快猫短视频

A MID-LIFE crisis brought his epiphany. 鈥淢y father died and I had a stroke,鈥� he says. 鈥淚t was a wake-up call about what I was doing to create a world my kids could survive in.鈥� Kidney had been a consultant on top Australian pension funds, but now he vowed to put his skills to use in a new way: combatting climate change.

Finance and the environment are traditionally uneasy bedfellows, but they have been getting cosier of late. Buoyant returns from green investments, plus the ever clearer financial repercussions of climate inaction, have drawn vast flows of money into projects to combat and mitigate global warming. It鈥檚 also spawning alternative types of investment designed to help save the planet. Could capitalism succeed where governments have largely failed 鈥� or is this all green hogwash?

The fixation on fast returns makes finance seemingly ill-equipped to cope with a long-term problem like climate change. Traders鈥� algorithms make money over timespans of milliseconds; CEOs can be hired and fired based on quarterly returns; even central banks tend to work on two or three-year cycles when setting monetary policy. Mark Carney, governor of the Bank of England, acknowledged as much in a . Climate change is a 鈥渢ragedy of the horizon鈥�, he said at Lloyd鈥檚, the London-based insurer. 鈥淥nce climate change becomes a defining issue for financial stability, it may already be too late.鈥�

Since then, however, a new wind has begun blowing. Low-carbon technologies have continued to mature, with solar energy in particular graduating from high-cost niche to financial superstardom, thanks in part to generous initial subsidies. In 2017, solar investment exceeded that for coal, natural gas and nuclear power put together, .

Then there鈥檚 the increasingly unavoidable financial impact of climate change. Lloyd鈥檚 is the world鈥檚 leading specialist insurance market, and reported losses of 拢2 billion in March after wildfires in California, monsoon floodsin Bangladesh and a string of hurricanes in the Caribbean. The 2015 Paris climate change agreement, too, has financial ramifications because of its commitment to bringing global net emissions of greenhouse gases to zero by mid-century. Whether or not that goal is achievable, it locks in a long-term policy direction that has investors licking their lips. The result has been a huge upswing of investment in 鈥済reen鈥� bonds that purport to finance long-term projects needed to fight against climate change (see 鈥�What is a bond?鈥�).

The first such bonds were launched around a decade ago. In 2007, for example, the European Union鈥檚 European Investment Bank issued a Climate Awareness Bond to finance renewable energy projects. By 2011, the World Bank was using bonds to raise money to and hand out and replace inefficient appliances in Mexico. Investors got returns in the form of certified carbon credits that could be sold for cash.

Not all of these early projects succeeded. A decade ago advisers to Prince Charles鈥檚 Rainforest Project and the Global Canopy Programme, based in Oxford, UK, set up a private company, Canopy Capital, that aimed to issue up to $100 million in green bonds to protect rainforests. It never quite worked, and the company was , losing its founders 拢500,000.

Green labels

There was also little oversight as to what marketed itself as green. In 2014, the International Capital Markets Association drew up some , but these only stipulated broad categories of investment. China, meanwhile, even allowed bonds to fund new coal-fired power stations, if they were replacing older, dirtier coal plants. Things were a mess, says Kidney. 鈥淎ll sorts of stuff was being financed, including memorably a 鈥榞reen鈥� car-parking garage, certified by the American Parking Association.鈥�

In 2010, Kidney founded the to draw up detailed, agreed rules for what qualifies as a green bond. It鈥檚 the financial-sector equivalent of consumer labelling schemes such as the Forest Stewardship Council for timber or Fairtrade certification for coffee or bananas. Nowadays, the initiative also requires bond issuers to demonstrate that the investment can help deliver the goals of the Paris climate agreement. 鈥淲e want to help financiers make better choices by providing information on what energy technologies are compatible with the 2掳C target, and what infrastructure is climate resilient,鈥� says , an independent environmental economist who helps draw up the standards. 鈥淲e can provide a bridge between UN reports and investment decisions.鈥�

From small beginnings, the initiative now has heavyweight backers including the , philanthropic foundations, and several major banks. And business is booming. In 2017, the initiative logged 1500 certified green bonds worth $155 billion, issued by 239 governments, banks, cities and corporations in 37 countries. That was 78 per cent up on the previous year, and a 40-fold increase on the figure in 2012 (see 鈥�Booming bonds鈥�).

So far these bonds have mostly supported renewable energy, low-carbon buildings, flood protection schemes and clean transport systems such as railways and metro lines. The US is the top issuer, thanks in part to big corporations that can鈥檛 get enough green energy. Facebook, Google and Microsoft are building solar and wind farms to fulfil promises to make their energy use 100 per cent renewable, and in 2016 Apple issued bonds worth $2.5 billion to fund solar farms, greener buildings and other projects. Top of the charts in 2017 was , the US government鈥檚 home loan agency, with a $27.6 billion bond issue to fund energy-efficient buildings.

Despite this, green bonds still account for only a small proportion of annual bond sales. But Kidney predicts they will hit a trillion dollars in 2020, and maybe $5 trillion by 2025, with increasing amounts heading for developing countries. One reason is that governments in rich countries have beenslow to make good on their promise in Paris to put $100 billion annually into a Green Climate Fund, to help developing nations cut emissions and climate-proof their economies. Funds raised from private investors through green bonds have become the most likely way to fill the gap. Last year for instance, to finance protecting its citizens from rising sea levels and tropical storms.

Indications so far are that climate bonds work 鈥� for investors, at least. In March this year, at the University of Waterloo in Canada looked at their performance on the Canadian markets, traditionally a hotbed of fossil-fuel and mining investment. He found that, as of 2015, pension funds that had invested in green bonds in 2011 did as much as 10 per cent better than those that invested in fossil fuels, while having one-quarter the . Research by the international investment bank Barclays found that, between 2009 and 2016, green bonds on US markets had a 鈥溾�� over those with weaker environmental components. That conclusion is backed by recent academic studies.

But data remains thin on the ground, and there are concerns that future green returns could be affected by any fall in prices for coal or oil, or the disappearance of tax breaks for clean technology. 鈥淪cepticism is warranted鈥�, one former Canadian investment banker and political scientist told 快猫短视频 on condition of anonymity.

More fundamentally, there is the question of whether green bonds do much good for the planet. The Climate Bond Initiative鈥檚 working groups are publishing standards that projects must meet to qualify as green. So far only three sectors are covered 鈥� renewable energy, low-carbon buildings and transport. Future standards will regulate bioenergy, agriculture, forestry, waste management and industrial activities such as steel and cement manufacture.

Some requirements are relatively uncontroversial. Today passenger transport systems should not emit more than 80 grams of CO2 per passenger-kilometre, falling to zero by 2050. That means no green labels for petrol-driven cars, and aviation would have to switch to biofuels or batteries to qualify. All electricity generation projects funded by green bonds must, through their construction and operation, emit . That rules out coal and gas while admitting wind and solar power, . In 2017, the initiative removed a third of Chinese bonds from its listings because they involved coal.

But the devil is often in the detail. Should electric cars qualify if they charge up using power generated at coal-fired power plants? According to Jackson, most electric vehicles in China deliver no climate benefit because they run on coal-fired electricity. But they get a green seal of approval on the assumption that, by 2050, all electricity will be carbon-free to meet Paris targets. 鈥淚t鈥檚 a judgement call,鈥� she says.

Nuclear energy, in contrast, doesn鈥檛 make the cut, despite its low carbon emissions: it is seen as too expensive and not commercially viable. That smacks of green political correctness, says author and nuclear power supporter . 鈥淪olar and wind were once hugely expensive too,鈥� he says. The high price of nuclear, meanwhile, arises from 鈥減olitical and technological choices in the past, which can be changed in the future鈥�.

鈥淓arly bonds financed all sorts of things, including a 鈥榞reen鈥� car-parking garage鈥�

Similarly contentious are biofuels. To be deemed green, biofuel investments must undercut the same 100-gram emissions threshold as electricity generation, and also demonstrate that they maintain woody carbon stocks: that is, that any trees cut down to grow biofuel crops are replanted elsewhere. Many environmental pressure groups think that isn鈥檛 good enough, potentially allowing rainforest to be replaced by fast-growing tree monocultures.

Even thornier is hydroelectricity. Dam-building submerges vegetation, and this produces greenhouse gases. Draft rules for hydroelectric dams sidestep that, recommending only that large dams meet the general 100-gram threshold and also have a generating capacity of at least 5 watts per square metre of flooded land. Most existing major dams qualify, including the world鈥檚 largest, the Three Gorges Dam in China, which produces around 20 watts per square metre.

Dam-builders see this as a green lifeline, but environmentalists are increasingly contemptuous of hydro, regardless of its carbon footprint. 鈥淟arge hydroelectric projects have potentially massive social and environmental impacts,鈥� say of the San Francisco-based pressure group International Rivers. 鈥淭hey flood ecosystems, displace thousands of people and spread waterborne diseases. They should not receive support from climate bonds.鈥�

But of the London-based International Institute for Environment and Development, who sits on the working group devising the hydropower guidelines, says that with 3000 plants under construction worldwide, compromise is needed. 鈥淐limate bond finance is a carrot that can help to encourage the private sector to build good hydropower, rather than the bad projects that have given the technology such a bad name,鈥� he says. According to Jackson, besides nuclear-powered France, the only major countries that supply grid electricity below the 100-gram threshold rely on hydroelectricity. 鈥淲e have to be realistic,鈥� she says.

Increasingly, environmentalists and scientists are buying in. 鈥淪ome believe it is impossible to develop standards defining what is green,鈥� says Pascal Canfin, head of the French arm of the environment group WWF, which supports the Carbon Bond Initiative鈥檚 aims. 鈥淏ut we think the sceptics are wrong.鈥� Last year, a group including Christiana Figueres, the climate diplomat who guided the Paris talks, and Johan Rockstr枚m, the environmental scientist who analysed the 鈥�planetary boundaries鈥� that we must not cross for the sake of the world鈥檚 future health, singled out green bonds as key to sustaining the trillion-dollar annual budgets .

Climate bonds are clearly a work in progress, both in what counts as green and in their popularity among financiers. 鈥淲e have a lot of rhetorical support from many investors, but it still needs to be translated into real investment,鈥� Kidney says. Annual global spending on basic infrastructure will reach about $7 trillion by 2025. If the world is to meet the Paris targets, most of that investment needs to be green.

The ultimate hope is a virtuous circle, with truly green investment taking off and providing better returns, so that previous technologies and infrastructure begin to look old hat. That鈥檚 already led many coal mines to shutter, and Kidney expects something similar to happen in the oil industry by 2025. Whatever their present environmental virtues, electric cars are beginning to outshine their traditional counterparts financially in some parts of the world. 鈥淎lready, nobody in China is investing in the internal combustion engine,鈥� says Kidney.

Will that be enough to turn the climate tables? Kidney thinks he won鈥檛 have to wait too long to see if his dream is realised. 鈥淚 figure I鈥檝e got at least another 10 years鈥� hard campaigning in me. We should know if we have a viable future by then.鈥�

This article appeared in print under the headline 鈥淭he colour of money鈥�