Daily Quick Read - August 9, 2019

Can Capitalist Save the World from Capitalism?

Is there any force on earth that can cause oil companies to leave some oil in the ground? Can investment bankers convince oil, coal and mining companies that the environment matters?

As the risks of climate change have become more pronounced, so have efforts by major investment firms to push companies in greener directions. They tried talking. Then they started backing shareholder resolutions. Now, LGIM is at the forefront of a more aggressive, and controversial, tactic: divesting. “You cannot have the same conversation for 15 years with no results,” Omi explains.

Climate activists say the awakening of the world’s money to the perils of global warming is too little, too late. But for some people inside money management, the speed of change is hard to believe. At LGIM, Nick Stansbury says he remembers the day in December 2016 when he was called into a meeting with about 25 of his fellow portfolio managers. Understanding the implications of climate change was going to become a priority, they were told.

Stansbury says he already had deep misgivings about the future of the oil market. Oil companies’ value depends on investors believing that demand for crude will always grow. For 100 years, that belief had been justified. But if renewable-energy sources gain market share and crude demand stutters, the market would go haywire, he says. That could trigger a huge re-rating of major oil companies—of which LGIM holds more than $12 billion in shares. “It was a lightbulb moment,” he says.

Hard to Compete With Free 

The cost of renewables is almost all up front. Once you’ve built solar or wind generation plants the fuel is free and your only costs are maintenance of the facilities. An electric vehicle cost so little to fuel that oil prices would need to drop $45 per barrel to compete at the pump.

Those commies and treehuggers at the Financial Times and BNP Paribas Asset Management are at it again, suggesting that investing in oil and gas is a bad idea, and that renewables are where the smart money is going. 

As electric vehicles proliferate, the fact that they cost so much less to fuel up with cheap off-peak electricity means that oil will have to drop to about $10 per barrel to be competitive. Lewis predicts that electric vehicles will cost the same as ICE-powered cars by 2022, and their operating and maintenance cost advantages will cause demand to increase dramatically. "The oil industry today enjoys massive scale advantages over wind and solar. But this advantage is now one only of incumbency and time limited." 

And people in Alberta wonder why nobody wants to invest in their expensive oil sands projects and blame Justin Trudeau for their problems. Mark Lewis writes in the report: "We conclude that the economics of oil for gasoline and diesel vehicles versus wind- and solar-powered EVs are now in relentless and irreversible decline, with far-reaching implications for both policymakers and the oil majors." 

The simple math is that their oil is very expensive, and it's hard to compete with free. 

Maybe Nukes Would Work Better

USDA kills 1.5 million native animals per year to help out private ranchers and farmers. The do this in our name. Now Trump’s EPA is reauthorizing the use of cyanide bombs to more quickly and efficiently kill wild animals.

The Trump administration has reauthorized government officials to use controversial poison devices – dubbed “cyanide bombs” by critics – to kill coyotes, foxes and other animals across the US.

The spring-loaded traps, called M-44s, are filled with sodium cyanide and are most frequently deployed by Wildlife Services, a federal agency in the US Department of Agriculture that kills vast numbers of wild animals each year, primarily for the benefit of private farmers and ranchers.

In 2018, Wildlife Services reported that its agents had dispatched more than 1.5 million native animals, from beavers to black bears, wolves, ducks and owls. Roughly 6,500 of them were killed by M-44s.

The Battle for Aisle 7

Walmart won’t stop selling guns and ammunition. Why does anyone think they will do something about reducing the use of plastics? The point of this article is that if we want to reduce plastic waste, we all need to push for change literally one item at a time. Demand flexibility from stores and push for the use of more recycled material. The plastics industry has captured our grocery stores aisle by aisle and it will take a massive effort to get them out.

Shoppers can petition and tweet all they want about reducing packaging waste, but grocery store chains have a far bigger voice that could be put to use. And none would be louder than mega-grocers like Walmart. These massive companies have started taking small steps to address plastic use, though advocates say they could be doing more ― if they really wanted to.

“They are the interface and broker between the makers of plastic consumer goods and the individuals buying those goods,” Nicholas Mallos, director of the Trash Free Seas Alliance at the Ocean Conservancy, told HuffPost. That role gives retailers “great power” in the fight against plastic waste, he said.

Walmart probably has the greatest influence of any grocer in the country. Around 90% of Americans live within 10 miles of a Walmart, and most locations offer groceries at cut-rate prices. The company sold $184 billion worth of food in the United States last year, easily outstripping its next biggest rival, Kroger, with $121 billion in sales.

Walmart and a number of other major companies have also signed on to join multiple efforts that bring together business leaders, government officials, environmental activists and scientists to study plastic pollution and search for solutions. But Walmart is also a member of the Plastics Industry Association, a lobbying group that has spent millions fighting plastic bag bans, according to The Intercept.

While many of the country’s biggest grocers dither, smaller stores are actually getting their suppliers to cut out more plastic. So-called “zero waste” shops are popping up all around the world, eschewing plastic packaging and encouraging the use of reusable containers.

Atlantis Before the Flood?

Hope Creek Nuclear Plant - New Jersey

When photographer Alex MacLean recently flew from Maine to Florida, he was able to provide graphic evidence of the future cost of global warming on US coastal communities. Sea level rise is going to cost billions to either mitigate or rebuild critical infrastructure and residential communities. 

Since long before drones democratized aerial photography, MacLean, who trained as an architect, has taken pictures from the sky, helping urban planners and other architects visualize ideas and document projects; but he also pays keen attention to how his aerial perspective can draw attention to what he sees as the creeping environmental degradation of the Earth. Recently, he took a multi-flight solo tour of the US East Coast from Maine to Florida over the course of a year, seeking perspective on the expected impacts of sea level rise.

He had known, of course, that rising waters pose serious risks to coastal states, but he was unsettled by the scale of vulnerability he discovered everywhere he flew: “There’s going to be a huge economic burden coping with all the problems that come with sea level rise.”

During his flights between Maine and Florida, MacLean noticed something he hadn’t given much thought to before: thousands of industrial sites and vast amounts of critical infrastructure perched perilously close to the water’s edge, not far above the current high water level.