July 5, 2017 • Jerilyn Klein Bier
President Trump’s unabashed mission to unravel environmental regulations and ignore climate change has many people seeing red and feeling blue. During his first 100 days in office, he signed executive orders to dismantle the Obama-era Clean Power Plan and advance the controversial Keystone XL and Dakota Access pipelines. He promises to bring back coal jobs from “job-killing regulations” and has decided to pull the U.S. from the Paris climate accord signed by nearly 200 nations. “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing noncompetitive,” he once tweeted. But investors and academics who’ve spent years studying the intersection of political, regulatory and corporate landscapes aren’t expecting the administration to derail green initiatives or thwart investing opportunities in renewable energy, water and other environmental market sectors. New York-based David Richardson, an executive director and the global head of client service at London-headquartered Impax Asset Management (sub-advisor to the Pax World Global Environmental Markets Fund) as well as a licensed civil engineer, says it’s useful to separate “the rhetoric from the reality.” “If you just listened to the rhetoric around the rollback of environmental regulations from the Trump administration, you might conclude that all is lost,” he says, or that renewable energy is a terrible place to invest. But renewables are the lowest-cost energy in many markets; they’re no longer dependent on subsidies, and they’re in line with Trump’s overarching focus on job growth and American prosperity, he says. According to a report published early this year by the Environmental Defense Fund (EDF) Climate Corps, solar and wind jobs have grown at rates of about 20% annually in recent years and are creating jobs at a rate of 12 times faster than the rest of the U.S. economy. “The Trump administration is on balance neither good nor bad for the environmental markets,” says Richardson. “The global economy is quite strong, and it’s a good time to be invested in these markets.” Valuations are attractive, particularly in Europe and Asia, he says. The administration’s environmental posturing doesn’t faze Bruce Kahn, a portfolio manager with New York-headquartered investment advisor firm Sustainable Insight Capital Management (SICM) and a Ph.D. in land resources. “It’s one thing to say something in the press,” he says. “It’s another to enact legislation and develop rules,” which could take years. “The administration wants everyone to pay attention to everything it’s doing, but we pay attention to companies,” he says. During any administration, SICM uses a bottom-up investing process and tries to understand how well companies will respond to the many policies in place, including trade policy. What does concern Kahn somewhat is the administration’s potential idea of a “tax holiday” to repatriate the capital of American firms to the U.S. Should that happen, he says there would be less appetite for tax equity investing by corporate investors. “Some projects in the renewable energy area rely on tax equity dollars and that might be at risk,” he says. Linda-Eling Lee, global head of research for MSCI’s ESG Research group, says several factors could reduce the potential impact of U.S. regulatory changes on clean energy investments. Clean energy is a global phenomenon, and as the technology becomes more cost competitive, the decision to invest in it “is more and more taking on a life of its own,” she says, instead of being shaped by regulatory incentives and disincentives. Investors have also begun to look more seriously at the potential vulnerability of their physical assets to changes in weather patterns, she says. Leading The Way Ron Pernick, founder and managing director of Clean Edge, a Portland, Ore.-based research and advisory firm that’s dedicated to the clean-tech sector and produces two clean energy-focused benchmark indexes with NASDAQ OMX, remains hopeful that Trump’s business advisory council can bring about some shift in attitude. “It’s literally a who’s who list for clean energy leaders and innovators and investors,” he says, including the CEOs of electric car and battery maker Tesla, investment firm Blackstone Group, conglomerate General Electric and automaker General Motors Corp. (Tesla’s Elon Musk, however, later quit Trump’s business advisory council, just hours after the president pulled the U.S. out of the Paris accord.) Pernick and his colleague Clint Wilder want President Trump to understand how clean energy can be a business opportunity, so they sent him an open letter with facts, figures and action points. According to Bloomberg New Energy Finance, global clean energy investments rose from $62 billion in 2004 to $329 billion in 2015. Bloomberg also included data on Americans’ majority support for clean energy and data on job growth and median wages, which outpace national averages. “If you want to create jobs, you better look at one of the biggest jobs creators in recent years,” says Pernick. He also points out that corporations, cities and states have always been and continue to be at the forefront of clean energy. Seventeen states receive 10% or more of their in-state electricity generation from wind, solar and geothermal power, where it was only three states in 2010, he says. Wind energy delivered more than 30% of the electricity produced last year in Iowa and South Dakota—which were both carried by Donald Trump in the 2016 election. A handful of cities are 100% powered by renewable energy, and dozens more have committed to or are working toward it. Pernick notes that some of the largest U.S. corporations (including General Motors, Nike, Google and Walmart) are working to achieve 100% renewable electricity in U.S. or overseas markets. Microsoft and Apple have already met similar goals. First « 1 2 » Next
But investors and academics who’ve spent years studying the intersection of political, regulatory and corporate landscapes aren’t expecting the administration to derail green initiatives or thwart investing opportunities in renewable energy, water and other environmental market sectors. New York-based David Richardson, an executive director and the global head of client service at London-headquartered Impax Asset Management (sub-advisor to the Pax World Global Environmental Markets Fund) as well as a licensed civil engineer, says it’s useful to separate “the rhetoric from the reality.” “If you just listened to the rhetoric around the rollback of environmental regulations from the Trump administration, you might conclude that all is lost,” he says, or that renewable energy is a terrible place to invest. But renewables are the lowest-cost energy in many markets; they’re no longer dependent on subsidies, and they’re in line with Trump’s overarching focus on job growth and American prosperity, he says. According to a report published early this year by the Environmental Defense Fund (EDF) Climate Corps, solar and wind jobs have grown at rates of about 20% annually in recent years and are creating jobs at a rate of 12 times faster than the rest of the U.S. economy.
“The Trump administration is on balance neither good nor bad for the environmental markets,” says Richardson. “The global economy is quite strong, and it’s a good time to be invested in these markets.” Valuations are attractive, particularly in Europe and Asia, he says. The administration’s environmental posturing doesn’t faze Bruce Kahn, a portfolio manager with New York-headquartered investment advisor firm Sustainable Insight Capital Management (SICM) and a Ph.D. in land resources. “It’s one thing to say something in the press,” he says. “It’s another to enact legislation and develop rules,” which could take years. “The administration wants everyone to pay attention to everything it’s doing, but we pay attention to companies,” he says. During any administration, SICM uses a bottom-up investing process and tries to understand how well companies will respond to the many policies in place, including trade policy. What does concern Kahn somewhat is the administration’s potential idea of a “tax holiday” to repatriate the capital of American firms to the U.S. Should that happen, he says there would be less appetite for tax equity investing by corporate investors. “Some projects in the renewable energy area rely on tax equity dollars and that might be at risk,” he says. Linda-Eling Lee, global head of research for MSCI’s ESG Research group, says several factors could reduce the potential impact of U.S. regulatory changes on clean energy investments. Clean energy is a global phenomenon, and as the technology becomes more cost competitive, the decision to invest in it “is more and more taking on a life of its own,” she says, instead of being shaped by regulatory incentives and disincentives. Investors have also begun to look more seriously at the potential vulnerability of their physical assets to changes in weather patterns, she says.
Leading The Way Ron Pernick, founder and managing director of Clean Edge, a Portland, Ore.-based research and advisory firm that’s dedicated to the clean-tech sector and produces two clean energy-focused benchmark indexes with NASDAQ OMX, remains hopeful that Trump’s business advisory council can bring about some shift in attitude. “It’s literally a who’s who list for clean energy leaders and innovators and investors,” he says, including the CEOs of electric car and battery maker Tesla, investment firm Blackstone Group, conglomerate General Electric and automaker General Motors Corp. (Tesla’s Elon Musk, however, later quit Trump’s business advisory council, just hours after the president pulled the U.S. out of the Paris accord.) Pernick and his colleague Clint Wilder want President Trump to understand how clean energy can be a business opportunity, so they sent him an open letter with facts, figures and action points. According to Bloomberg New Energy Finance, global clean energy investments rose from $62 billion in 2004 to $329 billion in 2015. Bloomberg also included data on Americans’ majority support for clean energy and data on job growth and median wages, which outpace national averages. “If you want to create jobs, you better look at one of the biggest jobs creators in recent years,” says Pernick. He also points out that corporations, cities and states have always been and continue to be at the forefront of clean energy. Seventeen states receive 10% or more of their in-state electricity generation from wind, solar and geothermal power, where it was only three states in 2010, he says. Wind energy delivered more than 30% of the electricity produced last year in Iowa and South Dakota—which were both carried by Donald Trump in the 2016 election. A handful of cities are 100% powered by renewable energy, and dozens more have committed to or are working toward it. Pernick notes that some of the largest U.S. corporations (including General Motors, Nike, Google and Walmart) are working to achieve 100% renewable electricity in U.S. or overseas markets. Microsoft and Apple have already met similar goals.
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