New Jersey’s $40 billion investment opportunity that no one is talking about

What is a leading opportunity for states to create energy security, job growth and economic development with their public dollars?

The answer? A public financing institution that can engage effectively with private sector players to meet them on their own terms – addressing real barriers and providing the right types of capital needed to make clean energy projects investable.

Take Connecticut for example. In 2011, the state established the nation’s first state green bank, the Connecticut Green Bank (CGB). Over the last six years, CGB has used $174.6 million of ratepayer funds to attract $914.8 million of private investment in clean energy for a total investment of $1.1 billion. These investments have supported the deployment of 234.4 MW of renewable energy, created thousands of jobs, and reduced an estimated 3.7 million tons of CO2 emissions over the life of the projects.

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Three reasons for companies to defend the Clean Power Plan

US businesses turned out in force at COP 23 in Bonn, demonstrating to the rest of the world that they are committed to action on climate change, despite the US government’s withdrawal from the Paris Agreement. In fact, 2017 has been a banner year for corporate climate leadership: over 1700 businesses signed the We Are Still In declaration, and nearly half of all Fortune 500 companies now have climate and clean energy goals.

Now, there’s an immediate opportunity for companies to show leadership on climate change here at home: speaking up in defense of the Clean Power Plan, which the current Administration wants to eliminate but is still very much in play.

Here are three reasons for your business to publicly defend the Clean Power Plan before the EPA comment period ends in mid-January.

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COP 23 caps off a milestone year of corporate climate leadership

Photo credit: Rhys Gerholdt (WRI)

After the United Nations Climate Change Conference in Paris (COP 21) in 2015, where the historic climate accord was established, it was near impossible to imagine a future COP where the US federal government wouldn’t play a central role. Yet now, at COP 23 in Bonn, Germany, the US government doesn’t have an official presence at the event – for the first time ever.

To fill the void of federal policy action, companies and organizations from across the US are voicing their support for the Paris agreement at the U.S. Climate Action Center, a pavilion sponsored exclusively by non-federal US stakeholders.

The Climate Action Center is an initiative of the We Are Still In coalition of cities, states, tribes, universities, and businesses that are committed to the Paris Agreement. Thus far over 1,700 businesses including Apple, Amazon, Campbell Soup, Nike, NRG Energy and Target have signed the We Are Still In declaration – evidence that public climate commitments are quickly becoming the norm.

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One-on-One with EDF+Business: Former DuPont CSO Linda Fisher on sustainability leadership

At Environmental Defense Fund, we believe that environmental progress and economic growth can and must go hand in hand. EDF+Business works with leading companies and investors to raise the bar for corporate sustainability leadership by setting aggressive, science-based goals; collaborating for scale across industries and global supply chains; and publicly supporting smart environmental safeguards.

This is the first in a series of interviews exploring trends in sustainability leadership as part of our effort to pave the way to a thriving economy and a healthy environment.

Linda Fisher is one of corporate sustainability’s trailblazers. In fact, she was named the first chief sustainability officer of a publicly traded company (DuPont) in 2004.

Over the next decade, Linda led DuPont’s efforts to establish the company’s first set of market-facing sustainability goals, which included a strong emphasis on innovation. Read more

Walmart makes bold new commitments around safer products

Credit: Flickr user Mike Mozart

Today, Walmart updated their ambitious Sustainable Chemistry Policy on Consumables, which to-date has resulted in a 96% reduction in the weight of High Priority Chemicals. The new commitments set a bold goal of reducing Walmart’s chemicals footprint by 10% – over 55 million pounds of priority chemicals – a historic move.

Reducing chemicals of concern from products is a major interest for consumers. Modern science increasingly shows that certain chemicals prevalent in products can impact our health. Walmart’s renewed commitment to drive safer products onto store shelves is a laudable effort. Read more

Ready to jumpstart your company's chemical policy?

We’ve previously introduced our readers to the Chemical Footprint Project (CFP), a benchmarking survey that evaluates companies’ chemicals management practices and recognizes leaders. The CFP recently released a Model Chemicals Policy for Brands and Manufacturers, a template to help companies develop and share their chemicals policies. A chemicals policy institutionalizes a company’s commitment to safer chemicals and ensures understanding of these goals among all levels of their business, including the supply chain. Read more

New report: Unlocking Private Capital to Finance Sustainable Infrastructure

When two large storms knocked out an estimated $200 billion in economic value within a week, critical gaps in our infrastructure preparedness were laid bare. The 2016 “Hell or High Water” series from ProPublica and The Texas Tribune predicted a scenario that “visualizes the full spectrum of what awaits Houston” if it were hit by a large-scale hurricane. Experts consulted for the series cite Houston’s unimpeded development as a principal factor contributing to the region’s high exposure to flood risks.

According to Rice University engineering professor Phil Bedient, there is no way to design a system to handle the volume of water that Hurricane Harvey dumped on the greater Houston area. That said, if Houston hopes to arrive at a cost effective solution for mitigating future flood damage, Bedient recommends targeted, balanced investments in green and gray infrastructure. Read more

Investor sees methane management as self-help for oil & gas companies

Environmental Defense Fund Q&A with Tim Goodman, Hermes Investment Management

Tim Goodman, Director of Engagement at Hermes Investment Management

When burned, natural gas produces half the carbon as coal, so it is often touted as a “bridge” fuel to a cleaner energy future. But the carbon advantage of natural gas may be lost if too much of it escapes across its value chain.

Natural gas is mostly methane, which, unburned, is a highly potent greenhouse gas accounting for roughly a quarter of today’s global warming. Worldwide, oil and gas companies leak and vent an estimated $30 billion of methane each year into the atmosphere.

EDF’s Sean Wright sat down with Tim Goodman, Director of Engagement at London-based Hermes Investment Management. Goodman, who views methane management as practical self-help for the industry to pursue, engages with oil and gas companies on strategies to manage their methane emissions. This is the first of a two-part conversation with Hermes, a global investment firm, whose stewardship service Hermes EOS, advises $330.4 billion in assets.

Wright: Do you think the oil and gas industry is changing its overall attitude towards climate after the historic Paris agreement and recent successful shareholder resolutions? If so, how do you see that change manifesting itself?

Goodman: I think climate change is obviously an existential question for the industry. The really big question is can it actually change in response to Paris? The industry is beginning to respond as a result of Paris and shareholder proposals and other stakeholder pressure. You’re seeing some of the majors increasing their gas exposure at the expense of oil. You’re seeing a number of international oil companies reducing or ending their exposure to particularly high carbon or high risk assets, such as the Canadian oil sands or the Arctic. The oil and gas industry is also starting to place a greater focus on methane management and its own emissions.

Wright: What about investors – what do you think is driving the continued momentum around methane and climate as we see larger and more mainstream funds tackling these issues?

Goodman: Let’s talk about climate for the moment – the roles of both investors and companies in the run up to the Paris agreement and during the negotiations were crucial. The investors made it absolutely clear that they wanted to see a successful Paris agreement. Addressing climate change is good for business and good for their portfolios. And we saw this with the Exxon vote – the two-degree scenario proposal where mainstream asset managers voted for this proposal. We believe that this happened because of the underlying pressure asset managers were getting from their own clients who have a long-term perspective and see climate change as a risk to their funds.

Specifically on methane, it’s practical self-help for the industry to embark on methane management. It’s an obvious practical measure for investors to engage upon. If you can reduce your contribution to greenhouse gases, save money, and gain revenue by being more efficient and safe, why wouldn’t you do that? It’s an easy entree into engaging with the oil and gas industry. Whereas the existential question, what’s your business going to look like 20 years from now, is a more difficult question perhaps both for the industry and the companies themselves.

Wright: You pretty much just explained why Hermes prioritized methane – is that correct?

Goodman: Yes. But the science is a big part of it. Methane is a far more potent greenhouse gas than carbon – the more that we can minimize its effects, the greater the window the world has to transition to a low carbon economy. Methane’s effects don’t last as long as carbon, but if we don’t tackle methane, we aren’t taking meaningful action to move to a low-carbon economy.

Wright: What do you see as the risks of unmanaged methane emissions?

Goodman: There is an economic risk and benefit for companies. Most of the measures to manage methane are relatively low-cost and can very easily be implemented for new projects. If you’re not doing them, for example, and you’re fracking shale, you’re at a competitive disadvantage to your peers. The cost-benefits perhaps are more difficult, but still there, in existing infrastructure. But particularly among the oil majors, their relationship with their host governments, local communities, and other stakeholders is vital. It’s important for companies to demonstrate good corporate citizenship. If you’re a laggard on methane, you’re more likely to be considered as an irresponsible partner both commercially and also in your local community. So I think oil and gas companies risk massive reputational and legal risks if they’re not managing methane effectively, notwithstanding the economic benefits.

Wright: What do you typically hear from operators in your conversations about methane management? Do you hear different things from operators in different parts of the world?

Goodman: Methane management is part of a number of important issues that we’re engaging with the industry on, including other pollution, health and safety, human rights, corruption and climate change. What we’re hearing on methane does vary. It’s fair to say in some emerging markets methane management is not often discussed by investors with those companies. But when we do address this topic in these markets, the companies show interest and want to know why it’s important to us, what they should be doing, how they should be disclosing, etc. So we’re often having positive and interesting conversations in these markets.

In the developed markets, there’s a difference. And I think there’s a distinction between Europe and North America. The EU companies, particularly the majors, are realizing it’s an important issue and are talking about it and disclosing at least some data. In private dialogue with North American companies, it is clear methane is often an important issue for them, but their disclosure is less convincing. It does vary around the world, but you also have this interesting phenomenon, where some companies seem to be doing a good job in private dialogue, but the disclosure lags behind what they are actually doing. We also see companies attempting to present their efforts in a better light than perhaps they deserve. It’s a complex mixture, which is why engagement is so important because we are able to view the reality on the ground through private dialogue.

For more information on EDF’s investor resources on methane mitigation, please see our recent report, An Investor’s Guide to Methane, or subscribe to our newsletter.

As Trump rolls back methane rules, what should the oil & gas industry do?

This post originally appeared on Forbes.

Recently, at an oil and gas industry event co-hosted by Energy Dialogues and Shell in Houston, Ben Ratner, a Director at Environmental Defense Fund, met up with Michael Maher, presently with Rice University’s Baker Institute for Public Policy and a former longtime economist with ExxonMobil, to discuss the future of the natural gas industry. Specifically, they talked about the growing divide between those—in government and in the industry—who want less environmental regulation, particularly over the issue of methane emissions, and those who see sensible regulation as the best way for the industry to assure its future as offering a cleaner alternative to other, dirtier, fossil fuels.

Since Michael and Ben met in Houston, the Trump Administration announced the U.S. departure from the Paris climate agreement and postponements and potential weakening of methane emission rules from the Environmental Protection Agency and Bureau of Land Management. These new developments put the industry divide into sharper focus.

States could now step up to address issues that the federal government was poised to take the lead on under rules promulgated by President Obama toward the end of his term. But will states act without industry prodding or at least, support for action? And will companies most worried about license to operate intervene against delays, weakening, or even elimination of nationwide standards? Mike and Ben discuss below.

Ben: As a former oil and gas industry employee, how do you think the industry should respond to the regulatory rollbacks of the Trump administration?

Michael: This administration is moving rapidly away from a federal role in climate change policies. The question for the oil and gas industry is whether to sit back and coast on the federal failure to act or to work with states to address greenhouse emissions. Coasting may look like a cost saver for the near term, but the pendulum will eventually swing back, and a reversal of Trump’s policies is a real prospect down the road. However, if enough states—with industry support—were to effectively address methane emissions it could provide guidance for federal action down the road and protect the industry against the reputational damage of being seen to have resisted sound environmental regulation.

Michael: In the current political climate, what do you see as the role of leading companies?

Ben: The great irony here is that while the Trump attacks on environmental standards are intended to help industry by reducing costs in the short term, they may end up inflicting much greater long-term damage. A classic case of “short term gain, long term pain.”

Energy consumers, institutional investors and citizens want cleaner energy, and scrapping rules that help the industry clean up may ultimately endanger the industry’s social license to operate and make it more difficult to do business. So we will be looking hard to see which companies step forward to slow down the deregulatory torrent that is tarnishing the industry’s reputation just as demand for cleaner energy is lifting off.

In recent days, Shell and Exxon reportedly stated that they are complying with EPA’s contested methane rules, but other companies have stayed silent. Companies like ConocoPhillips and BP voiced their support for the Paris international climate agreement. With the U.S. now withdrawing from the Paris accord, will companies like these make good on addressing climate change by publicly supporting policies aimed at reducing methane emissions? We haven’t seen true industry support at the federal regulatory level, at least not yet.

At the same time, regardless of what happens in Washington, states have a golden opportunity to develop their own methane policies. In Colorado, for example, companies like Noble Energy and Anadarko worked with EDF and the state to negotiate methane and air pollution standards that work for business and the environment.

Industry played a vital role in Colorado’s success, and there will be more opportunities for industry leaders to participate in regulatory development in other states.

Ben: Are there business and reputational impacts of failing to address methane emissions?

Michael: Natural gas has historically competed with other sellers with other fuels almost totally on price. But customers and officials are increasingly looking at energy options based on environmental benefits and not just price. There is a robust debate in the Northeast, for example, about how to move forward in decarbonizing their electric power system and it is not focused solely on the costs of alternatives.

In this regard, it is in the interest of the natural gas industry to be able to promote natural gas as a much cleaner alternative to coal. But methane and associated emissions from natural gas drilling operations cloud that cleaner-than-coal claim and plays into the hands of those supporting a more rapid shift to renewables and who argue for “keeping it in the ground.”

Michael: How does EDF view methane control as part of a company’s social responsibility?

Ben: How a company manages its natural gas leaks tells you a great deal about how responsible it is, because leaks cause climate damage and can harm people’s health—especially among the most vulnerable, like children and the elderly. Also, since methane is a commercial product, if a company doesn’t know or care how much of its own product is going into thin air, that’s not a good sign.

Southwestern Energy is one example of a leader that sets a methane target, conveys to its people the value of methane management, and implements leading practices in the field. Another is Statoil, which is working with EDF and an entrepreneur to pioneer efficient new automated methane monitoring technology. These kinds of efforts can deliver financial value by recouping lost product, and demonstrating to investors, communities and other key stakeholders their lived commitment to responsible corporate behavior.

Ben: How do you see the industry tackling the methane problem?

Michael: Farsighted, well operated companies are already taking action to cut emissions, but sometimes the policy advocacy lags behind. There needs to be leadership on this issue from major players—not just singly but as a coalition urging federal agencies to retain or improve rules, rather than delay or weaken them. This coalition should also engage states in developing sound regulation of new drilling and older wells.

Some in industry are already pushing ahead with testing new technology that would reduce the cost of controlling emissions. That effort should continue, but voluntary action of this sort is not a replacement for regulations that apply across the entire industry. Nor will piecemeal voluntary efforts of a few overcome the stigma of hundreds of other companies abstaining from action to reduce their methane emissions.

Michael Maher is a senior program advisor at the Center for Energy Studies at Rice University’s Baker Institute for Public Policy

Ben Ratner is a Director with EDF+Business at Environmental Defense Fund

EDF and TNC partner on new Environmental Impact Bond to fund coastal restoration

To address the world’s most pressing environmental challenges, we must catalyze large-scale private investment in innovative environmental solutions. One place where such solutions are greatly needed is Louisiana, where more than 2,000 square miles of coastal land have vanished since the 1930s, putting communities and industries at risk from the effects of rising seas and increased storm surges.

This week, EDF begins work to develop the nation’s second Environmental Impact Bond, with support from NatureVest’s new Conservation Investment Accelerator Program, the conservation investing unit of The Nature Conservancy. In collaboration with our partners, Quantified Ventures and Louisiana’s Coastal Protection and Restoration Authority, EDF will bring public, private and non-profit resources together to accelerate Louisiana’s coastal restoration and resiliency plans through a new Louisiana Coastal Wetland Restoration and Resilience Environmental Impact Bond.

Coastal wetlands are a form of “natural infrastructure” that provide storm protection by attenuating wave energy. Continual loss reduces these protective services, potentially increasing damage from a single storm by as much as $138 billion and generating an additional $53 billion in lost economic output from storm disruptions. If no actions are taken to restore and protect the coast, Louisiana could lose an additional 1,750 square miles of wetlands by 2060, posing a direct risk to as much as $3.6 billion in assets that support $7.6 billion in economic activity each year.

Can sustainable finance help save Louisiana’s Gulf Coast?

While Louisiana expects 15 years of Gulf oil spill-related funds to support restoration work, the state has identified less than half of the funding necessary. A pay-for-success environmental impact bond backed by these cash flows can help to close this funding gap by mobilizing funds from the private sector to accelerate the pace of restoration project implementation. Restoring the coast earlier in the planning horizon will allow the state to realize long-term cost savings.

Pay-for-success (PFS) is a form of performance-based contracting that ties payment for service provision to the achievement of measurable outcomes. The PFS model has emerged as a promising approach to fund social and environmental innovation. Quantified Ventures, a pay-for-success transaction specialist, paved the way for applying PFS in an environmental context with the development of DC Water’s 2016 Environmental Impact Bond (EIB).

In September 2016, the District of Columbia Water and Sewer Authority (DC Water) raised $25 million from institutional investors Goldman Sachs Urban Investment Group and Calvert Foundation to finance the construction of green infrastructure projects that will reduce the volume of stormwater runoff entering the sewer system, thereby reducing combined sewer overflow events. If the projects perform as expected, DC Water will pay investors in accordance with the initial term rate of 3.43%. If the project outperforms expectations, DC Water will make an additional payment to investors for sharing its risk in the project. If the projects underperform expectations, then investors will make a payment to DC Water.

By sharing project risks between public and private sector partners, environmental impact bonds allow public entities to support innovative environmental solutions and private entities to put their risk-seeking capital to work. Given that sea level rise, land subsidence, storms and hurricanes add uncertainty to the successful outcome of wetland restoration, an EIB can shift part of a restoration project’s risk from Louisiana’s Coastal Protection and Restoration Authority (CPRA) to investors.

In collaboration with CPRA, EDF will select a wetland restoration project from Louisiana’s 2017 Coastal Master Plan to demonstrate the feasibility of an EIB for coastal restoration. This EIB will serve as a blueprint for investments in coastal resilience throughout Louisiana and other coastal states. We expect it may even usher in a new era of private investment in coastal resilience to help cities in the U.S. and across the globe that are already experiencing the adverse effects of climate change and are looking for solutions.

Public, Private, and Non-profit collaboration needed for a sustainable future

The amount of capital required to transition to a low-carbon economy, adapt our infrastructure to cope with the damaging effects of climate change, and preserve healthy ecosystems far exceeds the capacity of the philanthropic and public sectors alone. Of the estimated $1.5 trillion annual investment needed, roughly $700 billion is currently being invested. Innovative green investment products – like environmental impact bonds and green bonds – are helping to fill the $800 billion funding gap that remains.

Dakota Gangi, Sustainable Finance and Impact Investing Manager and William K. Bowes, Jr. Fellow, EDF+Business

We recognize that financial institutions have a role to play in addressing environmental challenges that goes beyond their direct investment dollars. EDF’s sustainable finance strategy seeks to leverage the influence, expertise and capital of the financial marketplace to protect the environment, improve livelihoods and achieve the ambitions goals in Blueprint 2020.

The project is funded by NatureVest, the conservation investing unit of The Nature Conservancy (naturevesttnc.org), through its Conservation Investment Accelerator Grant. With this support, EDF has an exciting opportunity to demonstrate how collaboration between the public, private, and non-profit sectors can address a critical environmental issue. We are excited to be working with Quantified Ventures and the state of Louisiana on this pilot project and hope that it will serve as a model for crowding-in private capital for coastal resiliency and restoration projects around the world.


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