. . . . When an auction of seabed rights for offshore wind turbines in the New York/New Jersey Bight raised record amounts last week of more than $4.4 billion, some raised concerns about permits, pointing to the 10-year permitting process experienced by the Vineyard Wind project in Massachusetts. A week later, we’re beginning to see some of the same issues in the Garden State, where local hearings have started amid some, uh, colorful objections. Read more here. . . .

. . . . Goldman Sachs became the first major Wall Street financial firm to pull out of Russia this morning, providing cover for others to follow, including maybe one of the biggest Russian players, JPMorgan Chase & Co. (JPM). Goldman (GS) reportedly has less than $1 billion in assets in Russia, but the move is symbolic of Wall Street joining many other companies around the world in suspending Russian business in protest of its invasion of the Ukraine. As we told subscribers earlier this week, expect more to follow suit, especially since financial lifelines have been cut on a global scale. . . .

. . . . Last month, Ford revealed that its new F-150 Lightning EV truck could send power into people’s homes if they need it. Now it appears GM has gone a step further by doing the same thing but having it integrated with the electricity grid. A pilot program in California, one of the biggest adopters of electric vehicles — but also where a huge debate about net-metering from solar homes to the grid is happening — is due to begin soon. In any event, the bar has just been set a bit higher in the EV world. Read more here. . . .

. . . . The White House announcement this week that it is restoring California’s ability to set its auto emissions regulations is a big breakthrough. After all, vehicles are the biggest U.S. polluter. Also, the Golden State’s regulations are increasingly being adopted by other states, a process that will soon make it not worthwhile for automakers to produce two types of cars. Read more here. . . .

. . . . In a novel lawsuit, salmon are suing cities in Washington state, saying that their rights are being impinged by dams that have been constructed and blocked their natural habitats. Sound fishy? Read more here. . . .

Editor’s picks: A bad day for bees; omnibus bill brimming with water resource, flood projects

A bad day for bees

The Environmental Protection Agency is expected to go ahead with a plan to extend for 15 years the use on American farmlands of four types of neonicotinoid chemicals known to be dangerous to bees and other insects. A report in the Guardian notes the European Union is moving to ban the use of these toxins, which have been blamed for widespread insect declines. According to the report, the EPA will extend the use of imidacloprid, thiamethoxam, clothianidin and dinotefuran despite the fact the agency has acknowledged “ecological risks of concern, particularly to pollinators and aquatic invertebrates.” The Guardian reports that an EPA spokeswoman said that review decisions for the neonicotinoids will be issued late this year and that mitigation rules for their use are being considered.

Omnibus bill flooded with water and resource projects

E&E News reports the $1.5 trillion fiscal 2022 spending deal is “awash in cash for water and natural resources projects, including a number of Republican proposals to gird coastal communities against the effects of climate change.” The report notes this is the first time in years the omnibus package includes congressionally directed spending, or earmarks. This bill includes about $4 billion in requested earmarks, including restoration work in South Florida, a levee and flood control project southwest of New Orleans, and more flood mitigation projects in the Mississippi Delta. The bill could fund as many as 2,700 projects. The House late Wednesday passed the bill, which will keep the government running through the end of September and which includes  to keep the government running through the end of September and includes $13.6 billion in emergency assistance to Ukraine and NATO allies. President Joe Biden is expected to sign the bill today or Friday.

Ranking S&P 500 companies on corporate GHG emissions reports

The SEC is poised to announce a decision on corporate social responsibility reporting, and the decision could “break the impasse over whether reporting should be solely for the benefit of investors — single materiality — or for the benefit of investors and the public — double materiality,” says Lynn M. LoPucki, of the UCLA School of Law, author of Corporate Greenhouse Gas Disclosures, a comprehensive study of corporate greenhouse gas reporting under the GHG Protocol. “Public use of the GHG data will be possible only through rankings by trusted intermediaries. This Article proposes methods for ranking S&P 500 companies based on corporate GHG emissions reports. It demonstrates those methods by ranking the studied companies,” LoPucki writes in the abstract.

Words to live by . . . .

“Fossil fuels are a dead end — for our planet, for humanity and for economies.” — António Guterres, secretary general of the United Nations.

Callaway Climate Insights Newsletter

By David Callaway

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