Subway ridership dropped by 90 percent when New York City became the epicenter of the coronavirus pandemic and the state issued a stay-at-home order. While many of us had the privilege to #StayHome for the past three months, essential workers, mostly coming from low-income professions, had to continue using public transportation as if a global pandemic was not taking place in the background. Therefore, it comes as no surprise that low-income black and Latino residents were disproportionately affected by COVID-19. With the coronavirus curve flattened, and as the city enters Phase 2 of the reopening, what steps can New York take to improve transportation equity?

According to a study by Columbia University Mailman School of Public Health and Boston University School of Public Health, at the height of the coronavirus crisis, people from low-income neighborhoods and communities of color used the subway to a greater degree than individuals from higher income neighborhoods.

Low income residents still made up the majority of people that were allowed to work under Phase I of the reopening plan. As of June 8th, non-essential retail, manufacturing, and construction services resumed in the five boroughs, which led to the subway and other public transportation being more crowded with other blue-collar workers.

The Metropolitan Transportation Authority (MTA) recently announced its 13-point Plan for A Safe Return, which includes unprecedented disinfecting, increased bus lanes, hand sanitizers at stations, and floor markings encouraging continued social distancing. However, this plan does not include steps to improve public transportation equity, the need for which became evident at the height of the coronavirus crisis.

To make New York City public transportation more equitable and pandemic-proof in the future, policy reform and long-term actionable steps are needed.

On the policy side, a greater portion of New York’s public transportation budget should be specifically allocated toward low-income neighborhoods. This includes implementing the much-needed infrastructural upgrades on the subway (track improvements, station upgrades etc.) to decrease delays and overcrowding.

It is important that bus lanes significantly increased across the city. But while it is commendable that 20 additional miles of bus lanes were added by the New York City Mayor’s Office, it is still 40 miles short of MTA’s recommendation of adding a total of 60 miles. Meeting MTA’s recommended target should be a priority for the city, especially in neighborhoods with greater numbers of essential and blue-collar workers.

Moreover, there should be wider options for flexible modes of transportation, such as bike-sharing, available in low income neighborhoods. According to a 2019 report by McGill University and New York Communities for Change, 75 percent of neighborhoods that experience extreme poverty do not fall under the Citi Bike service area, and only 16 percent of people of color have access to the city’s bike sharing resources. The New York City Department of Transportation needs to prioritize these neighborhoods for flexible transportation services. In addition, while Citi Bike has discount programs for people on SNAP assistance or living in NYCHA housing, these programs need to be marketed more widely and eligibility requirements need to be expanded to include more low-income New Yorkers.

In a time when the City’s economy is so cash-strapped, it may appear that making all these significant and costly changes to the public transportation system should not be a priority. However, adopting transportation policies that benefit low-income workers should be viewed as an opportunity to achieve long-term transportation equity. This way we can also ensure that our gratitude goes beyond our 7PM claps, as we continue to invest our resources into the people that helped us through this crisis the most — our essential workers.

At Build Edison, we have decades of experience in developing, managing, and financing demonstration projects across various clean energy technologies. We offer a number of solutions for startups, large companies, governments and investors to grow quickly and consistently, and to capitalize on one of the most exciting areas of the energy market.

Build Edison 530 Fifth Avenue, 9th Fl #5 New York, NY 10036

www.buildedison.com

How to Thank Essential Workers Beyond 7 pm Claps? Let’s Improve Our Public Transportation was originally published in Build Edison on Medium, where people are continuing the conversation by highlighting and responding to this story.

In the 1800s, coal was a staple of the U.S energy system. It was used to power ships and railroad engines, and played a large role in the American Civil War. By the end of the 19th century, almost 80 percent of the energy mix in the U.S. consisted of coal. However, in the past month, numerous energy watchdogs have reported that coal is experiencing an unprecedented decline due to COVID-19, with many stating that it will not recover after the pandemic. How real is this prediction and what factors might be driving this trend?

The decline of coal precedes the coronavirus pandemic. While environmental activism has played a role in the decline of U.S. coal, most of it is due to economics: availability of cheap natural gas, coupled with innovation and costs decline in the renewable energy sector. These factors made the relative price of coal much higher, thereby weakening the competitiveness of this fossil fuel in the electricity market. Even with political support from the current administration, an estimated 39,000 MW of coal-fired power plant capacity shut down since the beginning of 2017.

The May 2020 EIA Short-Term Energy Outlook provides a quick update on how the pandemic could impact the future of coal. It is expected that coal generation will decrease by 25 percent in 2020. This trend can be attributed to low electricity consumption right now, and relatively flat natural gas prices, making coal consistently less favorable.

The nail in the coffin for coal will likely be the rapid growth of renewables, which is expected to continue in 2020.

According to EIA forecasts, renewable energy generation will grow by 11 percent in 2020 — accounting for the majority of the new generating capacity being added to the electricity sector this year. This growth is expected to continue even with the pandemic-related economic slowdown and layoffs in the renewable energy sector.

Another telling sign of the continued decline of coal power plants is that they are running less frequently. More renewable energy is being dispatched during the pandemic as wind and solar is cheaper to operate when there is low electricity demand. Energy sources with no fuel or marginal costs, such as wind and solar, are preferred in low demand scenarios, contributing to further decline of energy sources that are based on variable fuels with variable costs, such as coal. The less a coal plant is used, the more expensive it is to support it. This can explain why 13 more coal power plants have announced that they are shutting down in Q1 of 2020.

Some analysts have argued that this is just a blip in the coal history. Coal is certainly declining, just not that fast. Once pre-pandemic electricity consumption levels return, coal consumption might go right back to where it was.

However, even in such scenarios, the EIA does not see coal surpassing renewable energy in 2021. Coal consumption may increase by 10 percent due to increased electricity demand and higher natural gas prices, but this figure is likely to remain lower than the anticipated growth of clean energy.

Coal decline should not be breaking news to us. We knew it was coming all along.

We have seen the charts — while renewables have experienced a steady growth, coal has been undeviatingly declining over the past decade in the U.S. The coronavirus pandemic has simply accelerated this trend.

Now electric utilities need to consider what to do with the remaining coal power plants in the country: Is it worth keeping them running or has the time finally come to say goodbye to the once ubiquitous U.S energy source?

At Build Edison, we have decades of experience in developing, managing, and financing demonstration projects across various clean energy technologies. We offer a number of solutions for startups, large companies, governments and investors to grow quickly and consistently, and to capitalize on one of the most exciting areas of the energy market.

Build Edison 530 Fifth Avenue, 9th Fl #5 New York, NY 10036

www.buildedison.com

Will Coal Survive COVID-19? was originally published in Build Edison on Medium, where people are continuing the conversation by highlighting and responding to this story.

A couple of years ago, blockchain was all the hype. It seemed like everyone was talking about how the technology behind the notorious bitcoin cryptocurrency would revolutionize how the world exchanged information, conducted financial transactions, and even voted in elections. The energy sector was no exception to this trend.

Industry experts have started to explore how blockchain technology could be used to increase efficiency in peer-to-peer energy trading, data management, accounting, and automation. As the sector continues integrating a larger number of renewable energy sources into the grid, blockchain can give us an accurate and detailed picture of our progress. Leveraging blockchain innovation in the Renewable Energy Certificates (RECs) process may help provide insight into the evolving energy market.

What exactly is a blockchain and what makes this technology unique?

Blockchain is a ledger that is made up of “blocks” of data that store digital information. The blocks consist of three types of data:

1. Transactional information, such as date, time, and price

2. Parties involved in the transaction

3. A unique code called a “hash” that makes the block distinct from other blocks

The biggest draw of this technology is that it is decentralized and cannot be manipulated. In order to add a block to the blockchain, a form of data logging is used to ensure that the information cannot be changed by anyone. This creates an environment of data transparency and accuracy that can be very useful for complex sectors with various data sources.

How can blockchain innovation be used to manage data on renewable energy generation?

Under the current electricity grid system, it is difficult to distinguish electrons produced from renewable energy sources (solar, wind, nuclear etc.) from those generated using fossil fuels. RECs are used to keep track of how much electricity is generated using renewable energy resources. When one megawatt-hour (1 MWh) of renewable energy is produced, the data is logged in a spreadsheet by the generator, which is then sent to a registry provider, such as the Center for Resource Solutions. A REC is created when this information is entered by the registry. After this, a second set of intermediary brokers create deals between buyers and sellers of RECs. This transaction is finally verified by an independent third party.

The current system that manages information on the production of renewable energy is archaic. It increases transaction costs (up to 5–10 percent) and creates opportunities for accounting errors and even fraud. Accurate and transparent information is essential to prevent double counting — where the green attributes of a single REC are used more than once.

Keeping track of RECs is one of the many applications of blockchain technology in the energy sector. If the generator directly sent the data to a blockchain, it would eliminate the various middlemen currently required to verify and trade RECs. Therefore, this technology has the potential to unify elements of this operation that are currently siloed and also create more transparency in the tracking process (Figure 1).

There are still barriers that are preventing large-scale application of blockchain technology in the REC market. Firstly, the REC process becoming decentralized presents a double-edged sword; while it can increase transparency, it can also become a regulatory nightmare if clear boundaries are not established between consumers and producers. Additionally, transitioning the entire operation to blockchain technology will be a colossal effort and there is no clear roadmap to do it. The numerous pilots involved in testing this model (since 2018–2019) have simply not been around long enough to successfully scale yet.

What is the future of blockchain energy innovation?

Despite the challenges, it is evident that there is immense potential for blockchain applications in the energy industry. According to a report by Global Market Insights, the blockchain energy sector will grow from $200 million in 2018 to $3 billion in 2025. As the electricity mix and data management in the energy sector become more complex due to renewable energy proliferation, industry leaders must ask themselves “should we invest more resources in scaling blockchain energy innovation?” It is an elegant solution to many of the sector’s current problems. It just needs a little bit more time (and capital) to mature.

At Build Edison, we have decades of experience in developing, managing, and financing demonstration projects across various clean energy technologies. We offer a number of solutions for startups, large companies, governments and investors to grow quickly and consistently, and to capitalize on one of the most exciting areas of the energy market.

Build Edison 530 Fifth Avenue, 9th Fl #5 New York, NY 10036

www.buildedison.com

Blockchain: The Pathway to a Smarter Electricity Grid was originally published in Build Edison on Medium, where people are continuing the conversation by highlighting and responding to this story.

We have all seen the images on the Internet — grounded airplanes, an eerily empty Times Square, and, most notably, goats are taking over deserted towns. Just like the rest of the world, the clean energy sector has also seemingly come to a standstill due to the spread of COVID-19.

The coronavirus pandemic hit the world at a time when the renewable energy and climate policy sector started to gain greater momentum. While energy pundits and market analysts all have forecasted an exponential growth of solar energy in the next decade, now everything has changed due to the current global health emergency and economic downturn. If the solar energy sector wants to survive in a post-COVID-19 world, it has to alter its strategy and align with the realities of social distancing. One way to do this is by increasing investment and resources towards community solar.

The residential solar industry has been one of the hardest-hit sectors amidst the coronavirus crisis. According to a report by Wood McKenzie, solar capacity deployment will be reduced by 18 percent this year. Morgan Stanley estimates that residential solar installations will decline by 48 percent in the second quarter of 2020. This will then lead to at least half of the total workers hired by the industry to become unemployed. The rooftop solar sector has disproportionately experienced pandemic-related downturn because it requires onsite installation and, even with certain financing mechanisms, high upfront costs. With the economic uncertainty, homeowners are simply not willing to pay thousands of dollars for a stranger, particularly during a time of social distancing, to come and put solar panels on their roof.

One way to promote the renewable energy sector during this time would be to boost community solar. Community solar allows both household and commercial clients to subscribe to a large off-site solar farm and receive credits that can be used towards decreasing their electricity bill.

Contrary to residential solar, community solar gardens are placed in an off-site location, contracts can be as short as one year, and the transaction can be done completely online without any human-to-human contact.

The reason why current community solar capacity in the U.S is only at 2.1 gigawatts (as opposed to residential solar at 77.7 gigawatts) is because residential solar is more commonly available, may boost property value, and has growing funding from both the private sector and the government. However, for customers that want to reduce their utility bills and support renewable energy during the pandemic, community solar should be promoted as a potential solution.

The government can play a significant role in shifting investment toward community solar projects. Congress has taken some steps to support struggling Americans and businesses by passing the CARES Act, a $2 trillion aid package that alleviates immediate financial burdens through a mix of grants, loans, and tax deferrals. However, if Congress decides to pass another recovery bill, it should extend the Solar Investment Tax Credit (ITC) and promote community solar as part of its agenda. This would not only serve to expand the solar energy sector, but could also create job opportunities for some of the 16 million people who have lost their jobs due to the pandemic.

A slowdown in the clean energy transition is far from ideal for climate change mitigation initiatives. While air pollution and greenhouse gas emissions are currently at historical lows around the world due to the slowdown in economic activity, the United Nations predicts that this trend is fleeting. Once the pandemic is under control, the level of emissions will rise exponentially as countries jump-start their economies and attempt to make up for lost time. Therefore, the clean energy and climate change tech sector must continue to find innovative ways to decarbonize our energy systems and learn how to be resilient in the face of a new reality.

At Build Edison, we have decades of experience in developing, managing, and financing demonstration projects across various clean energy technologies. We offer a number of solutions for startups, large companies, governments and investors to grow quickly and consistently, and to capitalize on one of the most exciting areas of the energy market.

Build Edison 530 Fifth Avenue, 9th Fl #5 New York, NY 10036

www.buildedison.com

How To Promote Clean Energy During a Pandemic? Subscribe to Community Solar was originally published in Build Edison on Medium, where people are continuing the conversation by highlighting and responding to this story.

If you walk across the financial district or Midtown Manhattan, you will be hard pressed to find a large building that does not feature either a LEED or ENERGY STAR certification stamp near the entrance. Can we say the same for other types of buildings across New York City, particularly low-income multifamily homes? Unfortunately, the answer is no.

The wave of Green Building practices has yet to fully reach low-income communities in New York. This brings a host of issues that disproportionally affect people of color.

According to a report by the American Council for an Energy-Efficient Economy (ACEEE), low-income households pay comparatively more than the average household for energy costs. In addition, people living in these poorly constructed multifamily homes have many respiratory diseases due to poor indoor air quality. A 2018 study conducted by the CDC discovered that there was a strong correlation between high rates of asthma and mold violations and low-income neighborhoods in the Bronx and Central Brooklyn.

The contemporary green building movement started from the need to improve energy efficiency and environmental footprint of buildings. While the 1970s oil crisis kickstarted the research and activity around this sector, green buildings are now an important part of tackling climate change. In addition to the environmental benefits, green buildings also have many positive impacts on the residents themselves, such as improved indoor air quality and lower utility bills.

The New York City Council passed Local Law 97 (LL97) in May 2019, which places stringent limits on greenhouse gas emissions for buildings over 25,000 square feet. This law was implemented to address the fact that 67 percent of New York’s city-wide emissions come from the built environment. This law will impact approximately 50,000 buildings that mostly consist of hospitals, hotels, senior care facilities, and commercial entities. However, government-subsidized housing developments are exempted until 2035. Many buildings that fall under the LL97 criteria have already implemented key energy retrofits. Hence, the passing of the law has only drawn investments toward buildings that fall under the LL97 portfolio, and potentially moved capital away from affordable housing complexes and buildings in low-income neighborhoods.

Both policy and investment focus needs to be shifted toward ‘greening’ multifamily buildings in low-income neighborhoods in New York. Addressing energy affordability can help to break the cycle of poverty, promote economic development, and raise public health.

Public financing can play a critical role in solving this issue. Access to up-front capital for low-income multifamily property owners and for managers of government-subsidized affordable housing is limited. This creates a financial barrier to advance green building practices in low-income communities. Additionally, as many buildings in low-income neighborhoods age, their operational costs increase. This creates further budgetary conflict between maintenance priorities and energy efficiency retrofits. Low-interest financing or on-bill financing from the government can reduce these up-front costs, allowing property owners to shoulder more sizeable energy efficiency projects and repay loans with savings from the retrofits.

On the policy side, multiple New York City and State agencies have programs that incentivize energy efficient retrofits. The New York City Department of Housing Preservation and Development (HPD) is also working on multiple energy efficient projects around the city, such as the Sendero Verde — a 655-apartment affordable housing development in East Harlem that is set to open in 2022.

While these efforts are on the path to increase clean energy retrofits in low-income neighborhoods, the key issue has been the lack of training for people who would implement these projects. Many property managers and owners in low-income neighborhoods do not have the time or resources to meet application and evaluation requirements for different programs. In order to fill this capacity gap, property managers and building owners need to have access to free training.

With low-income housing communities in New York experiencing legacies of disinvestment, high energy costs, and low-quality living standards, policymakers must ask themselves, “how can we ensure that our climate policies benefit everyone, regardless of income?” Prioritizing big buildings and skyscrapers for energy retrofits makes sense in terms of lowering emissions. However, good climate policy should uplift even the most marginalized.

At Build Edison, we have decades of experience in developing, managing, and financing demonstration projects across various clean energy technologies. We offer a number of solutions for startups, large companies, governments and investors to grow quickly and consistently, and to capitalize on one of the most exciting areas of the energy market.

Build Edison 530 Fifth Avenue, 9th Fl #5 New York, NY 10036

www.buildedison.com

Equality by Design: Green Building’s Role in Low-Income Housing was originally published in Build Edison on Medium, where people are continuing the conversation by highlighting and responding to this story.

The 1996 Western North America blackouts impacted 7.5 million people across United States, Canada, and Northwest Mexico. Thousands of people were trapped in airports. No phone service. People irate with sweltering heat. The cause behind one of the worst power outages in North American history? Exceeded grid capacity on a particularly hot summer day.

Skeptics of renewable energy cite cases like this to argue that integrating more intermittent energy resources like solar and wind into the grid will undermine grid reliability and resiliency. However, growing evidence shows that grid reliability and renewable energy integration are not incompatible. In fact, renewables combined with some creative market redesign could actually improve reliability and resiliency while delivering zero-emissions electricity.

The electric grids in the U.S are some of the oldest in the world and they have not been as effective at innovating as some others. Grid resiliency is more important than ever, as we are experiencing an increased number of blackouts caused by climate change-driven extreme weather events. With the right technology, investment, and market policies, these risks can be mitigated as renewable energy can fuel the path to greater grid reliability and resiliency.

Today’s electricity grid is composed of aging infrastructure, making it susceptible to a wide variety of threats, from natural disasters and cyber-attacks to falling trees. Additionally, it is governed by a complex web of stakeholders — utilities, grid managers, power producers, and federal and state regulators, who are required to coordinate to determine the precise supply and demand of electricity every day. This balancing act is challenging even with dispatchable energy sources like natural gas, oil, and hydroelectric pumped storage. Some argue that this process becomes even more complex and onerous when renewables, such as solar PV (without storage) or wind power are thrown into the mix as grid operators cannot reliably draw on these sources of energy at all times.

On the other hand, many experts argue that distributed electricity generation and high penetration levels of renewable energy can improve grid reliability. A 2017 study conducted by the U.S Department of Energy supports this idea as well. Experts also suggest that portfolio diversity is key. Ensuring a diverse mix of power generation sources can protect electric utilities from fuel supply interruption, market volatility, and regulatory changes.

Supporters of renewables also argue that dispatchability concerns can be laid to rest considering the recent technological advancements in the clean energy sector.

A report released by the American Wind Energy Association cited some of the advancements in the wind and solar sector, such as improved energy storage capacity, enhanced hardware design, and sophisticated software that can swiftly respond to demand changes of the grid.

While there is growing evidence that renewables can bolster grid reliability and resiliency, there are still roadblocks to fully integrating renewables into the grid. In order to tackle these challenges, the U.S energy system needs to start rapidly integrating innovative technological tools and policy strategies. Power markets must evolve to better integrate clean energy. Regional markets must become better coordinated so states endowed with renewable resources can sell into other markets (i.e. A sunny California can sell clean power into a rainy Washington). Additionally, wholesale electricity markets must become more flexible and incentivize investment towards integration of renewables in the grid.

Iowa and California provide models for how renewable energy grid integration can be successful in the future. Iowa is the second highest wind power-producing state in the U.S and has invested over $13.5 billion in the sector without compromising reliability. This is evident, as the state is ranked fourth in the country in terms of grid reliability. California accounts for 25 percent of U.S.’ cumulative installed solar technology. According to the California 2030 Low Carbon Grid Study, the state has the capacity to use renewables to cut its carbon emissions by 50 percent without compromising grid reliability. The state also set a record in 2017, having met 42 percent of its electricity demand using solar, wind, hydro and other renewable energy sources.

Ultimately, renewable energy integration is the path to grid modernization, reliability, and resiliency.

With extreme weather events on the rise that threaten grid reliability and resiliency, grid operators must ask themselves, ‘how can we improve an outdated grid system that no longer serves us?’ It is clear that renewables can be part of that answer and a modern grid is within reach — with the right types of investments and willingness to modernize.

At Build Edison, we have decades of experience in developing, managing, and financing demonstration projects across various clean energy technologies. We offer a number of solutions for startups, large companies, governments and investors to grow quickly and consistently, and to capitalize on one of the most exciting areas of the energy market.

Build Edison 530 Fifth Avenue, 9th Fl #5 New York, NY 10036

www.buildedison.com

The Path to Grid Reliability and Resiliency? Renewable Energy was originally published in Build Edison on Medium, where people are continuing the conversation by highlighting and responding to this story.

California has historically been a leader in clean energy and technology innovation in the United States. In 2006, and long before climate change became a topic of conversation at the dinner table, California passed the Global Warming Solutions Act, which mandated the state to reduce greenhouse gas emissions to the 1990 level by 2020. After the state achieved this goal four years early, California further advanced its emissions reduction target to 40 percent below 1990 levels by 2030.

When the Trump Administration rolled back nearly all climate policies — as well as pulled out of the global Paris Agreement — several state governments stepped up to fill the void. California suddenly wasn’t alone in its quest to combat climate change.

New York State in particular has emerged as California’s rival in climate change leadership. In July 2019, New York passed the Climate Leadership and Community Protection Act (CLCPA), which aims to reach 100 percent carbon-free electricity by 2040 and net-zero emissions across the state economy by 2050.

While both states have prioritized electrification of its built environment as a means to achieve their climate targets, New York’s approach is proving more effective.

New York is incentivizing customers to electrify buildings, and investing an additional $2 billion for energy efficiency programs. Thanks to this approach, customers in New York will be able to save more than $13 billion on utility bills through 2025.

California, on the other hand, chose to restrict new natural gas — an approach which would mainly impact new buildings and do little to decarbonize existing infrastructure. Additionally, the California Public Utilities Commission (CPUC) has voted to invest $45 million in all-electric heat pumps — a complementing effort to electrify existing infrastructure. This program is also intended to advance on-site clean energy generation and energy storage systems. However, the announced budget is a fraction of New York’s allocated amount for a state that is twice the population size.

In addition to building electrification, New York is aggressively investing in renewables and clean energy innovation. In February 2020, New York State Governor Andrew Cuomo announced a 30-day amendment to accelerate renewable energy projects within the state. In the same month, the New York State Energy Research & Development Authority (NYSERDA) announced a $6 million Co-Investment Fund designed to support emerging cleantech companies based in New York. While California has been investing in these areas over the past decade, New York is now investing at a break-neck speed.

There is no doubt that New York has emerged as a leader on climate change policy.

It is also a positive sign that other states (namely Nevada, New Mexico, Maine, and District of Columbia) are adopting climate policies that promote widespread adoption of renewables, clean technology, and energy efficiency programs. Given the urgency to keep global warming from exceeding 1.5C degrees, it is imperative that the U.S plays a leading role in achieving this goal, regardless of who is in the White House. California has been spearheading the transition to a clean energy economy for the past 14 years — and it is finally going to have some company.

At Build Edison, we have decades of experience in developing, managing, and financing demonstration projects across various clean energy technologies. We offer a number of solutions for startups, large companies, governments and investors to grow quickly and consistently, and to capitalize on one of the most exciting areas of the energy market.

Build Edison 530 Fifth Avenue, 9th Fl #5 New York, NY 10036

www.buildedison.com

New York vs. California: Who’s Ahead on Climate Policy? was originally published in Build Edison on Medium, where people are continuing the conversation by highlighting and responding to this story.

BlackRock’s recent announcement on the importance of factoring climate risk into investment decisions sent waves through the financial sector. Larry Fink, Chairman and CEO of BlackRock, published a letter stating that climate change will require “a fundamental reshaping of finance.” While some argued that BlackRock’s announcement was overdue and lacked substance, others welcomed it as a sign of changing values not only in the financial sector but in the corporate world at large.

The letter stressed that long-term profitability was at the center of this decision. With mounting global pressure from environmental activists, investors and corporations are finally beginning to realize the potential impacts of climate change on their businesses. Some insurance and real estate companies even anticipate the consequences of climate change threatening huge economies around the world.

Due to increasing societal and shareholder pressure, as well as growing global opposition to investment in carbon-heavy projects, investing consciously is beginning to offer benefits in addition to accounting for climate change risk. While investing in traditional energy was historically safe, the decision to divest is becoming more obvious as traditional energy stocks continue to underperform. It is becoming clear to investors that coal, oil, and natural gas projects carry outsized financial and reputational risk, far greater than that of the clean energy-based alternatives.

Increasingly, shareholders are advocating for climate-related issues, as stakeholder values play a larger role in companies’ decision-making.

Shareholder resolutions have demanded companies conduct climate risk assessments and disclose impacts on future profitability. Out of all shareholder resolutions filed last year, climate change-based resolutions are at an all-time high at 30 percent.

Companies have a responsibility to maximize profits, but fundamentally shareholders determine their value. With a spotlight on companies that ignore the risks of climate change and continue to operate business-as-usual, it is in everyone’s best interest to incorporate sustainability metrics into their business decisions. In light of this new dynamic, BlackRock has decided to pivot its investment strategy to be more climate-focused to ensure its reputation and long-term profitability.

BlackRock is certainly not the first financial institution to focus on environmental, social, and governance (ESG) metrics in its investment criteria. Bank of America has committed $300 billion to sustainable investments and Goldman Sachs plans to invest $750 billion over the next decade. The technology sector has also started to recognize the need to lead on climate change mitigation. In January 2020, Microsoft announced that it will be carbon negative by 2030 and remove all the carbon dioxide the company has ever emitted since it was founded in 1975.

While corporations are under mounting global pressure to start investing responsibly, some major financial institutions are yet to catch up.

JP Morgan has received immense criticism by advocacy groups for being the world’s largest investor in fossil fuels, having invested $1.9 trillion since the signing of the Paris agreement in late 2015.

Larry Fink is right — a company that does not appeal to a broad range of stakeholders will “encounter growing skepticism from the markets, and in turn, a higher cost of capital.” Hence, BlackRock and the host of companies that have prioritized mitigating the damaging impacts of climate risks are pivoting to adjust to the new business reality. What will it take for others to follow suit?

At Build Edison, we have decades of experience in developing, managing, and financing demonstration projects across various clean energy technologies. We offer a number of solutions for startups, large companies, governments and investors to grow quickly and consistently, and to capitalize on one of the most exciting areas of the energy market.

Build Edison 530 Fifth Avenue, 9th Fl #5 New York, NY 10036

www.buildedison.com

Are the Risks of Climate Change Reshaping Finance? was originally published in Build Edison on Medium, where people are continuing the conversation by highlighting and responding to this story.