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Fossil Fuel's Persuasive New Strategy

[fa icon="calendar'] Oct 21, 2014 10:27:35 AM / by Carol Pierson Holding

By Carol Pierson Holding

The Climate Policy Initiative (CPI) just released an analysis of the “Financial Impact of theGulf of Mexico Coming Low-Carbon Transition,” which computed the potential value lost to stranded assets, or what fossil fuel companies will have to leave in the ground in oil, gas and coal. The CPI estimated the lost value at $1.1 trillion, plus another $1.8 to $4.2 trillion for the transport sector (think oil trains.) This total of $2.9-$5.3 trillion represents up to one quarter of total U.S. stock market value.

While the CPI report was meant to be positive – operating savings (think of the expense of solar panels vs. a coal plant) would offset stranded assets, creating a net positive of $1.8 trillion—it still sounded terrifying. And while the report claims the worst impact will be on Governments, which own 50-70 percent of fossil fuel companies and generate substantial revenue through taxes and royalties, I felt distracted from my central concern about climate change. Could we absorb the coming disruption?

The oil companies offer a painless alternative. Yes, we have to transition to renewable energy, but who better to lead that transition than the energy giants? Their leadership campaign is three-pronged:

First, acknowledge the need to transition away from fossil fuels.

This tactic was first used by Shell Oil. In its 2013 New Lens Scenario, Shell acknowledged that such a transition was necessary and offered a non-disruptive way to achieve 100% renewable energy by 2100: to minimize economic disruption, transition first to natural gas. Even liberals like Amory Lovins endorsed the strategy.

Now, 1½ years later, the entire fossil fuel industry has followed suit. Even the arch-conservative organization Heartland Institute has dropped its terror tactics (recall their 2012 billboard headlined “(The Unibomber) Still Believes in Global Warming. Do You?”). and gone so far as create the Climate Change Awards, which in July 2014 granted up to $50,000 each to ten scientists, economists and activists who support a “free-market approach to climate change” and “speak out against global warming alarmists.”

Second, address consumers directly with messages of safety and continuity.

Oil companies are running network television advertising not that different from the “Morning in America” calm, optimistic commercials that put Ronald Reagan in the White House.

You do get a sense of peace watching BP’s “Committed to America” spot.

Exxon/Mobil’sFuel Connections” ad offers gas that “cleans intake valves, helping engines run smoother and reducing emissions” providing “better fuel economy.” Amazing.

Chevron’s “We Agree” campaign advocates natural gas, with the admonition “We’ve got to be smart about this.”

Third, and this might be a fortuitously-timed accident: they lowered gas prices.

According to Thomas Friedman writing in the New York Times, U.S. and Iraqi oil companies have lowered their price per barrel in order to “bankrupt” Russia and Iran. Putting aside whether it’s a smart strategy to destabilize unfriendly, combative countries, the drop in oil prices could also change the economics of electric cars. Low gas prices coupled with messages about gas that gives “better fuel economy” cast doubt on the e-vehicle and hybrid claims are a better value.

And as oil companies align themselves with the U.S. government’s foreign policy, they’ll have better leverage in their quest to open our East Coast to drilling.

Finally, let’s not forget the threat of major economic dislocation. For stockholders, stranded assets add uncertainty to a stock market that’s already roiling. Another reason not to rock the boat by demanding a transition to renewables that’s too fast and disruptive.

Safety is beginning to look pretty good, even to me. You just have to ignore the reality of a dying planet, which over the last week, has been easier to do. Ebola and ISIS dominate the news. An admittedly small sample of media shows a disturbing lack of climate change news. Even the Huffington Post’s reliable “Green” alerts have seemed stretched away from real climate news to include Ebola coverage, like the nurse’s dog story, and lots of news about the climbers who died in Nepal.

It’s a shame how easy it is to distract us.

Photo courtesy of sporst via Flickr CC.


Carol Pierson HoldingCarol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 9,300+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 9,300+ companies from 135 industries in 106 countries. By aggregating and normalizing the information from 343 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

 

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[fa icon="comment"] 1 Comment posted in climate change, Climate Change Awards, CPI, Exxon, fossil fuel, natural gas, Shell, Uncategorized, oil companies, BP, Carol Pierson Holding, Climate Policy Initiative, East coast drilling, Heartland Institute, solar panels

Climate Change Advocates Need Positive Branding

[fa icon="calendar'] Sep 16, 2014 9:54:19 AM / by Carol Pierson Holding

By Carol Pierson Holding

The idea of branding climate change seems like another exercise in navel-gazing until you China pollutionconsider the effectiveness of the opposition. They’ve got branding down, relentlessly repeating the mantra, “science is inconclusive and solutions are exorbitant and unproven.” On the other hand, environmentalists repeat vague Cassandra-like warnings of “climate change” and “global warming,” supporting dire predictions with confusing statistics, hard-pressed to come up with simple, relevant messages.

Even relatively green media like the New York Times end up reinforcing the fossil fuel messages, especially in their business sections. In an unfortunately common example, Friday’s Huffington Post called out the New York Times for “overhyping the benefits of fracking…(claiming that it was) changing the economic calculus for old industries and downtrodden cities alike.” Fracking equals jobs and a better economy, the article claimed. But Huffington Post reporter Mark Gongloff quoted Dean Baker, co-director of the Center For Economic And Policy Research, who found that in fact fracking communities had a worse record for factory jobs than the U.S. as a whole. Still, when it’s reported in the New York Times

Climate deniers are brilliant at setting up simple, memorable and scary financial calculations that brand climate change activists as prioritizing the environment against the economy. They pit environmental health against jobs. They equate renewable energy with sky-high utility bills. They warn electric cars have no range and will leave you stranded and solar panels will burn your house down. And my favorite, heard quite a bit in the halls of Congress: why should the U.S. pay to clean up the atmosphere when China now emits more greenhouse gas than we do?

Again, even environmentally-friendly media reinforce this trope. The latest is last week’s Rolling Stone article titled “China, the Climate and the Fate of the Planet.” The article is rife with fodder for climate solution obstructionists, starting with author Jeff Goodell’s front page called-out quote:  “If the world’s biggest polluter doesn’t radically reduce the amount of coal it burns within the next decade, nothing anyone does to stabilize the climate will matter.”

True, China’s contribution to atmospheric CO2 is now over 10 billion metric tons a year, and 25 years of climate negotiations have failed utterly. But Goodell’s article did not have to lead with the negative. He could have highlighted that China is now the largest consumer of solar power and that this year, 60 percent of its new energy production was from renewable energy sources, even higher than the U.S. at 53.8 percent. That it’s making every effort to close coal plants. Or that even in the face of beatings or worse, its citizens are still rioting in the streets against fossil fuel production.

Iconic graphic designer Milton Glaser, creator of the “I Love New York” logo, developed a climate change branding campaign with buttons and billboards that feature a black circle fading to a small green strip at its bottom edge over the slogan “IT’S NOT WARMING. IT’S DYING.” Position this message against one of the current denier billboards that proclaims “’Green’ Climate Policies: Probably unnecessary. Certainly ineffectual. Ruinously expensive.” Which one sounds more rationale? More persuasive? Easier to adopt? Commenting for Fast Company, Adele Peters questions Glazer’s negative approach but remains hopeful that he’s tackled the challenge. Her closing thought is absolutely correct: “We need more brilliant designers and marketers tackling the messaging about climate change in different ways--especially in the U.S., which leads the world in climate denial.”

Photo courtesy of DaiLuo via Flickr CC.


Carol Pierson HoldingCarol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 9,100+ companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 9,100+ companies from 135 industries in 104 countries. By aggregating and normalizing the information from 339 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

 

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[fa icon="comment"] 0 Comments posted in climate change, CSR, environmental pollution, fossil fuel, fracking, global warming, Uncategorized, sustainability, Carol Pierson Holding, CO2, coal, CSRHub, environment, greenhouse gas, renewable energy, solar panels

Could the Wind Industry End Fossil Fuel Subsidies?

[fa icon="calendar'] Jan 22, 2013 9:28:48 AM / by Carol Pierson Holding

By Carol Pierson Holding

After a year where wind producers sat on their hands, waiting until Congress decided whether the wind tax credits would be extended, it finally happened: on December 31, as part of the fiscal cliff deal, Congress extended the production tax credit (PTC) for wind and other renewables through the end of 2013.

But one year is not enough time to get a wind production facility up and running. There are plenty of wind operations — some 100 pre-operational wind projects in the Northwest alone — that are far enough through planning stages to break ground in time to qualify. But any longer-term projects are stalled because of the lack of predictability for tax credits. Wall Street can’t invest with that much uncertainty. Even operating concerns cut back. In fact, this year’s uncertainty caused turbine manufacturers including Siemens and Vestas to cut back in the middle of last year.

What galls Energy Policy Expert Fred Hewitt is that energy subsidies have been a fixture of American policy since the dawn of the fossil fuel era, and yet lawmakers refuse to make subsides for wind anywhere near permanent. Some eighty years ago, special treatment in the tax, accounting and business formation codes, from special depreciation and Federal resource leasing rules, was put in place to support building the electric power system. Similar subsidies were given to the nuclear industry fifty years ago in the form of legal shielding in case of accident. These special incentives still exist today.

And yet the renewable energy industry has to apply every one or two or five years to have their incentives renewed.

Wind has its negative impacts of course. Wind patterns are disturbed. Loud whirring interrupts the bucolic quiet. Birds are decimated if they fly into a turbine. All energy sources have their impacts.  Only renewables are free from carbon emissions.

Fossil fuel lobbyists argue that wind is not reliable and has yet to prove its financial viability. But wind is no longer an energy source that has to prove itself. It’s a bonafide industry, drawing in investments of $15.5 billion a year with 500 companies currently competing in the US alone. Small wind turbines are being installed in factory locations to protect manufacturers from energy shortages and price fluctuations. And because utilities have requirements to source additional energy from emission-free sources, future demand is assured. See 90 of these companies’ CSR ratings on CSRHub.

Still, how will this new industry go up against the might of its competitors, fossil fuel companies determined to slow its progress?

Despite its drawbacks, the PTC extension is not all doom. The fact that it passed at all amidst the chaos of the fiscal cliff is remarkable. While wind champions are generally pro-environmental Democrats, support was bi-partisan. Central state Republicans like members of the Red State Renewable Alliance supported the measure on behalf of rural constituencies for whom wind development is an economic Godsend. As Hewitt puts it, “This is an important political signal.”

Still, the PTC will continue to be problem until it is extended for multiple years. The industry has come up with a compromise: through the American Wind Energy Association, the industry has offered a voluntary proposal to Congress to phase out Production Tax Credits over six years. Why six years? Because that’s how long it will take for wind to establish a stable base market in the U.S. and to invest in new innovations such as off-shore wind power.

Hewitt describes the kicker: they want all energy industries to do the same, phasing out special treatment of any kind. Over the same six years.

Many agree. The Environmental Defense Fund is quietly stirring support for getting all energy industry players agree to phase out subsidies, a goal that Obama touted in his State of the Union Address and which the G20 agreed to do for fossil fuels at their meeting last September.

How fitting that the wind industry, the youngest player and the one that really needs the subsidies, is the first to volunteer to give them up. Could it be that renewables are not only the most conservative environmentally but fiscally too? You have to love the irony.

[csrhubwidget company="Vestas-Wind-Systems" size="650x100" hash="c9c0f7"]

Photo is courtesy of vauvau via Flickr CC.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 6,700 companies worldwide. Carol holds degrees from Smith College and Harvard University.



CSRHub provides access to corporate social responsibility and sustainability ratings and information on over 6,700 companies from 135 industries in 82 countries. By aggregating and normalizing the information from 200 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

 

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[fa icon="comment"] 1 Comment posted in American Wind Energy Association, corporate social responsibility, fossil fuel, Fred Hewitt, nuclear, Uncategorized, wind, PTC, Carol Pierson Holding, CSRHub, renewable energy

Can Climate Change Activists Enlist Mainstream Investors?

[fa icon="calendar'] Nov 19, 2012 2:24:01 PM / by Carol Pierson Holding

By Carol Pierson Holding

On November 7 in Seattle, 350.org launched its “Do the Math” campaign to target college and university investment funds to divest of fossil fuel stocks. While this strategy is bound to raise awareness among college kids, I initially questioned if there was enough money at stake to actually influence behemoths like Exxon.

The audience at the kick-off was not a radical crowd. Like the Keystone Pipeline protests, attendees were about half college students and half veterans of previous divestment efforts. I walked in with two such veterans, now oceanographers in their 60s.

Ticket demand in Seattle was so intense that the event had to be moved to Benaroya Hall, where 2,000 seats sold out within days. Seattle was just the first city in a 21-city tour, all of which have had similar responses. The numbers and passion should be enough to spark college divestiture. But that still begs the question: will divestiture by colleges have any meaningful impact?

College and university endowments are about $400 billion, and given the high returns in fossil fuel, most no doubt hold these stocks.

On the other side of the equation is $27 trillion, or the value of 2,795 gigatons of fossil fuel reserves identified by financial analysts at the The Carbon Tracker Initiative.

In other words, even if all university endowments held only fossil fuel stocks and every stock was divested, it’s still only 1.5% of the value of underground carbon holdings.

So the question is, where else can this movement go?

350.org is using apartheid as its forebear, but in many ways, the comparison is inapt. South African manufactured goods and natural resources, even diamonds, could be sourced from other nations. Unlike the energy industry, substitutes were already available. Even more important, apartheid is a political issue and disruption would be limited to South Africa.

With fossil fuels, life itself would be disrupted. To name just one example: oil is the heart of global transportation systems, driving the auto industry, refineries, retail gas stations, encompassing hundreds of millions of jobs around the world. As the American Petroleum Institute says in its current ads, fossil fuels = jobs, energy, growth and security.

Even these seemingly unassailable arguments have holes. As Naomi Klein said this week to Bill Moyer, right now, fossil fuel companies don’t pay for the real harm in carbon waste. Hurricane Sandy’s direct economic loss is estimated at $50 billion so far. Swiss Re put total losses from Katrina, including loss of productivity, at $250 billion. Both extreme- climate events affected jobs, energy, growth and most certainly security.

What starts with college campuses could well move on to larger sustainable investment pools. Bloomberg News reported last week that—

“Institutional investors are now employing sustainable investing strategies in more than $3.7 trillion of investments -- a 22 percent increase in two years. Hospitals, retirees, pensions, banks and religious institutions used sustainable and responsible investing (SRI) strategies for $1 out of every $9 invested in the U.S. at the end of 2011.”

And the divestiture movement could spread even beyond SRI. Colleges and SRI funds use their shareholder clout to influence the actions of companies. But Lisa Woll, CEO of SIF, the SRI industry association that reported the results, credits another less selfless reason: clients are protecting themselves against risk.

Risk plays a much more important role in today’s post-great recession investment environment. Now, indices like the Dow Jones Sustainability Index are integrated into financial and management performance analysis. Blue-chip financial media from the Financial Times to the Wall Street Journal hold annual SRI conferences. Bloomberg added sustainability metrics to its analysis. Data providers such as CSRHub provide sustainability metrics to corporate supply managers and consumers when they are making purchase decisions.

The risk of what might happen in terms of fossil fuel liability for climate disasters could start to dissuade investors, especially with students and grumpy green grandparents taking to the streets. The SIF report on SRI investments found that climate change is already an issue for 23 percent of institutional asset owners using sustainability criteria. Institutional investor assets guided by environmental concerns increased 43 percent from 2010, to $636 billion.

Still chump change next to $27 trillion in carbon assets, but we’re starting to approach some numbers that could cause hurt. And hurt forces change, not just with carbon producers but with regulators. We used moral condemnation to drive divestment of tobacco companies, even after some funds lost value due to apartheid divestiture, and regulators stepped in where they’d been reluctant in the past. Are fossil fuel companies next?

Photo courtesy of Georgie R via Flickr CC.


Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 6,000 companies worldwide. Carol holds degrees from Smith College and Harvard University.

 

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[fa icon="comment"] 2 Comments posted in American Petroleum Institute, climate change, divest, Do the Math, fossil fuel, Katrina, university endowments, Uncategorized, 350.org, Carol Pierson Holding, hurricane sandy, SRI, The Carbon Tracker Initiative

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