The ferocity of wildfires in California has stunned us again this year. The most recent terrifying examples include the Kincade fire and deadly Maria fires. Fires are a part of California's history, but their size and intensity have increased dramatically in recent years because of climate change.
We hope that fire-wrought devastation does not happen here in San Luis Obispo County, but given the reality of our warming Earth, there's no assurance that we can sidestep tragic destruction and loss of life. The time has come to take action against climate change and divest from fossil fuel companies.
Most of our state's hottest and driest years have come in the last two decades.
National Geographic has reported that the warmer air "sucks water out of plants and soils, leaving the trees, shrubs, and rolling grasslands of the state dry and primed to burn." The summer dry season in California has also grown longer in recent years, compounding fire risk, and this has been linked to climate change. The climate emergency has arrived at our doorstep.
Credible science institutes have long-since concluded that CO2 emissions are a primary cause for our rising average global temperatures. The U.S. Environmental Protection Agency (EPA) states, "Human activities are responsible for almost all of the increase in greenhouse gases in the atmosphere over the last 150 years." The obvious remedy? A steep reduction of CO2 emissions.
The EPA further states that electricity production accounts for more than 27 percent of U.S. CO2 emissions, making it a principle source of climate-warming emissions. Transportation, at 29 percent, is the other major contributor to CO2 emissions. Together, these two industries present the greatest opportunity to cut emissions and save our planet.
Financial investments are made with an eye for future opportunities and risks. While fossil fuels remain in use today, forecasts consistently show production costs declining and demand rising for renewable energy and electric vehicles of all kinds. Investment in renewable energy and transportation technology, then, is really the only rational option for our future.
SLO County cities, including San Luis Obispo, Paso Robles, Arroyo Grande, Grover Beach, Pismo Beach, and Morro Bay, have all agreed to the option for customers to source electricity through Monterey Bay Community Power, a carbon-free community choice energy agency. This was a wise decision that will allow residents and businesses to access competitively priced renewable energy.
According to the U.S. Energy Information Agency, in 2018 only 17 percent of U.S. energy generation came from renewable sources, including hydropower, wind, biomass, solar, and municipal solid waste (such as San Luis Obispo's anaerobic digestion facility). Increasing this proportion creates an extraordinary investment opportunity. In October, the International Energy Agency issued an official forecast that renewable power will increase globally by 50 percent over the coming five years, illustrating the potential of related investments.
Investment in renewables is now an imperative. In the face of fossil fuel industries' declining prospects, and the vast potential for growth in renewable energy as mentioned above, what actions should investors, both institutional and individual, be considering for their investment portfolios? As the city of San Luis Obispo did in 2017, investors must take action and divest—sell—all investments in fossil fuel companies. Further, those freed-up investment dollars should be reinvested as part of a diversified portfolio in a range of renewable energy companies including, solar, wind, grid infrastructure, clean transportation and clean energy technology companies.
Talk with your financial advisor about your portfolio and demand that any investments including fossil fuel companies be sold, and those funds be reinvested in clean energy. If they won't accommodate your request, find a new advisor. If you're a DIY investor, please visit fossilfreefunds.org for an easy way to determine whether your mutual fund investments include fossil fuel companies, and, where necessary, consider fossil-fuel-free and renewable energy mutual fund options. Δ
Scott Secrest is a financial advisor with Natural Investments LLC in San Luis Obispo. Write a response and email it to email@example.com.