Table Of Content

INVESTING IN THE ERA OF CLIMATE CHANGE Columbia University Press Publishers Since 1893 New York Chichester, West Sussex cup.columbia.edu Copyright © 2022 Bruce Usher All rights reserved Library of Congress Cataloging-in-Publication Data Names: Usher, Bruce, author. Title: Investing in the era of climate change / Bruce Usher. Description: New York, NY : Columbia University Press, [2022] | Includes bibliographical references and index. Identifiers: LCCN 2022004785 (print) | LCCN 2022004786 (ebook) | ISBN 9780231200882 (hardback) | ISBN 9780231553827 (ebook) Subjects: LCSH: Investments—Environmental aspects. | Climatic changes—Economic aspects. Classification: LCC HG4521 .U84 2022 (print) | LCC HG4521 (ebook) | DDC 332.6—dc23/eng/20220321 LC record available at https://lccn.loc.gov/2022004785 LC ebook record available at https://lccn.loc.gov/2022004786 Columbia University Press books are printed on permanent and durable acid-free paper. Printed in the United States of America Cover design: Noah Arlow CONTENTS PREFACE ix SECTION 1: MOMENTUM Chapter One Prosperity, with a Catch 3 Chapter Two Investing in the Era of Climate Change 11 Chapter Three Momentum 17 SECTION 2: CLIMATE CHANGE SOLUTIONS Chapter Four Renewable Energy 23 Chapter Five Electric Vehicles 41 Chapter Six Energy Storage 49 Chapter Seven Green Hydrogen 57 vi CONTENTS Chapter Eight Carbon Removal 63 Chapter Nine Better Together 71 SECTION 3: INVESTING STRATEGIES Chapter Ten Risk Mitigation 79 Chapter Eleven Divestment 87 Chapter Twelve ESG Investing 95 Chapter Thirteen Thematic Impact Investing 107 Chapter Fourteen Impact First Investing 115 SECTION 4: INVESTING IN REAL ASSETS Chapter Fifteen Renewable Energy Projects 125 Chapter Sixteen Real Estate 141 Chapter Seventeen Forestry and Agriculture 147 SECTION 5: INVESTING IN FINANCIAL ASSETS Chapter Eighteen Venture Capital 159 vii CONTENTS Chapter Nineteen Private Equity 167 Chapter Twenty Public Equities 173 Chapter Twenty-One Equity Funds 185 Chapter Twenty-Two Fixed Income 193 SECTION 6: THE INVESTOR’S DILEMMA Chapter Twenty-Three The Investor’s Dilemma 203 Chapter Twenty-Four Best Practices 209 Chapter Twenty-Five Why Investment Matters 215 Chapter Twenty-Six The Future 225 ACKNOWLEDGMENTS  NOTES  INDEX  PREFACE Climate change is a controversial topic. Just over one in two Americans believe global warming is caused mostly by human activity, and there is even less agreement on what should be done about it. In fact, the science is unambiguous: human emissions of greenhouse gases have warmed the Earth by 1°C in the past century, and the current emissions trajectory will result in 4°C–6°C of warming by the end of this century, with potentially disastrous consequences for humanity. The science is similarly unambiguous on what must be done to avoid catastrophe: reduce emissions of greenhouse gases to zero, ideally by 2050 and no later than 2070. Fortunately, there is a path for achieving this. Com- mercial solutions already exist to reduce emissions by more than half, and technologies are under development to tackle the rest. But avoiding catastrophe will require implementation of climate solutions at an unprecedented pace and at a global scale, and that will require an extraordinary amount of investment capital: an estimated $125 trillion by 2050 to decarbonize the global economy and limit warming to an adaptable 1.5°C–2°C. Investing in the Era of Climate Change focuses on the implications for investors and the role that investment plays in addressing climate change. Governments also have a critical role, ensuring emissions are regulated and capital is properly incentivized, yet engagement of the private sector is critical to implement climate solutions at the scale and speed needed to address the climate challenge.