Tag Archives: jobs
GMO’s Jeremy Grantham on Climate Change and Investable Ideas
By Nick Summers August 08, 2013 Photograph by Harry Gould Harvey IV for Bloomberg Businessweek What was a 74-year-old asset manager, who oversees $100 billion, doing at a Keystone XL pipeline protest outside the White House? The biggest issue confronting us is the deterioration of the environment, particularly damage to the climate. It’s one thing to warn in a quarterly letter about a carbon bubble and another to maybe get arrested for it. Why did you take that step? Within the U.S., the biggest problem is coal and tar sands. If we burn half or more of what we have in two areas in North America, there is no chance of avoiding very dire consequences. Rising water levels displacing hundreds of millions of people globally, destabilizing global politics, acidification of the water almost certainly destroying most of the coral reefs, and possibly threatening the bottom of the food chain in the ocean. In November, you wrote that scientists must sound a more desperate note. I think they have an ethical responsibility. Did you ever think you would be out in front of scientists? I’m not out in front. What they are reflecting is what we learned in the investment business: the significance of career risk. I made a living pointing out that our No. 1 job is not managing money; it’s keeping our job. Short-term momentum investing dominates because of that. The scientists are protecting their jobs. How they do that is to stay out of the limelight and make sure they’re conservative. What is your opinion of young people? They’re not out in the streets. They are still flocking to Wall Street. They’re not flocking quite so enthusiastically to the financial world. I am prepared to take my optimism wherever I can get it. Obviously, they haven’t responded. It may seem too distant, which is ridiculous because this is happening so fast that this is their lives, not their children’s. How do you start with big observations and get to investable ideas? The only investable idea I have real confidence in is farming and forestry. My family owns some forest, and now we’re closing on a farm. Make the farming more sustainable and the forestry more sustainable, and everyone benefits. Can you talk more about the farm? We’re buying a farm to do comprehensive experiments and broad-based agriculture. What they call “mob grazing”—a high density of cattle, moving them around, making sure that they eat everything that’s there. They trample the seed and so on and they fertilize it. Using goats to eat invasive plants, using chickens to follow the cattle and pigs to eat the leftover vegetables and the fallen fruit, orchards growing fruit and organic vegetables, over 200 acres. Where is this? Maui. My elder son is at Harvard Management Co. He does exotic forestry and farming investments. The second son is a forester. This will give us data and experiments without betting the farm on any one of them. When do you plan to get seeds inthe ground? Immediately. They’ll start small. It will hopefully be a template. They use this offensive word “holistic.” I hate it. It’s the world’s most pretentious word. How long do you let an idea percolate before you commit it to one of your quarterly letters to investors? Sometimes years. I have a decent idea about the exaggerated attention given to debt. I seem to be having writer’s block. What is this big idea? I’m not saying it’s a big idea. It may be very humble. I noticed a series of deficiencies in the data as typically presented. It’s as if only debt matters, only finance matters, only banking matters. We have been manipulated to see ourselves in a world where those things rule the roost and therefore we have to be protective of the big banks. Can the Fed take away easy money without jolting the markets? Who cares? This is the game I’m complaining about. We will prosper by the quality and quantity of our labor and capital. Do not pretend that how they twitch around has any material effect. Many people intuit that climate change is getting worse, but put it out of their heads. Why do you find this interesting? I like to be right. I try not to miss the big ideas, forget the little ones, and try to get them right. End of job description. Continue reading
Biomass: There’s Money in That Wood Waste
Posted: 06/24/2013 One country’s demonstration project is another country’s established technology. When Sherwood Park in Alberta built a demonstration biomass district heating project they bought the equipment from Lambion Energy Solutions of Germany. Axel Lambion is the CEO and he chuckles at project’s demonstration status. In his charming, German accented English notes that his company has built over 3,400 of these projects throughout Europe and around the world. In fact, his great, great grandfather was building biomass energy systems for sawmills at the end of the 19th century. “His slogan was take useless waste and make high quality energy out of it. Energy at that time was very expensive, it seems like we have forgotten this in the last decades,” says Lambion. And that’s exactly what the project in Sherwood Park does. Its feedstock is waste wood, ground up wooden pallets and crates, of which there is a plentiful supply garnered from nearby pallet manufacturing operation North Star Pallets . They’re also planning to burn agricultural residues, like barley straw or oat hulls, on a research basis. The project was commissioned in September of 2012 and came in at $3.2 million with the federal government putting in $1.5 million, $350,000 coming from the Federation of Canadian Municipalities and Strathcona County (Sherwood Park is in Stathcona County) filling in the rest with along with expertise supplied by the Resource Industry Suppliers Association . And while we kid about its demonstration project moniker it is well deserved, it is the first project of its kind in Alberta. The project itself is quite similar to the one we profiled at UBC , it burns biomass and uses the energy to heat several different buildings. Like the UBC project it was an add on to an existing natural gas district heating system. District heating is a simple idea. Produce the heat in a large centralized plant and then pipe it to nearby customers, but it still hasn’t cracked into the mainstream in Canada yet ( despite this awesome typewritten report from 1975, PDF ). However, the list of benefits from district heating is worth remembering Customers no longer have to worry about maintenance Space savings with the removal of furnaces and chimneys in each building Less risk of fire Improved air quality Flexible – can add absorption chillers for cooling or electricity generation depending on demands More efficient Less greenhouse gas emissions The efficiency of the one-megawatt biomass heating plant of the demonstration project blows away all of the little furnaces and boilers that would have been used out of the water. It heats a recreation centre, numerous county buildings, a large theatre space and even nearby condos. The economies of scale are impressive. A condition of receiving its grants meant it had to meet or exceed air quality and emissions requirements. The government wanted this project to be replicable in other urban sites and it ensures it’s a good neighbour with scrubbers, multiple monitors and something called an electro-static precipitator. According to Harry Welling of Kalwa Biogenics, another partner on the project, the heating provided by the biomass project can cover half of the heating load on the coldest prairie winter day of the year and the vast majority of the heating loads the rest of the year. To use utility company jargon, it provides the base-load heat and the natural gas boilers provide peak demand and backup. The system also reduces greenhouse gas emissions by 1,200 tonnes a year compared to the natural gas system it was added to. It also burns 12,000 tonnes of biomass a year. To avoid noise the project uses a modular container system to haul the biomass in and take the empty containers away. Each container carries 3.5 tonnes of biomass Bucolic little biomass boiler It’s tucked into an area of town called Centre in the Park featuring green space, couples walking their dogs and fountains. The containers only get replaced on weekdays and during daytime hours. Except for the sign telling you so you’d hardly know there was a large wood-fired boiler in this bucolic little area. Welling was also instrumental in assessing the economics of the project. The big factor in deciding to build a system like this is the cost of fuel. While the price and volatility of natural gas has declined over the years the cost of the commodity has been steadily inching up since early 2012 . Welling has crunched the numbers and found that with biomass at $40 per tonne, the cost of a gigajoule worth of heat is $2.20, or roughly half of the current price of natural gas. Chopping the fuel cost in half is quite the accomplishment, but with a biomass system comes other costs – mostly labour and transportation. Those “liabilities” are actually anything but, they’re local jobs that are filled by people who live in the county. And when you start talking about economic opportunities for biomass the lowest hanging fruit is the forestry and lumber processing industries. This is an area of the economy that has been depressed for quite some time. Burning biomass for heat or power means new economic opportunities. When Axel Lambion looks at Europe he sees a saturated market. Everyone and their dog has a biomass system, they’re taking old coal plants and co-firing them with wood pellets . Lambion has even installed systems that run on left-over grapes from the wine-making process and left-over potato skins from a French fry operation – they’re not very efficient but they do deal with waste effectively. By comparison Canada is a land of opportunity, with only a few similar systems installed across the country. “That’s why I’m here. In fact it’s very interesting for us,” says Lambion. “We are very proud that we are doing a project for Vanderwell Contractors up in Slave Lake which is a big privately owned saw mill. We’re doing a project where we burn 50,000 to 60,000 tonnes of hawk fuel (waste wood) which we convert into electric energy.” The project could generate 3.6 megawatts of electricity and it could save the sawmill hundreds of thousands of dollars in electricity costs each year. Canada has the biomass. And we need to reduce our waste and our greenhouse gas emissions. We need the jobs and the heat and power. Once companies like Lambion and others prove their mettle in the North American market expect Canadian and U.S. companies to get a lot more involved with biomass energy systems. We’d love to hear your biomass story in the comments. Continue reading
UN: Global Renewables Sector Tops 5.7 Million Jobs
New reports confirm renewable energy market stalled last year as technology costs fell, but emerging economies promise to drive growth By James Murray 12 Jun 2013 The UN Environment Programme (UNEP) has today confirmed global investment in renewable energy slowed down last year, even as deployment in key technologies and markets continued to accelerate. The agency has this afternoon published two major reports on progress in the renewables industry , which echo previous studies showing investment fell 12 per cent last year to $244bn, primarily as a result of the drastic fall in the cost of solar and wind power and policy uncertainty in several industrialised nations. Despite the investment slowdown, the reports stressed that the general trend for the industry was encouraging, noting that $1.6tr has been invested in renewables since 2006, 2012 marked the third consecutive year investment comfortably topped $200m, and that the sector now employs 5.7 million people globally. The data also confirms once again that investment in new renewables capacity topped investment in new fossil fuel generation capacity. The reports also demonstrated that the slowdown in investment had not been matched by a slowdown in deployment, due to the fact solar prices fell by 30 to 40 per cent, while wind energy costs also saw more modest falls. As a result solar installations hit a new record of 30.5GW, while wind energy capacity deployment rose from 42.1GW in 2011 to 48.4GW last year. “The uptake of renewable energies continues world-wide as countries, companies and communities seize the linkages between low carbon Green Economies and a future of energy access and security, sustainable livelihoods and a stabilized climate,” said UNEP executive director Achim Steiner, in a statement. “There has been a dramatic increase in number and size of projects. There have also been sharp falls in manufacturing costs and in the selling prices of wind turbines and photovoltaic panels, contributing to a shake-out in the industry in 2012. This is not only normal in a rapidly growing, high tech industry but is likely to lead to even more competition, with even bigger gains for consumers, the climate and wider sustainability opportunities.” Last year also saw a sharp shift in the make-up of the global market, with investment in emerging economies nearly matching that found in industrialised nations for the first time. According to the Global Trends and Global Status reports, investment in renewables in the so-called Global South topped $112bn while investment in developed nations reached $132bn. The spread of investment is in stark contrast to five years ago when industrialised nations invested 2.5 times more in renewables, excluding large hydro, than developing countries. The reports also noted that 138 countries now boast renewable energy targets or targets, two thirds of which are in developing countries. Moreover, China further cemented its position as the world’s leading renewable energy market last year as investment rose 22 per cent to $67bn. The report comes in the same week as the International Energy Agency (IEA) reported that China saw one of the lowest increases in its greenhouse gas emissions in 20 years last year as a result of investment in energy efficiency and renewables. However, while sharp increases in renewables investment were recorded in Africa, the Middle East and parts of South America, the UNEP reports also confirmed significant slowdowns in the US and Germany where investment fell 34 per cent and 35 per cent, respectively. Investment in Japan bucked the trend, climbing 73 per cent to $16bn on the introduction of new renewable energy subsidies, but the bulk of industrialised countries saw investment stall as a result of policy uncertainty and falling technology costs. Michael Liebreich, chief executive of Bloomberg New Energy Finance , which contributed to the reports, said the research demonstrated the continued strength of the global renewables industry, but he warned a step change in investment would still be required if the world is to meet its climate change targets. “It is encouraging that renewable energy investment has exceeded $200bn for the third successive year, that emerging economies are playing a larger and larger part, and that the cost-competitiveness of solar and wind power is improving all the time,” he said. “What remains daunting is that the world has hardly scratched the surface – CO2 emissions are still on a firm upward trend and there was still nearly $150bn of net investment in new fossil-fuel generating assets in 2012.” Continue reading
