Plan A: Empowering the Marketplace
A revolution on Wall Street would help shape the revolution in energy and environment that is desperately needed in order to safeguard the health and future of our planet.
Two years ago, CEO Larry Fink's annual letter to investors described the climate crisis as something which would trigger a "fundamental reshaping of finance." Ever since, we've seen green shoots of hope in companies like Microsoft, who pledged to go "carbon negative" by 2030 and established a billion-dollar fund for climate innovation and carbon removal technologies. Experts tell us that the solar sector could account for 22 million jobs by 2050, energy storage could support 4.5 million workers, and wind energy could constitute 1.5 million employment opportunities in a future scenario for 2050 in which the world has reached 100% reliance on renewable energy sources.
"Two years ago, CEO Larry Fink's annual letter to investors described the climate crisis as something which would trigger a 'fundamental reshaping of finance.'"
That's the good news. The bad news is that the world and the marketplace aren't moving fast enough to do what science tells us we must do. Between 2007 and 2014, more than $73 billion of public finance was approved for overseas coal, led by Japan and China, with 25% of coal plants outside of China being financed by Chinese banks in 2018. The IEA projects $322 billion per year will be invested in renewables through 2025, compared with $116 billion per year into fossil fuel plants. By 2030 there will be a "climate finance gap" of $2.5-$4.8 trillion USD by 2030. In order to close this gap, an additional $166 to $322 billion USD in clean infrastructure per year will be needed on top of current levels of investment.
"The IEA projects $322 billion per year will be invested in renewables through 2025, compared with $116 billion per year into fossil fuel plants."
Eron Bloomgarden TED Talk, "A new financial model for conservation," November 12th, 2018.
The best way to catalyze and compliment action by ambitious government figures is to make climate-friendly private sector investments even more attractive -- by putting a global price on carbon pollution.
That's where a revolution on Wall Street can put us in striking distance of doing in time what science tells us must be done.
I've been working on a new way to help investors do well and do good at the same time with a group that consists of John Kerry, former Secretary of State; Robert Engle, Nobel Prize-winning economist; Krane Funds Advisors; Climate Finance Partners; and IHS Markit. We have created the first global price for a ton of carbon emissions by combining the three largest carbon emission market prices into one global price. We've worked with IHS Markit to create the Global Carbon Index, which offers broad coverage of cap-and-trade carbon allowances by tracking the most traded carbon credit futures contracts. Currently, the index covers the major European and North American cap-and-trade programs: European Union Allowances (EUA), California Carbon Allowances (CCA), and the Regional Greenhouse Gas Initiative (RGGI).
"The best way to catalyze and compliment action by ambitious government figures is to make climate-friendly private sector investments even more attractive -- by putting a global price on carbon pollution."
In other words, it's an ESG or impact investment creating a new global price for carbon emissions. It will give governments, companies, and investors a benchmark to estimate the cost of their carbon footprint as well as incentivize further reductions in pollution and carbon emissions.
Why is this so important? The World Bank, IPCC, and many other organizations estimate that the price of a ton of carbon needs to reach at least $100 over the next decade if the global community is to meet the targets of the Paris Climate Accords. KRBN created the first US-listed ETF to establish a global price for carbon emissions, thereby creating a new asset class that can act as a hedge against portfolio vulnerability due to climate change.
"KRBN creates the first US-listed ETF to establish a global price for carbon emissions, thereby creating a new asset class that can act as a hedge against portfolio vulnerability due to climate change."
We live in a complicated world, and there aren't any "one size fits all" solutions to a challenge as enormous as global climate change. Governments will have to do more, from the federal level down to the states and cities, which in the last four years have had to lead while the federal government has been absent. But there's no solution to the ticking clock of climate tipping points that isn't dependent on a marketplace transformation to push the curve of investment and climate-smart finance. Using every tool in our collective toolbox is essential. We know "there's no Planet B;" so empowering the marketplace must be part of everyone's Plan A for action.