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GUEST ARTICLE: Building Bridges In Thinking About Impact Investing - Part 5

Benjamin Bingham, January 3, 2018


In a series of articles, a prominent US figure in the impact investing space explores how to pull together disparate ways of thinking about the world to show how this model of managing money should be addressed. Here is the fifth essay. Wishing readers a happy New Year.

This is the fifth instalment from author, Benjamin Bingham, CFP, founder and CEO, 3Sisters Sustainable Management. He is the author of Making Money Matter/Impact Investing to Change the World (www.makingmoneymatterbook.com). (See the previous article here.) An article introducing Ben can be found here.

As consumers of energy, when we turn on a light or adjust the thermostat the affect is much greater than the proverbial butterfly flapping its wings. On a physical level with the flip of a switch we may be increasing the need for extraction of oil, fracking of natural gas, or strip-mining of coal. Loren Eisley in his classic treatise, The Immense Journey, posited the idea that humanity’s evolutionary purpose was consciousness, so that each time we flicked a switch without consciousness we are increasing the likelihood of devolution: instead of becoming the “crown of creation” we would devolve to the level of machine or animal/machine. If we thought about it, our dependence on centralized, dirty energy would stop. Systems that are clean, smart and local support our evolving consciousness, and provide a sense of security and freedom.

We could think things through backward through the chain of interlinked facets each time we use any technology. For example, the use of electric cars that are dependent on electricity from coal is no big improvement. Only with an evolving consciousness and subsequent investor and consumer demand will renewable energy return to its proper valuation in this critical moment of history when the tides are literally turning.

Simple off the shelf hardware and software, new insulating and monitoring techniques in the intelligent retrofitting of old buildings are the most immediate and efficient way to invest in cutting the cost of energy and utilities to consumers and to the environment. But still we need to generate what we need. Following the Natural Step decision process, the investor would avoid extraction as much as possible. Here are the prominent current options:

Natural gas, or methane/propane, is the “cleanest burning” fossil fuel, with virtually zero emissions: little to no residual carbon, just nitrogen gas. But the extraction of natural gas can pollute water with heavy metals that can then run into lakes/rivers. What is worse, varying amounts of methane may be released directly into the atmosphere in the process. As a greenhouse gas, methane is more potent than carbon dioxide when released into the atmosphere.

Petroleum is the most common source of energy in the world from thick motor oil to diesel and gasoline to kerosene it all comes from the breakdown of primeval forests that have stored the energy of the sun through photosynthesis! The problems with petroleum are well documented and investors are getting out (https://www.bloomberg.com/news/articles/2017-12-19/cuomo-urges-new-york-pension-fund-to-end-fossil-fuel-investments )

Nuclear fission, or “Splitting the atom,” turns radioactive uranium and plutonium into nuclear fuel; both elements are very dangerous and have extraordinary shelf lives: plutonium is lethal in microscopic doses for more than 250,000 years. Like natural gas, the energy creation appears to be pure in terms of carbon emissions, but the risks of exposure to sabotage or natural disasters is too great. Fusion, or putting the atom back together, seems less volatile but has the same materials issues.

Solar provides the most prevalent renewable source of power by capturing the sun’s energy with photovoltaic and thermoelectric technologies. It will continue to grow faster than any other renewable technology.

Plant algae can be turned into biodiesel as a renewable source of energy, but it is yet to be commercially successful. The fact that the fossil fuel industry is researching algae may indicate its long term prospects as an alternative energy source.

Fuel cells take a highly volatile gas, hydrogen, from H2O and converts the chemical energy directly into electricity emitting only water and heat as by-products. This provides continuous DC power, similar to batteries. South Korea built the first major utility using this technology showing great promise for the future.

Wind technologies continue to grow as a major renewable power source. Small scale, vertical (helix) windmills can take wind from any direction and can be put on buildings for off the grid use; but most windmills are huge towers that dominate scenic vistas, and disrupt habitats, even offshore. On the other hand, windfarms may be the best alternative in certain geographies. The practical issue, as with any sources of energy, is storage capacity and transmission through a centralized grid without losing strength.

Biomass, or Waste to Energy, can turn a problem (waste) into a solution (energy) by channeling biogas or burning waste wood. This is all a form of “reverse photosynthesis” which sounds good but bio-mass burning makes up 30 per cent of global C02 emissions according to NASA’s Dr. Joel Levine.

Ethanol, or biofuels, can be considered if their production does not take good agricultural land away from food production. However, it is not particularly efficient:  in order to a make 1 liter of biodiesel, it takes about 9,000 liters of water to grow the 4,000 liters of soy, corn or sugarcane required. Other plants make more efficient use of water. Hemophytes that grow on desert with salt water may be the answer.

Geothermal in the form of ground-source heat pumps, in places where temperatures are at extremes in the summer or winter, may be the most energy efficient and environmentally friendly temperature regulation strategy for individual homes and buildings.

For generating electricity, the Earth’s heat can be captured by drilling deep down to access the heat produced from the radioactive decay of minerals.  These “Enhanced Geothermal Systems” (EGS) are designed to extend geothermal potential to most of the planet, well beyond plate boundaries. This fracturing of rock layers to create pathways for hot air is no better than the release of toxins in fracking for natural gas. In addition, the best locations are often sacred places for indigenous peoples. Let’s let them be.

Hydroelectric dams and their accompanying transmission lines can ruin rivers and flood biologically diverse territories, and displace the local people who are dependent on these ecosystems for self-sufficient/sustainable living. However, in geographies rich in moving water, small scale or even mini-hydroelectric power generation captures energy in the flow of water and mitigates the environmental and displacement concerns of large-scale hydroelectric operations.

Wave and tidal energy generation uses buoys as a mechanism for enabling power generation. These systems can have a negative effect on ocean life, as the bulk of the technologies may be underwater. Scotland recently launched the world’s largest tidal turbine. This a promising source of energy that should be monitored.

The lack of resiliency and security in centralized utility systems is encouraging innovators to develop technologies that can be modular and local as well as renewable. There will be a battle to maintain the power of utilities and energy companies to control local markets. However, as investors and consumers become more conscious, it is likely that locally generated Micropower will become the norm not only in the villages of a developing world but in smart communities everywhere.

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