The players in this look at the economics of climate change and opportunities for investment include Alan Greenspan, Paul Volcker, Shell CEO Ben van Beurden and Warren Buffett.
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| Money on the move |
Jennifer A Dlouhy writes that an all-star lineup of economists, from Alan Greenspan to Paul Volcker, is endorsing a plan to combat climate change by slapping a tax on greenhouse gas emissions and then distributing the revenue to American households. All living former Federal Reserve chairs, several Nobel Prize winners and previous leaders of the president’s Council of Economic Advisers have signed on to a statement asserting that a robust, gradually rising carbon tax is “the most cost-effective lever to reduce carbon emissions at the scale and speed that is necessary.”
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| common ground on carbon tax |
Many economists have favored a carbon tax as the most effective strategy for discouraging greenhouse gas emissions and combating climate change. But the economists now are going further by stressing that the revenue should be rebated to citizens, instead of being used to reduce the deficit, fund government or pare income taxes.
“For the first time, there’s consensus among economists on what to do with the money, and the answer is to give it back to the American people,” said Ted Halstead, head of the Climate Leadership Council backing the plan.
That approach is key to ensuring it is a progressive tax that ends up helping the poor, instead of just hiking their energy bills. The premise is that periodic dividend checks could more than make up for the hike in costs for poor- and middle-income Americans.1
Ron Bousso and Dmitry Zhdannikov of Reuters report that Royal Dutch Shell (RDSa.L) still sees abundant opportunity to make money from oil and gas in coming decades even as investors and governments increase pressure on energy companies over climate change, its chief executive, Ben van Beurden, said. The amount of carbon dioxide emitted from Shell’s operations and the products it sells rose by 2.5% between 2017 and 2018. A defiant van Beurden rejected a rising chorus from climate activists and parts of the investor community to transform radically the 112-year-old Anglo-Dutch company’s traditional business model.
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| Some common ground |
“Despite what a lot of activists say, it is entirely legitimate to invest in oil and gas because the world demands it,” van Beurden said.
“We have no choice” but to invest in long-life projects, he added.
Shell and its peers have long insisted that switching away from oil and gas to cleaner sources of energy will take decades as demand for transport and plastics continues to grow. Investors have warned, however, that oil companies often rely on forecasts that underestimate the pace of change.
Shell plans to greenlight more than 35 new oil and gas projects by 2025, according to an investor presentation from June.2
The CBC reports that a Warren Buffett-linked company will build a $200M wind power farm in Alberta. The Rattlesnake Ridge Wind project will be undertaken by Calgary-based BHE Canada, a subsidiary of Buffett's Berkshire Hathaway Energy. The Rattlesnake Ridge Wind project will be located southwest of Medicine Hat and will produce enough energy to supply the equivalent of 79,000 homes.
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| chorus from climate activists |
Berkshire Hathaway Energy also owns AltaLink, the regulated transmission company that supplies electricity to more than 85 per cent of the Alberta population.
BHE Canada says an unnamed large Canadian corporate partner has signed a long-term power purchase agreement for the majority of the Rattlesnake Ridge energy output.
The project is being developed by U.K.-based Renewable Energy Systems, which is building two other Alberta wind projects totalling 134.6 MW this year and has 750 MW of renewable energy installed or currently under construction in Canada.3
The “wise money” seems to be seeking long term investment in areas where carbon pricing is creating incentives to transition away from fossil fuel investment.
References
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