People power meets market muscle

February 16, 2021

The climate change issue has a sad history, for the most part: scientists expressing concern, then alarm, then something a lot like panic. And all the while, politicians, businesses, and people...well, as in the sinking of the “unsinkable” Titanic, the band played on. But that history has reached a turning point.

Climate change science, including the greenhouse effect that causes it, goes back to the close of the 19th century when Svante Arrhenius worked out how the temperature of the atmosphere would change if the amount of carbon dioxide went either up or down. In the 1950s, scientists Charles Keeling and Edward Teller pointed out that CO2 emissions from burning fossil fuels could affect the global climate. In the decades after that concerns went up, and so did emissions, and in 1988 the Intergovernmental Panel on Climate Change was launched. Its reports have become ever more urgent as the evidence piles up. That urgency has not driven very much real change.

Until now.

Greta, Biden, Peabody, and TeslaTwo things have changed: Public opinion, and the market.

Swedish teen activist Greta Thunberg has personified the feeling of her generation. Young people look to the future and don’t see an endless march of progress. They see a spiral into oblivion, a planet hurtling toward a suffocating apocalypse, while governments argue and delay and set targets and do little or nothing to achieve them. They are very, very angry.

They are following Greta’s example and striking. They are joining organizations like Extinction Rebellion. They are demanding more from their parents’ peers, no longer satisfied with words that do not match actions. And they are voting.

In many ways, the US election was a referendum on climate action. Ex-President Trump systematically dismantled anything that might benefit the environment, pulling the US out of the Paris Accord, eviscerating the Environmental Protection Agency, and erecting trade barriers against foreign renewable energy products (most notably solar panels, virtually none of which are manufactured domestically). Then-Candidate Biden, on the other hand, took a cue from his unsuccessful rivals for the Democratic nomination and created a policy platform with aggressive measures to mitigate greenhouse gas emissions. According to New York Times exit polls, you were more likely to vote for Joe Biden if you were female, if you were non-white, if you had post-secondary education, if you weren’t particularly wealthy, if you were LGBTQ+, and especially if you were under 30 years of age.

It now looks like the US will take decisive action on climate. The Biden platform includes net zero emissions by 2050, infrastructure to enhance resilience, taking a global leadership role, addressing environmental justice, and helping workers to transition out of polluting industries and into the clean energy economy. In a matter of days Canada shifted from being the continental climate leader to gaping at the cancellation of an oil pipeline project.

The people aren’t the only ones that have spoken. The market has as well.

More and more large corporations are setting aggressive targets for renewable energy and emissions reductions, including Google’s parent company and Microsoft. CDP (formerly the Carbon Disclosure Project) lists 273 companies on their climate change “A List”. More importantly, over 9,600 companies used CDP to disclose their emissions and policies last year, and the number of companies added in 2019 and 2020 was more than double that in the prior several years.

Even the greatest climate change culprits are feeling the winds of change. Times are very bad for coal - despite presidential promises of a renaissance four years ago - with bankruptcies sweeping the industry (Peabody Energy is at risk of its second bankruptcy in five years). Coal-fired power generation is rapidly becoming a relic as more and more plants are retired. While some oil companies like ExxonMobil are doubling down on climate denial propaganda, others are waking up and walking away. French oil behemoth Total recently opted to leave the American Petroleum Institute, citing the API’s support for rollback of methane emissions regulations, opposition to electric vehicle subsidies, and hostility toward carbon pricing. Royal Dutch Shell has set a goal of net zero carbon by 2050, rolled out a plan to deploy half a million EV charging stations, and bought a big stake in an Irish offshore wind power project.

In the auto patch, things are changing as well. By 2025 Volkswagen wants to be selling 3 million EVs a year, with 50 all-electric models in their lineup. General Motors announced last month that it would sell only zero-emission vehicles by 2035. Ford announced US$29 billion in investment in EV and autonomous vehicle capabilities. In part these may be responses to various jurisdictions announcing internal combustion engine vehicle phaseouts, including countries like Norway, India, France, and the UK and metropolitan centres like London, Rome, and Amsterdam. It may also be a response to the soaring market capitalization of EV manufacturer Tesla: it’s now worth more than the next seven auto companies combined, including Toyota, Volkswagen, Daimler, GM, and BMW. (Full disclosure: I have TSLA shares. Mind you, I won’t be able to afford to buy one of their cars until maybe when their promised US$25K subcompact starts appearing in Auto Trader.)

Finance is changing too. After feeling the heat from students, the Ontario Teachers Pension Plan announced its commitment to be net zero by 2050. More tangibly, it is partnering with another investor to purchase district energy company Enwave. Green bonds are taking off in popularity. Sovereign funds are pivoting away from the fossil fuels that made them: the Government Pension Fund of Norway is investing its oil-royalty cash to give that country the highest per-capita rate of EV ownership in the world.

Will it all be enough? My money - literally - is on the power of human ingenuity, the desire for a cleaner planet, and the exponential growth (and cost reduction) of technologies like solar photovoltaic cells, industrial wind turbines, and lithium-ion batteries. That is where my hope lies as well.

Yes, the shorelines of the world are advancing as sea levels rise. But the tide is turning.

Alex Chapman, Executive Director