Per Capita Davis: Big money and climate change
The previous column was the second of three addressing money and the transition to a fossil free future and it featured the actions of several billionaires to identify and support game changing new technologies. Incredible as it may sound, there are also trillionaires in the world, and it appears some of their money is also moving toward renewables.
The term “sovereign wealth fund” implies, at least to me, control by sovereign nations. Not so, other entities can also establish these funds, but the largest fit the Wikipedia definition as, “a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as private equity or hedge funds.”
Norway owns about two-thirds of the stock in Statoil so the government takes in money in exchange for oil exports. If they export a lot, they accumulate reserves. Predictably, most of the world’s largest sovereign wealth funds are in Middle East countries that export oil.
The world’s biggest sovereign wealth fund is Norway’s more than $1 trillion and that country recently announced it was investing $14 billion in “green” projects such as wind and solar. Not only that, Norway also indicated it would dispose of its investments in 34 companies that explore for oil and gas and divested $6.5 billion from coal-related companies.
The Norway sovereign wealth fund is not the only such fund divesting from fossil fuels, or, put another way, re-investing a portion of their funds in renewables. According to the Guardian, “Other national funds built up from oil profits are also thought to be ramping up their investments in renewables. The moves show that countries that got rich on fossil fuels are diversifying their investments and seeking future profits in the clean energy needed to combat climate change.”
All this is a long and somewhat circuitous way of introducing the topic of “carbon offsets.” My attempt to shoehorn sovereign wealth funds into a discussion about carbon offsets may be a bit of a stretch, but the notion that big suppliers of oil would begin investing in renewables, though a move to be applauded and appreciated as progress, seems to include at least a tinge of similarity to offsets.
Offsets can be either formal, strictly defined and regulated, or a bit on the loosey goosey side. Much like the re-investments noted above; they can be a positive vehicle to provide money to support renewables.
For example, consider a plane ride to New York from San Francisco. Air travel is one of many sources of greenhouse gas emissions; planes burn a lot of fuel. We, as passengers, can “offset” our share of the GHG’s produced by the plane on this trip by providing funds equal to an amount that, when invested, results in reducing or removing an equal amount from the atmosphere. Estimates for the cost to offset this journey are generally in the range of $10 per passenger.
There’s more than a little bit of controversy over offset programs such as this. The whole topic is fraught, with many complexities and nuances. Basically, to boil it down to a huge over simplification, do offsets actually work, do they just make people feel better but not accomplish much, if anything at all, or can they, if properly managed, achieve the advertised results? The answer matters.
The state of California established an offset opportunity as part of its cap-and-trade program. This is a rigorously defined program requiring almost 150 pages of detail to insure its integrity. In brief, the Air Resources Board defines acceptable offsets. Currently this is limited to protocols for forestry (both urban and otherwise), livestock, mine methane capture and rice cultivation.
Qualifying to be an offset eligible to receive funds that apply to a corporation’s obligations under cap-and-trade involves incredible detail to demonstrate that any GHG reductions are “real, additional, quantifiable, permanent, verifiable and enforceable. “
As an example, qualifying as “permanent” means the GHG benefits must be within the U.S. and, with some reasonable exceptions, endure for at least 100 years.
Offsets got somewhat of a bad name in the past when funds sent, for example, to protect the rain forest, were rendered ineffective because of burning, politics, or land use decisions.
The level of scrutiny applied by the ARB program is generally not available, for example, to our traveller deciding how to offset his or her trip to New York. Fortunately, many airlines offer an opportunity for passengers to purchase offsets, and have calculators on their websites to help determine the appropriate purchase price.
There are also websites, such as goldstandard.org, that have developed a reputation for, if not as rigorously as the ARB, approximating and emphasizing the same requirements for eligible offsets to be real, additional, quantifiable, permanent, verifiable, and enforceable.
So, one does not have to be a company, a billionaire or a trillionaire to have reasonable confidence that some of our activities, such as air travel, but also a raft of others that produce GHG emissions, can be offset.
Of course, using offsets should not replace our individual responsibility and efforts to reduce our climate impact in daily decisions and actions in our home, business, and transportation choices.
— John Mott-Smith is a resident of Davis. This column appears the first and third Wednesday of each month. Please send comments to firstname.lastname@example.org.
Crossposted from the Davis Enterprise
Published online on September 17, 2019 | Printed in the September 18, 2019 edition on page A4
Cool Davis is a coalition of citizens, the City of Davis, and community organizations working to empower our community to reduce greenhouse gas emissions.
It was great to see our latest Tuleyome Tale on fungi, written by our on-staff Certified California Naturalist Mary K. Hanson, appear online with the Lake County Record-Bee newspaper. https://www.record-bee.com/2019/09/27/tuleyome-tales-a-tale-of-three-fungi/ #CalNat