Solar Victory and the ESG Bubble: Economics Digest #28

Scientists save slow lorises in Java, propose building an underwater wall to protect Arctic glaciers and predict solar power will win

Topic of the Week: Will Geoengineering Stop Climate Change?

To cope with the effects of global warming, scientists and environmental activists are calling on industrial enterprises to use renewable energy, and ordinary people to recycle. Modern technologies allow capturing CO from the air₂ and “sealing” it underground, but this is not enough to reverse climate change. Geoengineering can radically solve the problem – a direct impact on the environment, which in theory should reduce the temperature on the planet.

Proponents of this approach offer different methods of dealing with the effects of global warming, here are some of them.

• Spray into the stratosphere atmospheric aerosol – the smallest solid particles. They will reflect sunlight, beaming it back into space, causing the temperature on Earth to drop. A similar process occurs during volcanic eruptions when ash is released into the air. The implementation of such a project will cost at least $2,25 billion annually. In addition to the high cost, this idea has other disadvantages: aerosols can cause droughts, acid rain, and reduce the amount of ozone in the atmosphere.
• Artificially freeze ice at the poles. Researchers at the University of Arizona have proposed pumping water out of the ocean in winter using a wind-powered pump and then spilling it on the surface of the Arctic. Thus, the ice cover will become thicker and melt more slowly in summer. Scientists from the Institute of Polar and Marine Research. Alfred Wegener modeled a similar project and found that it would not make a big contribution to the fight against global warming. In addition, salty sea water can harm local ecosystems.
• Reflect the sun’s rays with beads from silica gel. They want to spread them on the surface of the ice so that it melts more slowly. The American non-profit organization Arctic Ice Project has successfully tested this technology in Alaska. But before starting large-scale projects, you need to make sure that the silica gel is environmentally friendly. Beads made of such material dissolve in sea water and it is not yet known how this will affect the environment.
• To build underwater wall, which will protect the glaciers from warm ocean currents. The design is planned to be made of fiberglass with a Teflon coating. The cost of such a wall would be $20 billion, and its effectiveness has not yet been proven.

Forecast of the week: By the mid-2020s, the main energy sources will be renewable

The International Energy Agency (IEA) believes that by 2025 coal will no longer be the main source of electricity, it will be replaced by the sun. According to the baseline scenario, by 2030, 80% of new capacity will come from this type of energy. The solar panels will generate 4 TW of electricity per hour. For comparison: according to the IEA forecast, only 813 TWh will be received from gas. By 2070, the share of solar and wind energy will increase to 2030%, and the battery capacity will grow by an average of 30% annually.

Demand for oil will remain strong until the end of the 2020s, after which it will plateau. According to IEA experts, without tough political decisions, the share of hydrocarbons in the economy will not drop sharply. According to the baseline scenario, after the pandemic, the price of oil will rise and will be $2025 per barrel in 71, and $2040 per barrel in 85. This is explained by the fact that hydrocarbon producers need to maintain a balance of supply and demand.

Website of the week: online reclamation of territories near Shies

The authorities of the Arkhangelsk region have launched a website where you can monitor the reclamation of areas around the Shies station in real time. Previously, it was planned to build a landfill for municipal solid waste from Moscow. The project was opposed by residents of the region, as well as activists from all over the country. As a result, the construction was stopped, now they plan to plant trees and build residential buildings next to Shies.

Situation: diesel fuel got into the Angara

In the Kezhemsky district in the east of the Krasnoyarsk Territory, on October 9, 2020, a state of emergency was introduced due to an oil spill. As early as October 2, about 500 liters of diesel fuel, which was pumped from a barge, got into the Angara River near the Novaya Kezhma shift camp. The incident occurred due to the rupture of an old tank car, where oil products were transported. The Unified Duty Dispatch Service of the Kezhemsky District reported that specialists remove fuel using sorbents. At the same time, the deputy head of the district, Oleg Zinoviev, said that the leak on the barge was quickly eliminated and there were no oil stains on the water. The Investigative Committee opened a criminal case under Part 1 of Art. 247 of the Criminal Code (violation of the rules for handling environmentally hazardous substances and waste).

Question of the Week: Is ESG Funding a Bubble?

At the beginning of October 2020, the volume of the green bond market exceeded $1 trillion, the same amount is estimated at the value of securities managed by ESG funds (invest in companies that care about the environment and social development). Analysts at Bank of America predict that the market will grow by another $2021 billion in 450, with the majority of transactions in such securities, the income from which goes entirely to the development of projects in the field of sustainable development.

However, there are still no generally accepted standards for “green” assets in the world, and it is difficult for investors to evaluate the activities of companies in this area. In particular, a study by the Bank for International Settlements showed that ESG bonds do not affect the intensity of emissions – the ratio of CO₂produced by the company to revenue. This may mean that businesses do not always implement eco-projects. In this regard, oil and energy companies, such as Repsol SA and Saudi Electricity, are very doubtful among market participants. According to experts at the American consulting agency CreditSights, a major greenwashing event could bring down the stable securities market. To avoid this, we need standards that make ESG investments more transparent. The first step could be European Union legislation in the field of green finance, which will appear as early as 2021.

Development of the week: Mineral robotic system from Alphabet

A division of Alphabet, company X has introduced its new development – a “smart” system for agriculture called Mineral. It is based on a four-wheeled robot that uses sensors and cameras to analyze the condition of plants and soil. Based on the collected information, satellite images and weather data, he predicts how the crops will behave in the future. As a result, Mineral creates digital twins for each plant and selects an individual watering regimen, as well as the right amount of fertilizer. This will allow farmers to save resources and less harm to the environment. So, Mineral will notice parasites on the plant in time, so pesticides will need to be applied only in a limited area, and not on the entire field. Now the development is being tested in several US states, when it goes on sale is not reported.

One line

• India will replace decommissioned coal-fired power plants with those that run on renewable energy sources.
• The Pope has asked not to invest in companies that do not support climate initiatives.
• Greta Thunberg urged Americans to vote for Joe Biden.
• Canada will ban single-use plastic from 2021.
• A database of companies that recycle recyclables will appear in our country.
• The French company Arkema issued green bonds to finance the construction of an incineration plant in Singapore.
• Polluted air causes symptoms similar to those experienced by patients with Parkinson’s and Alzheimer’s.
• Adidas, Stella McCartney, Lululemon and Gucci will use mushroom faux leather.
• Hyundai has unveiled a collection of clothing made from recycled automotive textiles.

What to read

The Guardian’s longread about how animal rights activists are trying to save the population of slow lorises in Java, the most densely populated place on the planet. Due to the increase in the area of ​​uXNUMXbuXNUMXbcities, there are almost no forests left on the island in which loris could live, and it is increasingly difficult for animals to get food. To save them, a team of scientists led by Anna Nekaris of the University of Oxford is building a network of suspension bridges between trees. They replace wild grape vines and allow animals to move safely between canopies. Unlike wild monkeys, loris do not know how to jump on trees, they slowly crawl from branch to branch. When the forests became smaller, they had to move more often on the ground, where they were attacked by predatory animals. The animal rights project will help lorises better adapt to the changed environment and find new food sources.

What to listen

The release of the “Green” podcast on how to choose cosmetics so as not to harm nature. Ekaterina Rusinova and Nina Makhovaya, experts from the chemical concern BASF, spoke about different types of environmental certificates, as well as how companies can obtain them. In addition, they explained why eco-brands use SLS. Host Anastasia Chizhevskaya also spoke with blogger Varya Valovil about whether green cosmetics companies always adhere to ethical principles.

What to see

A short video from TED-Ed about sustainable agriculture. It talks about what technologies will help farmers adapt to global warming and provide food for all people. The authors of the video also offer several solutions that will reduce food waste.

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