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Our home to share our thoughts and host an (e)discussion about the opportunities sustainability presents and how our world will be changing as a result. From savvy strategies for clients to our fleet of Schwinn 10-speeds and everything in between; we invite you to the conversation and hope that we can explore true.green. together.


Everyone who cares about the natural environment recycles, right? Paper, plastic, glass…but what about money? It can be almost just as easy to recycle energy investments to address the serious global issue of climate change if you set up a Green Revolving Fund (GRF).

What is a revolving loan fund?
A revolving loan fund is a dedicated funding mechanism used to support specific projects that payback project costs to such fund. Often using cost savings from funded projects, loans given are repaid into the revolving loan fund. Then the money repaid to the revolving fund is lent again to finance additional projects.

What is a green revolving fund?
A green revolving fund (GRF) is a revolving loan fund used to finance projects that have specific ties to energy conservation or efficiency, renewable energy, or other natural resource-saving projects. Specifically tracked savings from projects funded are returned to the green revolving fund to be used for future projects.

How do GRFs perform?
Colleges and universities with GRFs have reported a median return on investment of 28 percent over the life of a typical project (see Sustainable Endowments Institute’s (SEI) Greening the Bottom Line 2012). GRFs are often focused on projects with a payback window of no more than five or ten years. The investments make economic sense. Often the biggest hurdle is working out the mechanisms to allocate savings appropriately within the constructs of a university’s current budgeting and finance structures.

To start brainstorming for high payback projects, review McKinsey & Company’s Global GHG abatement cost curve beyond business-as-usual, in its report Pathways to a Low-Carbon Economy. This chart and report provide insight into the investments that reduce greenhouse gas emissions with the highest financial payback. Of course, most everyone knows that changing an incandescent light bulb to a LED often pays back its investment in less than a year, but this report will get you thinking beyond lighting. If the McKinsey & Company report is too academic for you, just start talking to your facilities and maintenance leaders. They know what needs to be replaced and upgraded. Starting from there, look at your options for more efficient technologies. More energy efficient options often cost more upfront, but that additional cost will often be more than recovered in energy savings over the life of the equipment, saving money and reducing emissions.

glf

Image included with permission from Sustainable Endowments Institute

 

Who is using GRFs?
The most common users of GRFs are colleges and universities. AASHE has a database of information about many of the institutions that have started GRFs. The Sustainable Endowments Institute (SEI) has coordinated The Billion Dollar Green Challenge to encourage colleges, universities and other nonprofits to investment a cumulative total of one billion dollars into green revolving funds. As of July 2016, SEI has $131 million committed from 62 participating institutions. See if your alma mater is on the list, or your child’s dream school. As of July 2016, the University of Vermont boasts the largest GRF, with a $13 million fund started in 2012. They look for projects that pay back within seven years and cost no more than $3 million per project. Harvard University’s well know $12 million fund, established in 2001, has supported nearly 200 projects which now cumulatively save the school over $4 million each year (yes, each year!) on energy bills.

Schools have found that a GRF is a reliable mechanism to support cost-saving capital improvements even in the midst of budget cuts and rising energy costs. GRFs regularly outperform the investment returns for schools’ endowments and thus some endowments have become involved with initial funding support to GRFs.

Are you at a small institution or one that doesn’t have access to millions of dollars? No problem. The range of sizes (both regarding enrolled students and school endowment size) among colleges and universities with successful GRFs suggests that any school could implement a GRF. SEI reported that initial capital investments in GRFs are evenly distributed in the ranges: below $100,000, between $100,000 and $1 million, and above $1 million. The fund I helped start began with only $50,000 and is added to annually from various sources. As a result of projects funded by this GRF and through a number of other small cost behavior-based changes on the campus, the energy bills are down, and the institution is saving more than $400,000 annually on energy costs compared to a business as usual scenario.

How is a GRF formed?
GRFs are formed in many ways. The most common sources of start-up funding are one-time administrative budget allocations, prior efficiency or utility savings, private donations or foundation grants, and endowment funds. Although administrative involvement and support for a GRF is key, students are frequently involved in creating the GRF at colleges and universities.

Verdis Group helped Omaha’s Henry Doorly Zoo & Aquarium (“Omaha’s Zoo”) set up a GRF, starting with seed capital from a grant and growing through utility lighting rebates, recycling-focused grants, direct contributions, and of course energy savings. One of the hurdles the Zoo’s Green Team faced was having money to fund even small sustainability projects, and this fund has almost entirely resolved this issue. Each year projects are selected that are both high payback projects, such as lighting updates, and low or no payback projects, such as adding recycling infrastructure to make recycling easier, faster and more complete. These GRF bundles use the high payback projects to support the projects that don’t financially payback on their own, and everyone is happy—the accountants who are saving money on energy bills, the Green Team who now has funds to make the changes they view as most important, and the environment which benefits from resource conservation and reduced pollution.

How is a GRF administered?
It is important to get your administration and tracking set up before jumping into a GRF. There are many administrative models among GRFs. On college campuses, the governance of the fund often depends upon how it was formed. Typically, a small group oversees the finances of the fund, while a larger, more diverse group reviews project loan applications on an ongoing basis. Funds typically require projects to have a maximum payback period to ensure timely replenishment of principal to the fund. Some funds charge interest while others simply require repayment of the principal. Interest allows the fund to grow organically over time; however growth can also come from additional external contributions or allocations from operating funds. Other funds require a percentage of real energy savings to be paid to the fund even after the principal amount of the loan is returned, allowing the fund to grow from the additional savings.

At Omaha’s Zoo, Verdis Group currently administers the GRF in partnership with the Zoo’s accounting group. The Zoo wanted its GRF to financially benefit its general operating budget and serve as a continuing funding source for green projects. Thus, savings in the Zoo’s GRF projects are allocated with a percentage to the Omaha Zoo’s general operating budget and the remainder to replenish the GRF. Since the creation of the Zoo’s fund, SEI has developed a GRF tracking system (GRITS 1.5) that helps institutions manage and analyze project-level energy, financial and carbon data without developing a new process or tool just for the GRF tracking. SEI’s experience with GRFs is exceptional and the GRITS tracking tool has made setting up and tracking a GRF even simpler.

What are common GRF goals?
A GRF can focus on energy efficiency goals, such as reducing energy expenses and cost savings (a.k.a., fighting climate change with the bonus of saving money). In other cases, the GRF may support innovation and engagement projects that do not have direct significant financial payback. In the latter example, a GRF is replenished by grants or other funding, rather than repayment of project savings. GRFs are often operated as hybrid funds that fund both high payback projects along side engagement projects with low or hard-to-measure payback.

At Omaha’s Zoo, a hybrid fund was formed because engaging the staff and providing funds to implement staff-generated green projects was important. Yet, ensuring the revolving nature of the fund endured was critical because an ongoing source of contributions beyond savings was not guaranteed. Verdis Group works with the Omaha Zoo annually to analyze potential projects, determine project paybacks, and guide the Omaha Zoo’s GRF selection committee toward a group of annual projects that meet financial payback, employee engagement, and environmental goals.

So get out there and start recycling something even more interesting than those old aluminum cans – recycle your energy investments!

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OPPD is considering a rate restructuring, which the Board of Directors will discuss November 12th. The proposed change would increase the basic service charge for residential and small business customers from $123/year to $420/year in fixed charges while slightly decreasing consumption costs.

To give this ‘basic service charge’ some context, the Wall Street Journal reported a typical rate of “$5 or so” per month ($60/year), and the ACEEE reported fixed fees of $5-10 per month ($60 – $120/year) as of late 2014 for average residential customers.

The proposed rate structure is bad policy for the following reasons:

  • Low use customers will pay more ($60 – $180 annually) including many low-income residents and fixed income seniors, while high use customers (higher income) will pay less by roughly the same amount;
  • Apartment & small home dwellers who conserve will pay more for the same energy;
  • Reduced incentive to for all customers to be more energy efficient and conserve;
  • Increased wasteful use of energy, adding to air pollution and climate change;
  • Makes investing in renewable energy harder to justify economically.

I urge OPPD to strive to live their new slogan – “Leading the way, we power the future.” Lead our community in its battle against poverty and its goals to care for the natural environment. With the Pope’s recent encyclical in mind, OPPD’s rate restructuring is a real life decision where care for the poor and care for the environment go hand in hand.

The proposal to lower the cost of a kWh, the rate you pay for the electricity that you actually use, is counter to the future power-generation plan OPPD recently approved. Lowering the rate a customer pays for the electricity consumption reduces the incentive to conserve energy. Often, customers and small businesses look at how long a technology investment will take to recover its upfront cost in energy savings – financial payback. Lower rates result in poorer paybacks, which will slow investments in energy efficiency and renewable technologies that are important for our planet’s long-term health.

UNO’s report, “Nebraska Energy Burden Study: 2013 Update” provides the following statistics for Nebraskan’s energy expenses:

  • For households making less than $30,000, the average cost of energy was $1984 per year.
  • For households making more than $40,000, the average cost of energy was $2451 annually.
  • Households making more than $100,000 had an average cost of energy of $2738 per year, more than $750 above households making below $30,000.

This data demonstrates that low-income households pay less for energy than high- income households, as they should. They use less, they should pay less. The new rate structure begins to shift the current, rather equitable distribution of costs so that the poor, elderly, and environmentally conscience pay for large homes or other homes that consume larger portions of the energy load.

I’d like to see a map from OPPD that shows which customers’ bills are going down and which are going up. Real data, real addresses, mapped over the OPPD territory. Board members and OPPD leadership should be asking for this to ensure they fully understand the impacts of this change. Such an exercise will quickly tell who is paying for whom in the community under the new rate restructuring.  I can’t help but think that the map would look something like this one.

As an accountant who cares about both the poor and the environment, here are my thoughts:

  • It doesn’t matter whether a business has fixed costs or variable costs. The customers are not responsible for the costs. Customers pay for the products they purchase. A business’s executive leaders, accountants and finance folks are in charge of managing both fixed and variable costs, and that’s one of the many reasons accounting and finance is sometimes complex. It’s also why it’s great that Nebraska has public power, which shouldn’t feel the same pressures as shareholder-owned utility companies to meet quarterly earnings projections.
  • Customers are not buying a part of a power plant, part of a power line, nor are we asking to take on a week’s salary of an OPPD employee. Customers are buying electricity delivered into their homes. That’s it, nothing more, just kWh.
  • If OPPD has missed budget targets or future purchase forecasts have changed, they should adjust the price of the product being delivered, kWh. If I built a house that’s too big for my budget, I don’t go to my boss and say, well gosh, I’ve got a big fixed mortgage now, I need a raise.

The reality is that OPPD has a pretty significant budget shortfall. So rather than solely poking holes in their proposed plan, I’ll offer three ways for them to narrow that budget gap:

  • Increase kWh rates for all users, which lets everyone share the load equally.
  • Do what you do with your large business customers, charge a demand charge to residential customers and small business customers too. Demand charges continue to incentivize energy efficiency, because consumers can affect the amount charged by reducing consumption.
  • Move to a time-of-use pricing structure, where electricity costs more when it is most expensive to produce, usually during the late afternoon hours of the summer.

OPPD has made great progress in the past few years, with wind power purchases and decisions to retire three coal units in North Omaha. I am truly amazed that our power company will likely be 1/3 wind and 1/3 nuclear by 2018, both very low carbon and affordable power sources.

This is a public power state. We, the people, own our utilities, and we are represented by elected officials that are supposed to represent the consumers by definition.

The OPPD Board will hear from staff and the community at their November board meeting on Thursday, Nov 12th at 10:00 a.m. The public will have an opportunity to make 3 minute statements to the Board or you can email the Board at their website.

Speak up residents and small business customers – speak up and help OPPD lead us in the right direction!

 

For more information:

Meeting tonight with OPPD, Nov 9th

Rocky Mountain Institute – Fixed Charges don’t “Fix” the Problem

News on fixed charge changes – approved in Wisconsin, rejected in Minnesota

Similar rooftop solar fixed fee news

Featured Image courtesy of Watie White.

 

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At Verdis we are all driven to reduce our impact on the environment; at work and at home. Everyday, we work with clients to develop and implement changes to reduce energy use, reduce waste, recycle more, and simply reduce our collective impact on the natural environment. Beyond working with our clients, all of us individually pursue our passion to make the environment healthier in other ways. Craig chairs the group Mode Shift Omaha working to broaden active transportation options in Omaha, and Daniel serves on the Metro Transit Authority Board. I’ve been working on my personal impact on the environment, and have been building my dream home in the most sustainable manner we could.

House

What were we able to accomplish from a sustainability perspective on our new home?

 

My husband and I are quite proud of our HERS 32 Rating.  A Home Energy Rating System (HERS) rating is a score that compares a home’s energy use to a modeled house that is the same as your house, but built to 2004 International Energy Conservation Code. For a HERS rating, the lower the better. A home that scores zero is a Net Zero home, meaning it produces as much energy as it uses, typically through solar or wind power. Our HERS score of 32 means that our house is 68% more efficient than the HERS reference/modeled home. The U.S. Department of Energy determined that a typical resale home scores 130 on the HERS Index, so we are 98% more efficient than a typical resale home! My understanding is that only a handful of homes in Nebraska receive a HERS score this low on an annual basis, and once we add solar – net zero here we come!

 

Here are the highlights of changes we made from a typical home, which make our home more energy efficient and lessen our environmental impact:

Mechanical Systems

  • Open loop geothermal heat pump uses the 52 degree ground water temperature to heat and cool the home. We don’t need an air conditioner! And we expect our heating & cooling bills to be only $39 a month on average. The cost of this system is significantly supplemented by the Federal Tax credit.
  • Hybrid heat pump water heater uses the energy in our basement’s air to heat our hot water (along with electricity). This water heater is twice as efficient as a regular hot water heater (expecting to cost only $9 a month for hot water heating).
  • A variable frequency drive (VFD) on the well pump allows the pump to use only the energy needed to pump the amount of water needed at the time, instead of only having two options of “on full speed” or “off.”
  • A desuperheater transfers excess heat from the geothermal system to the water heater to preheat the water.
  • An Energy Recovery Ventilator (ERV) acts as the home’s lungs bringing fresh air into the house, while recovering some of the energy in the stale air before its removed from the house 

Construction Methods

  • rigid foam2×6 framing of the walls to allow for two extra inches of insulation (57% more), compared to traditional 2×4 construction
  • One inch rigid foam insulation used continuously on the exterior (instead of plywood) provides additional insulation and air sealing (see image at right)
  • Borate only treated blown in cellulose insulation in wall cavities, mainly used for health reasons, but also because cellulose is a great insulator and made from recycled paper. We used Green Fiber insulation made in Norfolk, NE
  • Energy efficient windows by Gerkin made in Sioux City, NE
  • Some Forest Stewardship Council (FSC) wood during construction, bonus from Millard Lumber – thanks!
  • Caulking the top and the sill plate before insulation to seal air gaps
  • Capillary breaks under and around foundation (plastic under the basement floor and waterproofing spray between the foundation walls and footings) minimizes the water that can enter the basement through the concrete
  • Passive radon mitigation system that allows radon under the home to exit through closed pipe that goes out the roof
  • Rough in for future solar, hopefully installed before the tax credit expirescarpet tile

Lighting, Interior Finish, and Other Sustainable Choices

  • LED lighting, we found screw in bulbs in traditional fixtures were the most economical, especially when bulbs were purchased in Council Bluffs.
  • A detached garage (attached garages often bring unhealthy air into the home)
  • East and south windows to warm the house in the winter, and larger eaves to keep the sun out in the summer
  • Energy Star appliances
  • No and low VOC paints/stains
  • Low flow water faucets, toilets and showers
  • Recycled carpet tile samples in our office / guest room (see image at right)
  • Products made close to home to minimize transportation emissions. For example, pre-finished wood floors are often finished in Asia with significant emissions from that transport; ours is wood floor from the United States and manufactured in the United States.

Implementation Evaluationsblow door smallestestest

  • Blower door tests evaluated air sealing. We did this before paint, trim and floors were installed, to see if the house was sealed well at a point – it was!
  • Personal inspection of the items that were different from what our builder usually used, like the blown in cellulose insulation

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So with all of these great energy saving strategies – What can I tell YOU about saving energy at your home?

  1. If you have incandescent lights in your home, go to Home Depot in Council Bluffs ledsTODAY and buy LED light bulbs to replace all the lights in your home. REPLACE them TONIGHT.

If you have a large home, this could add up to a couple hundred dollars investment, but the investment will pay for itself in electricity savings over the course of a year or less if you are replacing incandescent bulbs. The payback if you are replacing compact florescent lights (curly cue ones) is not as good. This Home Depot has the best prices I’ve seen for LEDs; a 60w-equivalent bulb is usually $5-7 each. On sale for $3 a week or two ago… After the first year, you’re saving lots of money in electricity each year! Here is a handy calculator to see this savings.

  1. If you are building or want to do a more significant project in your home, air sealing and insulation are the most cost effective ways to save energy. I would suggest getting your home’s HERS rating calculated. Then I would talk to the rater that does this calculation to see what you could do to improve your specific home in a cost effective way. I used American Energy Advisors (AEA) here in Omaha for this, and was very happy with the work they did for us and the advice they provided throughout the building process.
  1. If you are installing new insulation, take the day off and oversee the installers. The installers my builder used had never installed blown in dry cellulose and were given insulationno instruction on how to do so. When the ‘finished’ insulation was reviewed by the manufacturer representative to ensure it met manufacturer specifications (at my special request), it was short about 25% of the needed material. I’ve heard of other installers in town just skipping entire wall cavities. My advice here is to get lots of references before you choose a company, spend 20 minutes learning what you need to on the internet about how things should be installed, and then be there while the job is happening to actively review the installer’s work.

At the end of the building process, when AEA brought their infrared gun to check wall temperatures on a very cold December day, I was happy with the temperatures on the walls at this point. We’ll see a few years down the road, whether the insulation settles or not, a check we can do with an infrared gun that reads wall temperatures.

  1. If you want to build a green home, make sure you find a builder in the area with some experience with this, and just as importantly, a builder that is interested and willing to learn. Based on my research and conversations with others in the green community, there doesn’t seem to be a go-to green builder in Omaha.

We asked Landmark Performance Homes to build for us, and the owner Steve Faller was great throughout the entire project. Whenever we had a green practice in mind that Landmark had never done before, we talked through it. Steve gave us his insight based upon years of building experience and together we chose the best path forward. This was critical to keep our costs under control and to ensure that best practices in green building were incorporated whenever possible. I found Building Science and Green Building Advisor to be the most helpful websites when sorting out detailed questions on what to do.

  1. If you are buying a new home, check out the HERS scores before you buy. Here is the Residential Energy Services Network’s (RESNET) database of all HERS scores. Also, keep an eye out in realtor descriptions for HERS scores; local builders are working to get HERS scores included as part of the Multiple Listing Service (MLS) system where all realtors share listing information. If you are buying a home with a lower HERS score, this will save you money every month and should tip the scales when selecting between homes.

 

In the end, we love our dream home, and we are proud to have built a home that will stand for hundreds of years, making a small ongoing impact on our environment.

And if you wake up to this view everyday, how can you not want to protect our environment.

sunrise 11 inch

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Last week was Climate Week in New York City, and I wish I could have been there. Around 400,000 people marched by my old apartment, bringing the world a message: The public cares about the issue of climate change and wants action from our global leaders.

Nebraskans made some great strides moving the public’s understanding of climate change forward and addressing the issue as well.

Here’s what caught my eye this past week or so:

  • For the first time in five years (since Copenhagen 2009), world leaders came together to discuss climate change at the Climate Summit on September 23rd. One hundred twenty heads of state, hundreds of business leaders, activists, and celebrities were at the United Nations in New York City for the Summit. The U.N. Secretary-General started the meeting with a statement that included:

“… Science says they [emissions] must peak by 2020 and decline sharply thereafter. By the end of this century we must be carbon neutral. … I ask all governments to commit to a meaningful climate agreement in Paris in 2015. … We are not here to talk, we are here to make history.”

The poem Dear Matafele Peinem (linked below) set the stage for the meeting with a standing ovation, and France led the statements by countries by committing $1 billion to the global Green Climate Fund. The intent of the meeting was to move global leaders toward a legally binding global agreement to address climate change at the meeting in Paris in 2015.

 

  • The People’s Climate March in NYC drew three or four times the number of expected participants, a number nearly equivalent to the population of the City of Omaha! Imagine that. I was surprised and happy to see Ban Ki-Moon, the Secretary-General of the United Nations join this march himself, marching with singer Sting, actor Leonardo DiCaprio, activist Bill McKibben (the environment’s rock star) and 400,000 others.
  • On Saturday, September 27, I attended the Harvest the Hope Concert in the middle of a northern Nebraska cornfield. It showed me that Nebraskans do care about their environment, and that our farmers, ranchers and Native Americans are willing to stand up for our land, clean water, and their property rights. The Willie Nelson & Neil Young concert was a fun afternoon for my family, and I was proud to have three generations there to support Bold Nebraska and the thousands of bold Americans working to stop the construction of TransCanada’s Keystone XL pipeline. These individuals appreciate how climate change will affect our children’s lives, and they are doing something about it.
  • Global average temperatures over land and ocean surfaces for August 2014 were the highest on record for the month of August, at 0.75 degrees Celsius (1.35 degrees F°) above the 20th century average.
  • A new report out by the Global Commission on the Economy and Climate challenges the idea that addressing climate change will be costly, indicating that climate fixes will cost effectively the same as forecasted investments in needed infrastructure.
  • At a meeting just last week, I was reminded of the great work being done by the Omaha Public Power District (OPPD). Leaping over many other U.S. utilities, OPPD plans to supply 33% of its retail load generation using renewable power (mainly wind power) by 2018.  OPPD is also positioning itself to stop burning coal in Omaha by retiring three units at the North Omaha coal plant in 2016, and retrofitting two other units to use natural gas (a cleaner fuel) by 2023. Way to go OPPD!

Even though all of these actions are wonderful news for our environment, they are not enough.

Without global participation in the effort to limit green house gas emissions, climate change will have dramatic effects on our planet within your children and grandchildren’s lifetime. In the United States, our greatest efforts should be around eliminating coal use, but if still developing countries like China and India are building more coal plants than we retire, progress on this truly global issue will not be possible.

The simplest, cheapest solution is clearly understood by economists: put a price on carbon (greenhouse gas emissions). NPR’s Marketplace did a good job explaining how and why this would work. Yale University professor William Nordhaus explains it in his book The Climate Casino. He says that putting a price on carbon for the top 100 countries by per capita income, plus India and China, would cover 90% of the globe’s emissions. This price could then be enforced through a country’s policy mechanism of choice. Prices drive choices made by corporations and individual consumers alike. More expensive carbon-intensive practices (due to the carbon price) would be replaced by the least expensive, cleaner solutions.

And voilà, climate change is no longer the greatest challenge of our century.

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I went to hear Bill McKibben speak Saturday night at the Joslyn Art Museum.  McKibben is an author and the founder of an organization called 350.org.  They are working to bring the world’s carbon levels down to the safe level of 350 parts per million (ppm), a measure currently at 391 ppm.

As an accountant in my previous life (or career), I really liked and appreciated the lecture’s title – “Do the Math.” My colleague, Daniel, wrote about McKibben’s related article in Rolling Stone this summer.

 

So here’s the math – in only 3 numbers:

2 Degrees Celsius – Why is this number important?  Leaders from countries around the world have been working for years and years to address climate change.  This issue is so difficult because countries like ours (the developed world) have emitted so much carbon dioxide already, yet there are many countries around the world that are still developing.  Developing countries want our way of life and thus believe that it’s fair that they develop as we did (often requiring significant emissions).  A 2 degrees Celsius rise in the world’s temperature was the only hard number “the world” has agreed on thus far, in Copenhagen in 2009.  Here’s an excerpt from their statement:

“We agree that deep cuts in global emissions are required according to science, and as documented by the IPCC Fourth Assessment Report with a view to reduce global emissions so as to hold the increase in global temperature below 2 degrees Celsius, and take action to meet this objective consistent with science and on the basis of equity.” 

Nearly all heads of states from Albania to Zambia, including the U.S., Russia, India and China signed this Copenhagen Accord.  Science tells us that this is a good target. Unfortunately, the International Energy Agency (IEA) currently projects a long-term global temperature rise of 3.6 Celsius in its central projection scenario.

565 Gigatons – Scientists tell us this is the amount of carbon that can be added to the atmosphere before it is expected the earth will warm another degree Celsius; thereby getting us to the 2 degrees mentioned above.  The earth has warmed around one degree Celsius already compared to pre-industrial time, and if the extreme drought in Nebraska and throughout the country this year doesn’t give us a good example of what’s to come, one can look eastward.  Hurricane Sandy’s force and damage was a result – in part – because of climate change.  The destruction to New York, a city I called home for more than a decade, was unprecedented.  When I talked to my friends out there, they said this storm was different than any they have experienced before. The devastation was much worse and much farther reaching than anything in the past. My sister is on the ground cleaning up the mess, and she says that in places, it is like nothing she has ever seen before.

McKibben said that it will take ONLY 15 years for the world to emit 565 Gigatons at our current projected pace.

But McKibben saved the worst number for last.

2,795 gigatons – This is the estimated emissions that will result from the use of the fossil fuel that companies currently have in their reserves.  From my accounting days, McKibben said all the right things on how they computed reserves – looking at SEC filings, etc.  Reserves are difficult to calculate because you never know exactly what’s in the ground until you take it out, but SEC filings are going to be the best source for estimates, because the company’s auditors will have vetted them to some extent. The International Energy Agency adds credence to this number in its most recent World Energy Outlook 2012.

 

So let’s do the MATH.

If 565 gigatons gets us to an increase of 2 degrees Celsius, the fossil fuel companies have 5 TIMES that amount in reserves.  The business plan and goal of these companies is to sell all of their reserves to generate profits. The emissions from extracting, producing and using all of these fossil fuel reserves will mean chaos for our planet. The climate change the earth will experience from our collective human action is the most significant issue our generation and possibly humankind has ever faced.

But it wasn’t the math that really got me, even though I am still an accountant at heart, it was the picture of children standing in their flooded street in Haiti – holding signs that said:

 

YOUR ACTIONS

AFFECT ME

 

This picture and many others McKibben showed the crowd of at least six hundred on the Saturday night of the BIG TEN Championship football game, demonstrated that people around the world understand climate change, and that many Nebraskans care.  But can they do something about?

The other point that struck me as critical to appreciate is that the United States is where many of the large fossil fuel companies are headquartered or have significant operations and significant investors.  Exxon Mobil is currently the world’s largest company, headquartered in Texas. As a side note, its largest shareholder is Vanguard, a mutual fund many Americans invest in personally or through their retirement accounts. Royal Dutch Shell is the fourth largest company, BP is 11th, and Chevron is 12th, headquartered in California. Not only are the people of the U.S. emitting more greenhouse gasses per person than any other large country in the world, our citizens work at and control many of the largest suppliers of the fossil fuel reserves to be burned.

 

So what action is 350.org calling for?

Simple. Taking our money, and any money we can influence, out of the equity shares of the top 200 fossil fuel companies. The 350.org campaign is working to have students affect their university endowment investments, church-goers to get their places of worship to divest, and anyone who has a pension to get their future financial security disconnected from these fossil fuel companies.  It is perfect.

These companies are driven by share price; it’s something that their Board of Directors and their leadership cares very much about. It is how the worth of their company is valued. Creating a sustained and ongoing sell off of these companies will force the share price down… and possibly, hopefully, cause these companies to become energy companies, rather than fossil fuel companies.

I worked in the financial services industry in New York for more than a decade, and this action, if taken by a collectively large group, could be what needs to happen to redirect our climate future. We need to harness the sun, wind and geothermal power to change our direction, but talking alone with these fossil fuel companies has not convinced them that this direction is imperative. Taking our money out of these entities that are suppliers of the problem needs to happen to motivate their leaders. It is time to move the money.

 

So what would I tell a client?

Divestment of investments in the fossil fuel industry is just like any other strategy to be considered when trying to make one’s institution more sustainable. Verdis works with clients that are committing to becoming sustainable for different reasons and at different paces.  I would tell a client interested in the financial benefits of energy efficiency to consider moving money from fossil fuel investments to a green revolving fund (GRFs). GRFs are internal investment mechanisms to fund energy efficiency projects, and they use energy savings resulting from such projects to replenish the fund. Established GRFs reported a median annual return of 28%, compared to Exxon Mobil’s annual growth rate during the last decade of only 10.4%.

Even if a GRF is not a good alternative, there are many other non fossil fuel investments with excellent returns: Investments without a core business plan that is working against the efforts of all of the other sustainable strategies being implemented at one’s institution.  After all, changing an investment portfolio’s guidelines, in theory, is as simple as changing the list of allowable investments.  The impact could be substantial, and if it is, an institution won’t want to be left holding the stock of a company with a falling price.

 

Why I will act

Droughts, floods and storms are affecting so many people around the world already. Nebraska is even starting to see how droughts and floods will impact our businesses and lives. Droughts are destroying our crops here and around the world. We know rising sea levels are forcing people to relocate. And so many of the people directly affected don’t emit any carbon in their daily lives.  Many of these individuals around the world could work their entire lives and never be able to afford a plane ticket to see our developed world, let alone live it.

This is a huge global, moral issue. And because we are here, in the U.S., we can do something about it. So many, so far away, with scare resources, will feel the affects of our actions or inaction.  Our time is now.

We should care and we should act – for those who cannot act themselves. For those who are the future. For our children and our grandchildren. For those little children in Haiti. I will act for my daughter, who was born the very day this photo was taken in Haiti. There is no debate about the science. The debate is over.  It is time to change the course of our planet before it is too late.

 

 

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