Blog: EDF Europe

This ban on polluting vehicles proves the green revolution is coming – businesses must adapt, and fast

The government is clearly justified in making the announcement—the ban will clean up our air and help tackle global warming. But the real change is only just beginning.

You’ve got to hand it to Environment Secretary Michael Gove, he’s a quick learner with an instinctive grasp of how to control an agenda. The recent announcement that the UK will follow France in banning the sale of new petrol and diesel cars from 2040 dominated the news. A spectrum of papers ran it on their front pages and TV crews were hastily despatched on a search for electric vehicle charging points to juxtapose with ubiquitous close up footage of car exhaust fumes. The announcement makes it clear that belching emissions from the rear end of a car is set to become the social equivalent of lighting up a cigarette in a restaurant—just not allowed.

The question of how governments drive social change on this scale is fascinating. I’m a longtime believer in competitive market-based policies to uncover least cost solutions. But sometimes there’s nothing like a simple ban to cut through the smog of scandal, celebrity gossip and disinformation masquerading as news, to land in company executive in-trays with a resounding thud. Precipitous drops in smoking were undoubtedly triggered by the ban on smoking in public places. Taxation, labelling policies and advances in alternatives that deliver the nicotine hit minus the harm all contributed, but the policy that reached every single smoker and tobacco firm overnight was the sudden change in where it was acceptable to light up.

There are obvious parallels with the public health challenge posed by the burning of fossil fuels in close proximity to humans. By announcing a complete ban on the internal combustion engine, even one 23 years hence, the government has effectively removed the social license of those car manufacturers and oil companies, who have for too long undermined efforts to rein in their impact on our lungs and the planet. General awareness of the problem of air pollution is rising thanks to publicly available data and the action of numerous campaign groups. Local governments of every hue will feel emboldened to act. More people will decide to try out an electric alternative and as ranges extend and prices fall they’ll be pleasantly surprised at how good it feels to drive around with a clear conscience. I can’t be the only protective mother increasingly feeling justified in knocking on the windows of idling cars parked next to schools asking for engines to be switched off. I suspect it won’t be long before deciding to own a fossil fuel car purely on the basis of cost will be seen as unacceptably selfish and irresponsible.

The human health issue is just one factor supporting the proposed ban. Regular breaches in air quality standards are usually in densely populated, traffic-blighted areas. A long distance but attention grabbing ban does nothing immediately to address this and more targeted local action is needed now. And if it were just a question of human health, the ban would not need to apply in the majority of rural areas. The real reason supporting a comprehensive ban is climate change.

With virtually all of the world, bar the current incumbents of the White House, committed to trying to avert a global disaster, all large sources of greenhouse gas emissions can expect to have their social licenses to operate steadily removed. Sometimes this will be achieved through relatively unnoticed government policies charging for pollution and supporting cleaner alternatives until the point they can out compete their dirty rivals. Sometimes it will happen naturally through the march of technological progress. Other times more direct interventions will occur. Betting on this not happening will prove costly and industries and investors reliant on the status quo need to start enacting plans to adapt.

The last 23 years saw a revolution in computing and information technology, lighting the touch paper for further revolutions in almost every sector of the economy. This coupled with growing public support for action to protect us will mean well before 2040 our lives will once again be transformed, resulting in healthier, more human-centric cities and new sources of growth and employment.

The UK government was right to make this announcement—there will be inevitable attempts by vested interests to derail it but ministers need to stand firm and underscore the pledge in legislation, combining it with their existing plans to make the uptake of electric vehicles easier and more easily integrated with the Grid. If they do there will be strong cross party support—something we could do with an injection of right now.

First published at https://www.prospectmagazine.co.uk/science-and-technology/this-ban-on-polluting-vehicles-proves-the-green-revolution-is-coming-businesses-must-adapt-and-fast

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Global Investor Touts Methane Opportunity with Oil & Gas Industry

Institutional investors worldwide are increasingly encouraging oil and gas companies to improve and disclose their management strategies to minimise methane risk.

Methane – an invisible, odorless gas and main ingredient in natural gas – is routinely emitted by the global oil and gas industry, posing a reputational and economic threat to portfolios.

Natural gas is widely marketed as a low-carbon fuel because it burns roughly 50 percent cleaner than coal. But this ignores a major problem: methane. Natural gas is almost pure methane, a powerful pollutant that speeds up Earth’s warming when it escapes into the atmosphere.

Last month marked a significant milestone in investor action on the methane issue. The Principles for Responsible Investment (PRI) launched a new initiative representing 30 investors and $3 trillion in assets that will engage with the oil and gas industry across five different continents to improve its methane management and disclosure practices. The PRI initiative complements existing methane engagement efforts focused on the US led by the Interfaith Center on Corporate Responsibility and CERES.

EDF Senior Manager Sean Wright recently sat down with Sylvia van Waveren, a Senior Engagement Specialist with Robeco Institutional Asset Management (Robeco), a Dutch-based investment firm managing over $160 billion, to discuss the matter and understand why some investors are keen to affect the status quo on methane.

Sylvia van Waveren, Senior Engagement Specialist, Robeco Institutional Asset Management

Wright: Why is methane a focus of your engagements? What do you see as the risks of unmanaged methane emissions? 

van Waveren: Methane is one of the most important drivers of engagement with the oil and gas industry. We invest in oil and gas companies worldwide. A year ago, we started engaging them, specifically on climate change – and within that the methane issue is included.

In the past, methane was viewed as a U.S. shale gas issue, but more recently it has become important in Europe as we learned that methane is a powerful greenhouse gas. So in that sense, we learned a lot from the U.S. discussions and we still do.

I would like to stress that we see the methane issue more as a business opportunity than a risk. What we often say to companies is that methane is a potential revenue source. It would be a waste if companies do not use it.

Wright: The scope of PRI’s initiative is global, with investors from 3 different continents as far away as Australia and New Zealand, and a plan to engage with companies from the Latin America, Europe, North America and Asia-Pac. What does this level of global collaboration convey about methane emissions?

van Waveren: I am happy and it is good to see that others have taken up the seriousness of this issue, as well. Methane is no longer a U.S. only problem. The issue is being raised and discussed in all kinds of geographies.

I’m a firm believer in collective engagements. They can be a powerful force when the issue is not contained within borders. That is the case with greenhouse gases. So yes, I’m happy to see the PRI initiative taking off and I am an active believer in getting this solved and bringing attention to this subject.

Wright: In your conversations thus far with companies about methane, what resonates best when making the business case for improving methane management and disclosure?

van Waveren: When we talk about motivation at the company level, I have to be honest, it’s still early days. The European companies are talking in general terms and just now conceptualising methane policies. If we’re lucky, they have calculated how much methane is part of their greenhouse gas emissions. And if we’re more fortunate, they are producing regional and segregated figures from carbon, but it’s really very meager how motivated the companies are and what triggers them most.

I really feel we should emphasise more with companies to get them motivated and to really look at the seriousness of methane. One issue that is particularly bothersome is that many companies do not know how to calculate, estimate and set targets to reduce methane. It is still a mystery to many of them. That’s why we come in with engagements. We need to keep them sharp on this issue and ask them for their actions, calculations and plans.

Wright: Who are other important allies that have a role in solving this problem, and why?

van Waveren: We always would like to have an ally in the government. For example, carbon pricing or carbon fixations are all topics that we look for from the government. But in practice, that doesn’t work. Governments sometimes need more time. So we do not always wait for the government. When companies say they will wait for government, we say, “You should take a proactive approach.”

We rely very much on our knowledge that we get from within the sector. We review data analyses and make intermediate reports of scoring. We find best practice solutions and we hold companies accountable. There are also times when we name names. So in that sense, that is how engagement works. The data providers and other organisations with good knowledge and good content on methane – and EDF is certainly one of them – are very instrumental to get the knowledge that we need.

Wright: Can you give me an example of a widespread financial risk facing an industry in the past that was proactively improved by investors leading the charge – similar to this initiative?

van Waveren: More than 20 years ago, we had a greenhouse gas issue – acid rain. Investors helped solve that problem. Because of this, I’m hopeful that investors can also play a positive role in reducing methane.

I would also say the issue of Arctic drilling. Not so long ago, this was top of mind when we talked to our portfolio companies. A lot of companies have now withdrawn from Arctic drilling, especially from offshore Arctic drilling. I think investors were quite successful in sending a clear signal to the industry in a collective way that we didn’t see Arctic drilling as a good process. Maybe profitable – if at all – to the companies, but certainly not for the environment

Wright: Thank you, Sylvia. We really appreciate your time and your thoughtful answers showing how investors can be part of the solution on methane.

Also posted in Climate, EDF Europe, Energy, Methane / Comments are closed