July 1, 2017 by Alexander Rosenfield
Climate Impact Capital #cicinvest is here at #AspenIdeas Festival which is the nation’s premier, public gathering place for leaders from around the globe and has been engaging thought leaders since 2005.
#Climatechange Impact and understanding how we can discuss and impact these issues is one of the areas we are engaging in here. We would like to summarize some of the key discussion areas and provide our own thoughts.
Climate change and the extreme weather events it will cause will impact populations heterogeneously. The most vulnerable populations are in emerging countries, but we can see impacts here in the USA as well: invasive species killing our forests, Zika and other mosquito borne diseases moving North, increased incidence of high cost flood and drought disasters affecting agriculture and homeowners, and lower efficiency and problems in our energy infrastructure. Check out any of the online videos of Miami flooding from high tides; they are investing to raise the level of city streets and new water pumping stations.
Michael Greenstone spoke about The Climate Impact Lab which is trying to quantify the impact on a regional basis using an empirical approach. For example as the expected temperature changes, this impacts mortality 20x more on India from more super high temperature days due to unequal access to energy. Climate Impact Capital is developing a parallel system dynamics regional approach to understanding how climate variance will impact energy, food and water availability and cost. We see the need for long term modeling and preparation for weather variance as a clear need for improving capital allocation results.
Solving these problems does not have a clear path forward. Changing public attitudes, and even more, getting politicians to act on the basis of good economic policy and science is probably the first thing that needs to happen. Then more capital allocation to both early stage technology companies and to project finance. Part of the issue is that the Silicon Valley Venture Capital model has not worked for many types of cleantech and energy investing, while the need for innovation is greater than ever. There are of course some groups like #capricorn led by #dipendersaluja who have been funded by philanthropists and bold leaders. But like solar prices have decreased by an order of magnitude very quickly, we need the number of investors to increase respectively. How to bring on greater and broader sources of capital is acknowledged – but little focus here among the participants. There is a joke going around here that capitalism is a four letter word, but it is tongue and cheek as the hope and expectation is that the private sector and markets will be a critical part of the solution. But key to this is ensuring that markets are functioning properly; with transparency and properly aligned incentives.
Part of the market story is setting a “proper” externality value for carbon dioxide emissions. And while #Carbon prices are wildly divergent worldwide, it seems that market prices generally are more efficient than government subsidies to different sectors.
One surprising fact is that there is a very low interest in distributed solar power in India, perhaps due to poor performance, and that there is more interest in getting grid access, which of course will be more and more powered by utility scale solar. This leads to the question of how distributed technology can be improved and capture the needs of the consumers in these markets.
China is a big topic. They are now taking the leadership role in both in investing in renewable infrastructure, but also in taking a technology developing leadership role. Secretary of Energy #ErnieMoniz spoke eloquently about the need for federal and DOE leadership to seed and launch the technologies of the future. ARPAe is one good example which has led to 56 companies and $1.8 Billion of private money follow on investment. “We need deep innovation,” to decarbonize energy and “need to invest in 5-6 of those long shots.”
Marketing and communication around climate change and the fundamental scientific focus may not have helped. How we should talk about the economic benefits of technologies and how to get people to move from entrenched “tribal” positions that are not fact based is a key topic. Talking to people about their core interests of national security, health and economic security are a better approach.
Certainly China and India are trying to deal with local particulate pollution and have each experienced a significant lower life expectancy due to pollution. They see the future from both an environmental view and in creating new green jobs.
We were “sworn to secrecy” and saw a preview of the sequel to #anInconvenientTruth – but one take away we can have from #AlGore is that stability of investing and policy from the government is very important and changes like that by the current Trump administration shock the systems into long-term negative effects. Meanwhile, perhaps this will have shocked the counter movement to galvanize; with voices like #bloomberg, #algore and #wearestillin leading the movement.
Global climate change is in essence a global energy challenge, tied to issues of food and water sustainability. We will need (1) political will, led by public opinion momentum, (2) increased capital from public and private markets, led by shareholder movements to longer term return measurement and including externalities and climate risk in decision-making, and (3) continued technology and business innovation to develop and then massively scale and deploy solutions.
Climate Impact Capital thanks the Aspen Institute and wishes all the participants resilience in their efforts to bring about the much needed changes in our civil society.
Read more at https://www.linkedin.com/pulse/aspen-ideas-festival-targets-climate-change-alexander-rozenfeld?trk=v-feed&lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3BQwYSApJEIUaf3wVJ1YGdhQ%3D%3D