If we take these five steps now, we can ward off a climate disaster

28th August, 2021.      //   Climate Change  // 


If there was one little bit of optimism within the Intergovernmental Panel on Climate Change’s sixth assessment report, it’s that humans can still mitigate a number of the worst effects of climate if we act now.

Some changes are likely permanent or won’t be reversed for hundreds of years, like sea-level rise and more acidic oceans, but the report’s authors say that removing emissions will cause heating to cease and temperatures to stabilize over the following decades.

“It’s not too late to address; you simply have to move very quickly,” says Deirdre Cooper, co-portfolio manager of Ninety One’s Global Environment Strategy.

The IPCC’s report comes on the heels of a replacement $1 trillion infrastructure project recently gone the Senate, which incorporates funding for federal structure programs that might help with decarbonization, like improving the electrical grid.

There are a swath of sectors to contemplate to speculate in an exceedingly climate-change mitigation theme, from well-known companies to under-the-radar ideas.

“Solving the climate crisis is an ‘all of the above’ story. It truly takes everything,” says Pavel Molchanov, an analyst at Raymond James.

Upgrading the electrical grid. Cooper pointed to a June 2020 study from the middle for Environmental Public Policy at the University of California, Berkeley, which showed the U.S. can deliver 90% clean, carbon-free electricity nationwide by 2035, dependably, at no extra cost to consumer bills and without the necessity for brand spanking new fuel plants. The study used the recent cost declines for solar, wind and battery storage for its conclusion.

Companies like NextEra Energy NEE, -0.48%, a corporation that Cooper’s fund owns, are among utilities aggressively building renewable energy production.

Shutting coal plants can pay immediate dividends, Pavel says, and Europe is phasing out coal. These assets aren’t being mothballed, but owners are retooling them to burn wood pellets to supply electricity. Enviva Partners EVA, -1.18% could be a major supplier of sustainable wood pellets to those plants. While it’s not completely carbon-free, emissions are significantly but coal, and it’s a renewable product because it comes from sustainable forestry, he adds. “This may be a one-of-a-kind company,” he says.

Decarbonizing transportation. Spurred by Tesla TSLA, +1.53%, traditional carmakers including Ford F, +3.18% and GM GM, +2.43% announced they’d make 50% of their fleets electric by 2030, and European carmakers pledge to be electric by 2030. Cooper points out European sales of electrical cars track between 15% to twenty, versus 2% some years ago, with prices adore burning engine cars. Electric vehicle sales in China also are rising.

Aside from the carmakers, Cooper says investors can overlook the electric-battery chain. Her firm owns Chinese firm Wuxi Lead Intelligent that creates the machines to create electric-vehicle batteries, and Infineon Technologies, a German semiconductor manufacturer.

Other transportation areas are trickier to urge to zero-carbon, like production and within the airline and shipping sectors, she says. Research and development may cause improved technology, and hydrogen fuel cells, a nascent kind of energy, may play part.

Reducing single-use plastics. fossil oil is additionally wont to make new plastic. Research by the middle for International Environmental Law show plastic lifecycle emissions could reach 1.34 gigatons each year — comparable to the emissions released by quite 295 new 500-megawatt coal-fired power plants by 2030. that produces reducing new plastic generation critical. Primo Water PRMW, +1.67% makes and distributes reusable bulk drinking-water containers, like five-gallon jugs employed in home and office water dispensers. Pavel says Primo addresses two problems: reducing single-use plastic containers and improving water quality.

Rethinking food. U.S. agriculture contributed 9.9% of total U.S. greenhouse gases in 2018, in keeping with the Environmental Protection Agency. Food is a locality that’s ripe for decarbonization, say Cooper and Pavel. A University of Michigan study shows food consumption contributes anywhere from 10% to 30% of typical U.S. household carbon footprint.

Sustainable agriculture investing remains in its early stages, but a growing area is that the alternative-proteins sector. Meat products have larger carbon footprints than grain or vegetable products due to methane produced by animal flatulence. No. 1 on the list is beef, whose greenhouse emission emissions per kilogram are 7.2 times over chicken.

“There is not any thanks to get to zero carbon and consume the number of beef that we do today,” Cooper says.

Alternative-meat products are hitting market shelves which will be easily substituted in meals where meat isn’t the star of the dish. “It doesn’t necessarily mean that meat never exists,” she says, noting her fund encompasses a small position in Beyond Meat BYND, +0.94%.

Adapting new buildings. Alicia Karspeck, head of research at Fabric Risk, a market-risk platform specializing in climate, says while mitigation grabbed most of the headlines, she says we’ll have to start thinking the way to adapt to new climate scenarios. The IPCC will release a particular report next year addressing impacts and adaptation.

Investment opportunities may come from supporting existing infrastructure and creating new infrastructure in areas which may see climate migration, like northern parts of the country, particular the northern Midwest. The Senate infrastructure bill includes funding for water projects and rail, among other programs.

Karspeck noted an executive order from President Joe Biden requires that any new infrastructure built with federal dollars must include climate and future conditions information. “They’re trying to make new engineering standards, which is why it’s so impactful,” she says.

Buildings constitute 38% of the world’s carbon emissions, so making buildings more energy-efficient can significantly cut emissions, and a technique is to boost windows. Pavel says View CFII is that the leading supplier of electrochromic glass, which changes its tint in response to changes in sunlight, becoming darker when there’s more solar glare. Less solar glare means the building uses less electricity for air-con, Pavel says, and may reduce the building’s energy usage by the maximum amount as 20%. It’s for commercial buildings, and may be utilized in new construction or retrofitted.

Pavel points out companies mitigating global climate change aren’t all startups with unproven technologies. Primo Water and Enviva Partners, as an example, pay dividends and are profitable.

“These aren’t concepts. They’re real businesses with real revenue from real customers,” he says.

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