The water bond passed by voters in 2014 provides funding for projects to help recharge groundwater. But some of the best and most cost-effective options may be smaller-scale projects. Here’s a look at some promising ones in both urban and agricultural areas Don’t let El Niño’s heavy rain and snow lull you into thinking the drought is over. As of early March, the state has received just 68 percent of an average year’s rainfall. Despite that shortfall, California can do much more with the water it has. Particularly during relatively heavy rainfall years like this one, the state can recharge the groundwater supplies and store that water in the ground to help keep the state’s rural and urban areas afloat through dry years. Typically, 30 percent of California’s water supply comes from groundwater. But as we enter our fifth year of drought, that number is significantly higher, with 60 percent or more of our water supply coming from groundwater. That’s far more than the season’s rainfall and snowpack can replenish. There are many ways we can recharge our groundwater supplies, and provisions in the Proposition 1 water bond passed in 2014 provide a unique opportunity to fund them. Now, the California Water Commission (CWC) has released the first of two related draft regulations that specify how to assess project proposals and allocate $2.7 billion in funds intended to improve the state’s water storage. While the bond measure requires projects to provide a public benefit, be cost-effective and improve water quality, the complexity of the draft regulations may mean that only larger-scale, big-budget projects will be able to navigate the process and receive funding. That’s a shame, because smaller-scale options can be just as effective and even cost the state less. Bees pollinate almond trees at an orchard near Bakersfield, California. Almond farmers like Nick Blom are participating in programs to test flooding orchards to recharge groundwater basins. (Gosia Wozniacka, Associated Press) Let’s start with urban groundwater-recharge projects. In Los Angeles, 79 of the 228 community water systems are 100 percent reliant on groundwater. And while stormwater runoff has long been considered part of the problem – because water flowing over paved areas can lead to flooding and can also pick up toxic chemicals that pollute and harm human health – it is now becoming part of the solution. For example, the L.A. Department of Water and Power’s (LADWP) comprehensive stormwater capture plan includes an innovative, integrated project in Strathern Park that will capture as much as 1,500 acre-feet (1.9 million cubic meters) of water per year of stormwater runoff, reducing flooding as well as the region’s need for water imports. LADWP estimates that if the city maximized its stormwater capture potential, it could realize an additional 200,000 acre-feet of water, or nearly a third of its annual water use. Community stormwater capture and recharge projects deserve water bond funding. While a larger agency such as LADWP may have the staff expertise to apply for funding from the CWC, smaller water agencies and municipalities may have trouble navigating the complex rules. Moving to rural areas, the state’s farm belt has tremendous need for replenishing groundwater supplies. Dedicated recharge basins, areas that are set aside for recharge, provide flood protection and groundwater recharge, but require big swaths of land that sit idle when not filled with water, explained Kelli McCune, senior project manager at Sustainable Conservation, at a recent forum on groundwater recharge solutions hosted by Ceres. Smaller-scale alternatives may be preferable in some cases. Sustainable Conservation, for example, worked with researchers and Don Cameron from Terranova Ranch, southwest of Fresno, to replenish his groundwater supplies by allowing floodwaters to recharge active croplands. “In 2011, the last wet year, Cameron’s grapevines, pistachio orchards and fallow land were able to recharge 3,000 acre-feet of groundwater,” McCune said, “enough to fill nearly 1,500 Olympic-sized swimming pools, while suffering no crop loss.” Two big questions about onfarm recharge include the cost of these projects and whether farmlands would impact groundwater quality. Sustainable Conservation has found, however, that the cost of onfarm recharge is lower than dedicated recharge basins and potentially a magnitude lower than surface storage projects: With costs spread over 100 years, onfarm recharge costs between $63 and $168 per acre-foot of water, while a dedicated recharge basin costs $218 per acre-foot. Surface storage projects can cost $1,900 or more per acre-foot. Moreover, McCune said that the floodwaters for the Terranova project were clean Sierra Nevada snowmelt and direct rainfall, which diluted the groundwater and improved its quality. Nick Blom, a Modesto-area almond farmer and board member for the Modesto Irrigation District, who also participated in the forum, conducted an onfarm recharge project this January in partnership with the Almond Board and U.C. Davis to test flooding’s effects on trees and groundwater quality. “It’s a little premature to say if it’s working or not, but so far we haven’t seen any detriment to my orchard,” Blom said. “Most trees and vines are dormant now, so you can do a recharge like this and not hinder the root development.” Projects like these in Modesto, Fresno and Los Angeles suggest a promising way forward for water-stressed California, but whether they can be replicated in other areas will depend on how the CWC spends the water bond funds. In order to help innovative, smart, cost-effective recharge projects get the consideration they deserve, Ceres and Connect the Drops business partners, Clif Bar, the Coca-Cola Company, Dignity Health, Fetzer Vineyards, General Mills, Sierra Nevada Brewing Company, Symantec and the North Face submitted a letter urging the CWC to create mechanisms that allow for equal consideration of smaller-scale groundwater recharge projects to make a big difference in California’s water use. The public hearing for these regulations takes place on March 16. Hopefully the CWC will hear the call of a diverse group of stakeholders and ensure that groundwater recharge projects aren’t passed over. Read the post at Water Deeply
California’s bathrooms will begin taking water-efficiency up a notch. Showerheads will be required to use no more than 2 gallons per minute (gpm), down from the current limit of 2.5 gpm. And bathroom faucets are traveling down the same path starting in July, from 1.5 gpm to eventually 1.2 gpm. That’s a lot of numbers, but here are a few more to highlight the impact of this change: By the time California homes have fully embraced these new fixtures, the annual savings will be on the order of 38 billion gallons of water - nearly 58,000 Olympic-sized swimming pools, or enough water for almost 290,000 California homes for a year. Developing these new regulations required a huge amount of work by government, nonprofits, and the companies that manufacture plumbing fixtures. Connect the Drops signatory Kohler Co. helped to fine-tune the regulations, via the trade association Plumbing Manufacturers International, and shared some insights about “California is a bellwether for other parts of the country,” said Rob Zimmerman, Kohler’s Senior Manager for Sustainability. “We need to think about how people use water in their homes, and we need smart policies, whether it’s building codes or water codes. We need to be thinking differently.” Kohler has long worked on creating water-efficient products. “Showing how you can save water without sacrificing performance is central to our business,” explained Zimmerman. The company has been involved with the EPA’s WaterSense program since it began in 2006, and has won awards for creating and promoting water-saving products for consumers each of the past eight years. When it comes to using regulations to promote more-efficient use of water, Kohler has seen best- and worst-case examples of how those regulations can be implemented, and understands why getting involved in policy discussions can help all parties. “Our interest is, first of all, that the regulations have a positive impact,” Zimmerman said. “Also that they are implemented in such a way that it doesn’t disrupt existing supply chains, and that consumers either don’t know the difference or they are able to embrace it – that it doesn’t affect their experience with the product.” Zimmerman cites the public’s experience with the first generation of low-flow toilets in the early 1990s as a case study in how not to implement regulations and the reason why Kohler decided to participate in crafting the new water-saving regulations. In the case of the low flow toilets, a lack of time to develop high-quality products that also met the water-use limits mandated by the new regulation backfired and led to major public backlash. “We’re still hearing stories about those low-flow toilets,” said Zimmerman. That’s why Kohler and PMI worked with California regulators to adjust the timeline for the state’s new faucet and showerhead requirements. Low-flow showerheads were already on the market with good reliability, but low-flow faucets needed more time. So the California Energy Commission agreed to push back the faucet implementation by six months, giving plumbing manufacturers more time to perfect their products. Six months of less-efficient water use does have an impact, especially considering the severity of California’s drought, but in the long run, taking the time to get the process right helps everyone. And getting it right, when industry, regulators, and environmental groups each have their own priorities, requires building bridges. “If you can get everyone at the table to look at this from a long-term perspective, you’ll see that, when you buy a plumbing fixture it’s going to be in your home for 20-30 years,” Zimmerman said. “So let’s get it right so people will be more trusting of the next water-efficiency innovation that comes out.” That long-term perspective is particularly important when you consider that regulations implemented in California often become de facto standards nationwide. Kohler is based in Wisconsin, where there is enough freshwater available for everyone’s needs; but if you walk into a home-improvement store there, the only toilets available are low-flow toilets—though fine-tuned and higher-performing from the original models produced 20 years ago. Moving forward, Zimmerman and Kohler are closely monitoring the drought in California and noting the ways that new regulations can lead to business opportunities, while also making the state more sustainable. They particularly note two looming challenges ahead: investment in water and wastewater infrastructure and shortages in skilled labor to maintain that infrastructure—and urge all parties to work together to craft winning solutions. “The biggest idea is that when you can get industry, regulators, and environmental groups together at the table in the spirit of solving problems, we can solve problems,” Zimmerman said. “Most consumers, especially in California, don’t understand the nuances of this, they only know there’s a problem and they’re counting on us to come up with the answers in a way that doesn’t grossly inconvenience them. I believe we can solve the problem, we just have to be smart about it and work together.” Read the post at Water Deeply
Today, on International Women's Day, we salute the visionaries and the trailblazers: the women leaders who work tirelessly to champion sustainability in business and investor circles. Every year since 1909, the world celebrates International Women’s Day to applaud the social, economic, cultural and political achievement of women, and to continue raising awareness and advocating action towards gender parity across the globe. “Planet 50-50 by 2030: Step It Up for Gender Equality” is this year’s theme in an effort to accelerate the 2030 agenda and build momentum for the effective implementation of the new Sustainable Development Goals. These 17 Sustainable Development Goals and their 169 targets balance the three dimensions of sustainable development: economic, social, and environmental. This International Women's Day, Ceres salutes the innovative and often painstaking efforts of women working to create systems change in the name of sustainable business, investment, and policy. These women are pioneers and their extraordinary contributions are working to inspire and encourage the talents of countless others in the hope of creating a better – and more sustainable – future for all. We applaud these women warriors—as well as all the emerging women leaders in the climate and sustainability space. You too are poised for greatness and success. On this International Women’s Day, here are just a few of the incredible women Ceres works with who are driving action on sustainability and climate: Geeta Aiyer is a sustainable investing entrepreneur and Founder and President of Boston Common Asset Management. Aiyer has a proven track record of strong investment returns while focusing shareholder engagement on social and environmental issues. She has helped incorporate environmental, social, and governance (ESG) concerns globally, shifting the landscape of sustainable investing. Epitomizing her reach, Aiyer is also on the Advisory Council for the United Nations-backed Principles for Responsible Investment. Last year, Geeta won the Joan Bavaria Award for Building Sustainability into the Capital Markets. Presented by Ceres and Trillium Asset Management, the Joan Bavaria Award recognizes investors, businesses and NGO leaders who have helped move capital markets from a system focused on short-term profits toward one that balances financial prosperity with social and environmental health. Joan Bavaria was the CoFounder of Ceres and also founded Trillium Asset Management. She is remembered by her colleagues as the ‘mother’ of socially responsible investing. The award is presented at the annual Ceres Conference, which is happening May 4-5 2016 in Boston, MA. As a global apparel retailer, Gap Inc. is working to conserve and protect the quality of freshwater resources in the environments and communities where it operates. Melissa Fifield has played a pivotal role in driving Gap Inc.’s work on addressing water issues. Through Melissa’s leadership, Gap Inc. has developed a Women + Water strategy to ensure that the process of making clothes is safe for people and communities, and they’re working directly with women to help them gain access to clean, safe water. As a California-headquartered company, Gap Inc. helped Ceres launch its Connect the Drops campaign to raise awareness about sustainable water supplies and the economic health of the drought-stricken state. The campaign, which was featured in store windows of its California Banana Republic stores, directed customers to “Connect the Drops” and learn ways to conserve water in their own lives by washing clothes less, cashing in on water saving rebates, checking their homes for leaks. What’s more – Melissa helped steer Gap Inc. to a 38% total reduction in greenhouse gas emissions (from a 2008 baseline) and the company recently committed to reducing greenhouse gas emissions by an additional 50% by 2020. They’ve also announced plans to divert 80 percent of waste from landfill in its U.S. operations by 2020. Christiana Figueres is one of the world’s top climate policymakers, referred to as the “UN’s climate chief”, and has been working towards a more sustainable future at UNFCCC since 2010. Building toward that goal, she directed the successful Conferences of the Parties in Cancun 2010, Durban 2011, Doha 2012, Warsaw 2013, and Lima 2014, before culminating in the historical Paris Agreement of 2015. Christiana Figueras has been highly recognized in the field of global climate change and has received numerous awards such as the Grand Medal of the City of Paris, first on the list of 2015 Top 10 by the Nature Journal of Science, and the 2015 Global Thinker by Foreign Policy. Figueres will be stepping down from her post at the UNFCCC in July and we look forward to seeing where she lands next. Led by President and CEO Deborah Gillis, Catalyst continues to rally its more than 800 global partners to accelerate progress for woman through workplace inclusion. Deborah joined Catalyst in 2006 and has played a critical role in leading the non-profit's global expansion. Named among the top 50 most powerful business people in 2016 by Canadian Business, Deborah has led Catalyst’s initiative to increase women in the boardroom, resulting in the successful launch of the Catalyst Accord, which asks companies to commit to increasing female representation on their boards to 25% by 2017. Catalyst also launched MARC (Men Advocation for Real Change) in 2012, a vibrant community where men and women work together as allies in achieving gender equality in the workplace.Under Deborah’s leadership, the platform has reached 44,000 users and the community has grown by 39% in the last year alone. Later this month, the Catalyst Annual Award Conference will recognize Gap Inc. for its Women and Opportunity initiative, and provide a special commendation to The Right Honorable Justin Trudeau, Prime Minister of Canada, who will be honored for his inclusive, game-changing leadership in advancing diversity and gender equality. Catalyst is a member of the Ceres Coalition and has long been collaborating with us to advance companies' diversity and inclusion practices and performance. Kim Jordan has spent 25 years growing and leading New Belgium Brewing Company, one of the most respected craft breweries and innovative businesses in America. She has built the company from the bottom-up and employed a humanistic philosophy, guiding and influencing New Belgium’s company culture to include philanthropic giving and environmental stewardship. Under her leadership, New Belgium has become a certified B Corporation and seeks to set an example for good corporate role models who consider people and the planet when making strategic decisions. Recognizing her passionate commitment to environmental stewardship, Kim is a member of Colorado Governor Hickenlooper’s Renewable Energy Authority Board, and has received the Governor’s Excellence in Renewable Energy Award from Colorado University, Denver. A Colorado University Wirth Chair awardee and EPA Green Power Business Leadership awardee, Kim negotiated New Belgium’s transition to wind powered electricity and has overseen the implementation of Colorado’s largest private solar array at the Fort Collins facility. Mindy S. Lubber is the president of Ceres and a founding board member of the organization. Among Mindy’s many contributions to Ceres, she spearheaded The 21st Century Corporation: The Ceres Roadmap for Sustainability and The 21st Century Investor: Ceres Blueprint for Sustainable Investing, visionary guides highlighting environmental and social performance improvements companies and investors must achieve to succeed in the resource-constrained 21st century global economy. Mindy regularly speaks about corporate and investor sustainability issues to high-level leaders at the New York Stock Exchange, United Nations, World Economic Forum, Clinton Global Initiative, American Accounting Association, American Bar Association and more than 100 Fortune 500 firms. In 2010, Mindy was honored by the United Nations and the Foundation for Social Change as one of the “World’s Top Leaders of Change” for her work in mobilizing leading companies to integrate environmental challenges into core business strategies. She is a recipient of the Skoll Award for Social Entrepreneurship and received the 2016 William K. Reilly award. Mindy has also recently been named as an exceptional “climate warrior” by Vogue. Appointed by President Obama in 2009 as Assistant Administrator for the EPA Office of Air and Radiation, Gina McCarthy has been a true trailblazer in advocating for innovative strategies to protect public health, the environment, and our future. Her 30-year career spans across both state and local levels on critical environmental issues as well as policies on economic growth, energy, transportation, and the environment. Gina McCarthy spearheaded the implementation of the EPA’s Clean Power Plan, a set of regulations on new and existing power plants and goals for states to cut their carbon pollution. She continues to fight and advocate for the national adoption of the Clean Power Plan as well as other sustainable solutions for future generations. The new President of the UN climate change process (COP21) and French Minister of the Environment, Energy and the Sea, Ségolène Royal is a climate heavyweight champion whose career has made unimaginable leaps and bounds for climate action. During her tenure as Minister for the Environment (1992-1993), she campaigned actively and successfully for the “Law on the treatment of recycling of refuse”, the “Law to preserve the countryside”, and the “Law against noise pollution”. As President of the UN climate change process, President Royal’s action agenda includes the new solar alliance led by India and France, the geothermal alliance led by Iceland, a coalition to improve the energy efficiency of buildings; along with coalitions on risk prevention, agriculture, forests, water, oceans and putting a price on carbon. Anne Stausboll took the helm of Chief Executive Officer (CEO) for the California Public Employees' Retirement System (CalPERS), in 2009. She has also served on Ceres Board of Directors as Co-Chair and Chair. Under her leadership, CalPERS has strengthened ethics, transparency, and internal controls through governance and operational improvements, including implementing a risk mitigation policy and an Asset Liability Management program to ensure long-term sustainability of the pension system and integrating Environmental, Social, and Governance (ESG) factors within CalPERS investment portfolio. Read more here... The pension fund also saw its investment assets grow from $170 billion to more than $275 billion during Stausboll's tenure. Stausboll will leave CalPERS in June 2016, after serving more than seven years as its CEO, and we look forward to seeing where she goes next. As the leader of VF Corporation’s Sustainability program, Letitia Webster is responsible for creating value and reducing risk for VF Corp in regards to its environmental and social impact. Letitia leverages the importance of sustainability to create brand equity and a competitive advantage for VF Corporation. Letitia joined VF Corp in 2000 and has since been paving the way for more sustainable opportunities for the company and driving a number of initiatives including VF Corp’s sustainability report and an internal sustainability scorecard to track progress and reporting to Carbon Disclosure Project on the company’s energy & carbon footprint and actions to reduce climate change impacts. In 2013, VF Corporation became a BICEP member company and has since committed to 100% renewable energy. Since 2013, VF’s waste reduction, reuse and recycling efforts across its U.S. distribution center network have led to more than 20,000 metric tons of waste being diverted from landfills under Letitia’s tireless leadership.
Written in partnership with Edward Cameron, managing director at Business for Social Responsibility (BSR). On February 9, the U.S. Supreme Court issued a ruling to pause implementation of the Clean Power Plan while the lower court reviews the legality of the regulations. The “stay” of the rule means that the U.S. Environmental Protection Agency (EPA) may not enforce the Clean Power Plan pending the resolution of the case on the merits. That challenge is currently before the U.S. Court of Appeals for the DC Circuit, which will hear oral arguments in June and is expected to reach a decision in the fall. The Clean Power Plan is the Obama administration’s signature environmental initiative, representing the most ambitious effort to control greenhouse gas emissions under the Clean Air Act. The Plan sets a significant emissions reduction target of 32 percent from 2005 levels by 2030, to be achieved through a series of measures that will limit carbon emissions from power plants, while increasing the share of renewable energy and encouraging new energy efficiency actions. As the We Mean Business coalition notes, the Clean Power Plan is the foundation of a thriving, clean American economy, and the economic benefits are clear. The White House estimates the Clean Power Plan could save consumers up to US$155 billion from 2020-2030by providing cheaper energy. It will drive innovation, create new and better job opportunities, help grow the economy, and increase the competitiveness of American businesses in the global marketplace. These benefits led 365 companies and investors to encourage governorsacross the country to finalize their implementation strategies when the plan was finalized in August of last year. Major companies such as Mars Inc., Nestle, Staples, Unilever, General Mills and VF Corporation were among the signatories of the letters sent to 29 governors. While the ultimate legal outcome is unclear at this point, what is very clear is that the pace and scale of the transition to a thriving, clean economy is now undeniable, irresistible, and inevitable. For the record: The Clean Power Plan enjoys overwhelming public support, with close to three-quarters of all Americans supporting climate action and climate policies like the plan. In fact, 61 percent of the public supports the Clean Power Plan in the very states that are suing the EPA. With water contamination in Michigan and methane leakage in California stirring public outrage across the country, the public’s tolerance for environmental pollution is low. The mix of power-generating sources in the United States has shifted away from coal in recent years, due to the increasing cost-effectiveness of renewable energy sources such as wind and solar, the decline in natural gas prices, and the increasing stringency of regulations on conventional pollutants. While implementation of the Clean Power Plan will accelerate this trend, it will continue even if the plan is overturned. According to The Climate Group and CDP, in 2014, half of all new power capacity was from renewable sources. Renewables now generate 22.8% of all global electricity use – and this is set to grow further still. This is in part because the cost of renewable power technologies is continuing to drop, which is strengthening the economic case for switching to renewable power. Analysis by Bloomberg New Energy Finance indicates that $8 trillion will be invested in renewable energy technologies between now and 2040. The decision to temporarily halt the CPP will not alter this pattern. Governments across the globe are committed to climate action, demonstrated by 196 sovereign nations signing the historic Paris Agreement in December. As a signatory to the agreement, the United States will honor its commitment to holding the increase in the global average temperature to well below 2 °C above pre-industrial levels by rapidly reducing greenhouse gas emissions and achieving net zero emissions in the second half of this century. Moreover, 188 countries have developed national climate action plans with sweeping commitments to reduce emissions across all industrial sectors. The U.S. national climate action plan includes standards for heavy-duty engines and vehicles, energy efficiency standards, and economy-wide measures to reduce other greenhouse gas emissions beyond carbon dioxide. These policies are untouched by the temporary halt to the Clean Power Plan. Business is a committed partner to climate action and ambition, with more than 2,000 global corporations joining the United Nations Lima-Paris Action Agenda, which brings state and non-state actors together to accelerate cooperative climate action. The We Mean Business campaign involves 368 companies worth almost US$8 trillion and 186 investors with assets under management in excess of US$20 trillion. Through this campaign, companies have made more than 900 commitments to reduce emissions, enhance resilience, and advocate for effective climate policies. After many decades of failed promises and missed opportunities, global commitment to climate action is finally comprehensive and durable. Addressing climate change is truly an international story where companies, investors, cities, and citizens all play a crucial role. In a word, the transition to a low-carbon energy system is now unstoppable.
Changing how water is priced can help utilities manage the challenge of balancing high fixed costs with high levels of variable revenue. There are several countries that California can look to for ideas, including Israel and Australia, as well as a few nearby states The way we pay for water in California has to change. Despite a wet winter this year, California still faces serious drought conditions, and the forecast for the longer term is that this is likely the new normal. Balancing a growing population’s water demand with economic and environmental needs will require a shift in business as usual. Water-pricing schemes can be devised to address water scarcity and ensure that our water infrastructure funding needs are met. California does this on a limited scale already, but it could expand its efforts to bring balance back to the state’s water resources. Designing pricing schemes can be complicated and contentious, but fortunately we don’t have to reinvent the wheel. We can learn from other countries that have already grappled with the challenge. A recent event in Sacramento brought leading thinkers from Israel, Australia and other arid lands to talk about the strategies those countries have used to thrive even in the driest times, and water pricing was a common factor in their success. In Australia, which suffered a devastating 10-year drought starting in 2000, the federal and state governments in 2004 joined in signing the National Water Initiative, which implemented a framework for consistently managing water use, and water pricing, across the country. Gavin Hanlon, New South Wale’s Deputy Director General for Water, explained the lessons the country and its states learned as they developed a successful water-pricing program. First and foremost, Hanlon said it is important to set an efficient water price, one that reflects the costs of access to water, while also balancing fixed costs (that is, infrastructure maintenance) and variable costs (actual water use). Setting an efficient price that balances fixed and variable costs evens out volatility in pricing and keeps water users focused on using water efficiently. Just as high gas prices lead people to drive less (and buy more fuel-efficient cars), making water’s price tag more visible – and more impactful for higher-using customers – invariably encourages conservation. Second, Hanlon emphasized the importance of not subsidizing agricultural water use through too-low pricing, even though Australia’s urban users often pay more for water. Israel faces an even drier water forecast than California or Australia: Yacov Tsur of the Hebrew University of Jerusalem explained that, in 2010, the country’s water supplied 0.10 acre-feet (135 cubic meters) per person per year, a number that is expected to be halved by 2050. That’s well below the United Nations definition of absolute water scarcity, which is set at 0.4 acre-feet (500 m3) per person, and even less than subsistence water levels according to Shur. With a growing population trying to survive on dwindling freshwater replenishment, Israel relies on a twofold approach: demand management through pricing and conservation, and supply management that includes recycling and desalination. Most important, Tsur said, is designing water rates that reflect the true cost of water, which sends a clear signal to users. Israel’s water-pricing program is gradually increasing the costs that farmers pay for water use, so that the price will eventually cover the full cost of supplying the water, while giving farmers time to adapt. But California can look even closer to home for guidance on water pricing: Ceres is alreadyworking on water pricing with utilities in Colorado, Utah and Texas through our CFO Connect project. CFO Connect helps utilities develop new pricing structures and financial practices that encourage their customers to use less water and enable them to secure water supplies through channels outside of the centralized system – and even to encourage their customers to undertake these activities through pricing and financing activities. Many western water utilities are like California’s – plagued with cost and revenue structures that are nearly inverted. While many California systems have 80 percent of their costs fixed, nearly 80 percent of their revenue is variable and highly dependent on water consumption. In an era of rising costs, imminent capital expenditures and declining per capita water use, these inverted cost and revenue structures are a significant challenge. Revamping pricing schemes can remedy this problem. But first California must ensure that water utilities can employ pricing tools that incentivize conservation and allow for reduced water rates for low-income customers, such as tiered pricing. Last year, the California Supreme Count upheld a decision from the Fourth District Court of Appeals that tiered water rates used in the City of San Juan Capistrano were illegal because they did not reflect the actual cost of providing water as required by Proposition 218. In other words in the court’s opinion, users in the higher tiers were paying more than the actual cost of supplying the water. Although developing new water supplies needed fully to service high-using customers often costs more than existing supplies, it is difficult to establish a clear link that the higher-using customers created this extra expense. Many of the state’s water utilities use tiered water rates already, but this court decision is likely going to slow their uptake by others – and prevent the state from saving much-needed water. A ballot measure recently submitted to the state Attorney General for consideration on the November 2016 ballot – The California Water Conservation, Flood Control and Stormwater Management Act of 2016 – would remove barriers to conservation pricing and life-line water rates once and for all. As California starts to take these steps to improve how it measures, prices and uses water, we are on the path that other water-stressed nations have followed to a more sustainable water future. The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Water Deeply. Read the post at Water Deeply
Give Morocco credit. It has set ambitious renewable energy goals and dropped all fossil fuel subsidies. It opened up the electric power sector to private companies and made long-term guarantees that the state will buy large amounts of power being generated. The strategy is paying off. Earlier this month, King Mohammed VI turned on the switch to what will be the largest concentrated solar power plant in the world. The $9 billion project in the Sahara Desert is already generating 160 megawatts and as more phases are completed will eventually provide 1.1 million people with power. This is hardly a North African anomaly. The story is being repeated the world over. Chile, on the heels of enacting similar clean energy policies as Morocco, is on a path to quadruple renewable energy capacity – to 5,000 megawatts – in just four years. Investments in the country jumped 157 percent last year, to $3.5 billion, much of it for ever-cheaper solar, whose costs are now lower than coal-generated power. South Africa? Same story. Clean energy investments tripled last year, to $4.5 billion, and the country hopes to produce 18,000 megawatts of renewable energy by 2030. Developing countries are in a global race to scale clean energy. Fueled by climate change concerns, lower technology costs and the lack of energy access for more than one billion people globally, countries are scrambling to enact supportive policies that will catalyze projects and attract much-needed investment capital. And it’s truly a race. While renewable projects are popping up everywhere – in 2015, for the first time, clean energy investments in developing countries exceeded those in developed countries – it still not nearly at the levels needed if the world is to avoid dangerous climate change. In order to limit global temperature rise to less than 2 degrees Celsius – the goal forged by 195 countries at the recent global climate negotiations in Paris – the world will need to accelerate global clean energy investments in a big way. Right now we’re seeing a few hundred billion dollars being invested every year; that figure needs to jump by an additional$1 trillion a year, over the next three decades, to avoid catastrophic warming, according to the International Energy Agency. So which developing countries are best positioned to attract more investors and achieve the biggest clean energy growth in the near term? Investors and energy experts speaking at a recent UN Investor Summit on Climate Risk: Advancing the Clean Trillion – organized by Ceres and the United Nations Foundation – did not mince their words in answering these questions. India is working hard to open its doors to become, in Prime Minister Nanendra Modi’s words, a “solar super power” in less than a decade. Transparent bidding processes for clean energy projects, use of partial loan guarantees and easy access to land for “plug-and-lay” solar parks are just a few of the steps the government has taken recently to make it easier for investors looking for clean energy deals. Still, significant obstacles remain, including an unstable currency and high financing costs that are at least double what they are in the US and Europe – meaning that renewable power costs are far more expensive. Until these issues are resolved, achieving its mind-boggling goal of developing 100,000 megawatts of solar by 2022 is unlikely. China, on the other hand, is widely seen as the “rock star of clean energy.” Investments in the country last year totaled $110 billion, 10 times higher than India’s $10.9 billion and fully a third of the record$329 billion invested globally, according to Bloomberg New Energy Finance’s latest annual tally. The reasons are multifold, including clear, long-term government policies, a relatively stable liquid currency and a wealth of government-controlled sovereign funds to finance projects. And there are still ample ways for outside institutional investors to participate in China’s clean energy boom, especially in green bonds. China’s newly formed Green Finance Committee will require 2 to 4 trillion yuan of green financing every year ($325 billion to $625 billion), with less than a quarter of that being covered by the government, the rest by institutional investors. Green bonds will surely be a big part of this gargantuan effort. China’s carbon emissions trading system, which is set to go nationwide in 2017, is another big investor opportunity. Investors should also be paying attention to smaller emerging markets. Island nations in the Caribbean are moving aggressively to attract investors for solar grids, geothermal and other clean energy projects. A few months ago, St. Kitts and Nevis signed a power purchase agreement to develop 10 megawatts of geothermal energy as an alternative to relying on costly, high-polluting diesel fuel. A second phase of the project will boost the facility’s output to 150 megawatts. Other Caribbean islands are building solar grids for the same reason. The 1,200 islands that make up the Maldives in the Indian Ocean are also putting strong renewable energy programs in place. Among those taking advantage is the Danish pension fund, Pension Danmark, which has invested $25 million in a water desalination project that will use solar power. The giant pension fund is also investing in a 300-megawatt wind farm in Kenya through the Danish Climate Investment Fund, which is focused entirely on climate investing in developing economies. It’s easy to quibble that more must be done to make it easier to invest in the emerging markets, but evidence is growing that clean energy is gaining ground and opportunities exist. But nothing will happen automatically: financing exponentially more projects will require more hard work from both sides – from developing countries, which must have the necessary supportive policies, and investors who must recognize the urgency of opening their wallets when the conditions are right. Rachel Kyte, CEO of Sustainable Energy for All, summed it up well at last month’s Climate Investor Summit. “The real challenge from 2016 on is achieving scale. South Africa did something amazing last year. Why were they able to go to scale? Why were Chile and Morocco able to go to scale? This is the conversation that’s needed in Sub-Saharan countries, in India, in Mongolia, in Indonesia. What is it going to take for it not to be a belabouring process on a project-by-project basis.” Read the post at Energy and Carbon
Some of the ingredients for catalyzing clean energy investments in Asia, Africa and other emerging markets have their own unique nomenclature—“blend 2.0,” “de-risking” and “national investment catalogues.” Yet there is a more straightforward recipe: A mix of national clean energy policies with the needs of institutional investors looking for opportunities that are safe and relatively profitable. To date, creating this relatively simple blend has been largely elusive. While clean energy investments in developing countries are growing at a rapid clip, it has been done with minimal help from pension funds, insurers and other institutional investors who manage enormous amounts of capital—tens of trillions of dollars among U.S. institutional investors alone. But the momentum could be changing as clean energy environments are ripening worldwide. On the heels of another year of record high temperatures and a historic global climate agreement in Paris, investors are opening their eyes to the urgency of shifting significantly more capital to clean energy in developed and developing countries. Developing countries, whether in Asia, Africa or Latin America, are especially in need of capital because their economies, populations and overall carbon footprints are growing far more quickly compared to Europe, the U.S. and other industrialized countries. Barring major changes, energy-related pollution in developing countries will be more thandouble that from developed countries by 2040, according to the U.S. Energy Information Administration. The fact that these countries are also working feverishly to provide electricity to the more than one billion people who have no access to power today further exacerbates the challenge. “If you don’t have access to energy, you’re not going to see economic growth,” said Rachel Kyte, CEO of Sustainable Energy for All, speaking to 500 global investors at the Investor Summit on Climate Risk: Advancing the Clean Trillion, last month at the United Nations. “This has to be a just energy transition where everyone can imagine they will prosper.” For institutional investors, the opportunities are especially enormous after the recent climate accord in Paris, which aims to limit average global temperature rise to well below 2 degrees Celsius. The linchpin of the agreement is the carbon reducing commitments of 187 countries and their pledge to ratchet up those efforts in the years ahead. But which of these countries have the necessary policy frameworks in place that will induce institutional investors to open their wallets? Is India truly ready to attract the sizeable investment flows it will need to become a solar super power by 2022? To what extent are Sub-Sahara African countries open for business to ever-cheaper wind and solar power over costly, high-polluting diesel generators? Investors and other speakers at last month’s summit, organized by Ceres and the United Nations Foundation, did not mince their words in answering these questions. For all of Prime Minister Narendra Modi’s enthusiasm about developing a mind-boggling 100,000 megawatts of solar by 2022, India’s clean energy investment environment faces key hurdles, the biggest being exorbitant capital costs and high currency risks. “In India, the costs of financing are at least twice as high as they are in the U.S. That means the power is twice as expensive in the places that can least afford it,” Dr. Ion Yadigaroglu, partner and managing principal at the Capricorn Investment Group, said. Still, India is working hard to open its doors. Uday Khemka, vice chairman of the SUN Group, outlined government efforts to “de-bottleneck” investment barriers, citing transparent bidding processes for projects, the use of partial credit guarantees and opening up large swaths of land for “plug-and-play solar parks.” Plummeting solar and wind power costs are helping enormously, too, he said. While India’s changes are encouraging, its neighbor, China, “is the rock star of clean energy investment,” concluded Bloomberg New Energy Finance (BNEF) founder Michael Liebreich. China was the dominant leader of BNEF’s latest annual tally of global clean energy investments, accounting for $110 billion of a record $329 billion in global investments in 2015. The reasons are multifold, including clear, long-term government policies, a relatively stable liquid currency and a wealth of government-controlled sovereign funds to finance projects. Yet, according to Dr. Guo Peiyuan, co-founder and general manager of SynTao Co., there are big opportunities for institutional investors, especially in green bonds. Dr. Guo said China’s newly formed Green Finance Committee will require 2 to 4 trillion yuan of green financing every year ($325 billion to $625 billion), with only 15 percent being covered by the government, the rest by institutional investors. Green bonds will surely be a big part of this gargantuan effort. China’s carbon emissions trading system, which is set to go nationwide in 2017, is another opportunity. While China and India get most of the attention, investors should also be paying attention to smaller emerging markets. Kyte praised Chile, South Africa and Morocco for putting the necessary policy frameworks in place to catalyze projects and attract capital. Each of these saw healthy double-digit jumps in clean energy investments last year, compared to 2014. Island nations in the Caribbean are moving aggressively to attract investors for solar grids, geothermal and other clean energy projects. A few months ago, St. Kitts and Nevis signed a power purchase agreement to develop 10 megawatts of geothermal energy as an alternative to relying on costly, high-polluting diesel fuel. A second phase of the project will boost the facility’s output to 150 megawatts. Other Caribbean islands are building solar grids for the same reason. The 1,200 islands that make up the Maldives in the Indian Ocean are also putting strong renewable energy programs in place. Among those taking advantage is the Danish pension fund, Pension Danmark, which has invested $25 million in a project that will use solar power to turn salt water into freshwater. “It’s a small investment, but it’s very scalable (for islands),” Pension Danmark Director Jens-Christian Stougaard said, which is also investing in a 300-megawatt wind farm in Kenya through the Danish Climate Investment Fund, which is focused entirely on climate investing in developing economies. No doubt, there is a special sauce to tapping clean energy opportunities in emerging markets. In its simplest form, countries and institutional investors must be willing to work together. “Having that local engagement, that local connection, is pivotal to have success,” Stougaard said. “When we invest together with government entities, we have much better protection of regulatory and political risks.” Read the original blog post on EcoWatch here.
In drawing attention to dwindling water supplies the drought has highlighted our urgent need for better data to drive stronger water management decisions. The state has started on the right course with recent regulations regarding groundwater and water diversions, but we still have a ways to go. California is managing its water system like an unbalanced checkbook. There are thousands of “withdrawals” and “deposits” from stressed surface water and groundwater supplies, but no sufficient accounting system to understand the overall “balance” of water resources. Just as that’s a poor way to manage a bank account, it’s a recipe for waking up one day without any water. In the age where checks are meticulously tracked electronically, it’s remarkable that we still don’t have a complete picture of California’s water resources. But that’s starting to change. With the passage of the Sustainable Groundwater Management Act (SGMA) in 2014, the state is finally on a path to understand better the water balance of priority groundwater basins so that they can be better managed. A second law requiring that well logs collected since 1949 be made publicly available will further support these groundwater protection efforts. It only took 65 years! Now it’s time to focus on protecting our surface waters. California Senate Bill 88, approved last year, authorizes the State Water Resources Control Board to develop measurement and reporting requirements for a substantial number of surface water diverters (such as farmers or local water suppliers, which are authorized to redirect water from rivers, lakes and other surface waters to meet their water needs). Adopted in January by the State Board, the new regulations require more frequent reporting and measurement of diversions from an expanded group of water diverters. The state estimates that approximately 12,000 water rights holders are now on the hook for reporting. This action is a big step forward for smarter water management in California. Historically, there hasn’t been much incentive to track water withdrawals, let alone implement changes resulting from data being collected. Until now, only a small subset of diverters were required to report diversions every three years, and a loophole allowed 70 percent of them to avoid actually measuring the volume of diverted water, according to the State Board. But the protracted drought has brought falling water supplies to the fore and highlighted the urgent need for better data that can drive stronger decisions on water management. For instance, last year the State Board issued water curtailments to certain senior water rights holders due to limited flows and competing beneficial uses. That’s led to much criticism of the current water rights system – and legal battles have ensued. To manage the prioritization of our water resources better, we need to understand them better. “Knowing where, when and how much water is being used is essential to managing the system fairly for all,” State Water Board chair Felicia Marcus said recently. “We’ve historically not had a complete picture, and these past two years have made it even more essential to take this common sense move.” “Common sense” is right. Not surprisingly, there’s been some pushback on the regulations. Some have argued that the capital costs for installing and maintaining these measurement technologies will be a financial hardship, but the State Water Board has attempted to ease this burden. The regulation includes a tiered implementation system based on diverted water volume. Smaller water users have less stringent requirements for device accuracy and monitoring frequency, which should lead to lower costs. The State Board has also provided stakeholders with a list of potential grant funding opportunities. The regulation also includes a provision for “alternate compliance” if a diverter can prove that it is “unreasonably expensive” to implement the regulation. In these legitimate cases, the state should provide financial assistance, instead of forgoing data collection all together. To ensure the new law delivers on its promise, I’d also suggest: The State Board ensure that the data is being reported in ways that enable its fullest use. Put simply, data should be actionable, not just collected and put on the shelf. Groundwater and surface water data should be evaluated together to understand our state’s water resources more fully. Data on return flows, as well as water quality and environmental flow needs, should be collected and evaluated. The bottom line: robust water use data will lead to smarter water management decisions that will help ensure sustainable water supplies for California’s future. We should support any and all efforts in this regard. The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Water Deeply. See the original blog post on Water Deeply here.
This column is published in collaboration with Connect the Drops, a partnership between business and environmental groups to promote conservation and reuse of California water supplies. The San Francisco weather last week was rain, rain, rain. I caught myself mid-sentence complaining about the weather, but then concluded, “this is great, we need it!” and contemplated a ski trip to Tahoe to enjoy what we’ve been missing for the last four years – snow. But these back-to-back storms make things more complicated for the State Water Resources Control Board as it contemplates what’s next for California’s emergency urban water conservation regulation. This is the 25 percent urban conservation mandate implemented by the board last June, which expires in February. We need to stay the course and keep up our conservation efforts to protect our water future, but in the midst of El Niño storms, how do you convince stakeholders and the public that we need to remain vigilant and continue to conserve? This isn’t easy, but luckily we have a governor and State Water Board who understand that we are in a long-term game. “Even after the current drought emergency recedes, we must continue to build on our efforts to conserve water and promote innovative strategies for increased water conservation,” says the administration’s 2016 update of the California Water Action Plan. The state board’s draft revised water conservation regulations released last week attempt to re-think the current one-size-fits-all approach, and instead, account for site-specific factors like climate and efficient growth. In general, this seems reasonable: however, there was one proposed “credit” that appears off base. State board staff propose a credit for “any urban water supplier that obtains at least four percent of its total potable water production from a qualifying new local, drought-resilient water supply.” In other words, communities where desalination or indirect potable reuse projects have been implemented in recent years could be allowed to ratchet down their conservation efforts. This credit sends the wrong messages to water managers. Conservation is an extremely cost-effective strategy that should be pursued aggressively, regardless of other concurrent efforts to ensure a sustainable water supply – even if these other efforts are laudable. California needs a multi-pronged approach to secure a sustainable water future that maximizes local water supplies through conservation, recycling and stormwater capture and use. One strategy should not be pursued at the expense of another. Appropriately, in addition to calling for “conservation as a California way of life” the California Water Action Plan looks to increase the use of recycled water and promote projects that capture and infiltrate stormwater. If we combine conservation and local supply development, we will reduce the stress on our state’s water supply far more quickly. If the State Water Board adopts the proposed regulation at its February 2 hearing, the state anticipates 325 billion gallons in water savings from February through October 2016. But then what? Let’s remember that the governor’s call for “voluntary” conservation of 20 percent led to a meager 4 percent savings. The state must concurrently look to the development of long-term, non-emergency water conservation regulations that go beyond October 2016 and implement other critical elements of the California Water Action Plan that call for the development of local water projects. Our state’s water management challenges will only become more intense and severe with climate change and other stresses, so reverting to pre-drought thinking isn’t an option. Californians should be proud of what has been achieved since the state’s emergency urban water conservation regulation went into effect in June 2015. The latest numbers show that, from June through November, the cumulative statewide reduction was 26.3 percent, or over 325 billion gallons, enough to supply over 10 million people for a year. We’ve proven that we can do it, and arguably without too much pain for most. Let’s stay the course for the long term and make sure that California employs a multi-pronged approach to secure a sustainable water future that includes a proven, cost-effective strategy – conservation. See the original blog post on Water Deeply here.
The global clean energy industry has plenty of reasons to feel good these days. First, there was last month’s historic COP 21 Paris climate agreement, forged by 195 countries, which eclipsed most people’s expectations in its breadth and scope toward achieving a low-carbon economy. Then, the U.S. Congress approved a five-year extension of wind and solar federal tax credits — a step that Bloomberg New Energy Finance estimateswill spur an additional US$73 billion in investment and nearly 40,000 megawatts of new wind and solar projects by 2020. And recently, BNEF issued promising year-end clean energy investment figures for 2015 — a record US$329 billion, up sixfold from just a decade ago. The industry’s strength — even as oil prices plummet and Europe’s renewables market retracts — is remarkable. And much of it is in regions where clean energy growth is most needed, according to BNEF’s new data: China (US$110 billion in 2015, up 17 percent from 2014), Mexico (US$4.2 billion, up 114 percent), South Africa (US$4.5 billion, up 329 percent) and Morocco (US$2 billion, up from almost zero in 2014). With this news — as well as the declining costs of renewable technologies, which makes dollars invested go further — one might conclude that turning the Paris climate accord’s vast ambition into reality should be relatively easy. But it won’t be. Significant gaps remain in our ability to grow clean energy at the levels necessary to meet the goal of ensuring the world stays within 2 °C (3.6 °F) of warming that scientists urge us to stay within to avoid the worst effects of climate change. (Temperatures have already risen nearly 1 °C, and we just learned that 2015 was the hottest year on record.) And one of the biggest gaps is the lack of institutional investor capital flowing to clean energy projects. As I noted last summer, the gap is most striking in developing countries, which are vital to curbing global carbon pollution to avoid dangerous climate change. Until we have adequate levels of capital, ambitions for a strong and robust clean energy economy will, like a stool missing its third leg, keep falling over. The truth is, we need far more investment in the low-carbon economy — well over US$1 trillion every year, not the few hundred billion we’re seeing now. National climate commitments at COP 21 alone will require some US$13.5 trillion in investments by 2030, according to the International Energy Agency. I won’t be the first to equate all this to a three-legged stool: policies that support clean energy, cost-competitive technologies and sufficient levels of finance. The successful Paris climate agreement and lower renewable energy technology costs are providing two of the legs, but until we have adequate levels of capital, ambitions for a strong and robust clean energy economy will, like a stool missing its third leg, keep falling over. To be sure, this “third leg” is getting a bit of timber from the United Nations’ Green Climate Fund, which aims to help mobilize US$100 billion of climate finance annually to developing countries by 2020. But this and other types of public financing are not enough; far more capital will be needed from institutional investors. Countries such as Morocco and Mexico, which are phasing out fossil fuel subsidies while offering incentives for renewable energy, are providing road maps for other developing countries to follow. So what will it take to get pension funds, insurance companies and other investors who manage trillions of dollars to open their wallets to this enormous clean energy opportunity? Here are a few of the keys: Supportive national regulations: The 187 countries that made specific carbon-reducing commitments in Paris must follow up by establishing supportive rules and regulations that will catalyze projects and attract capital. Countries such as Morocco and Mexico, which are phasing out fossil fuel subsidies while offering incentives for renewable energy, are providing road maps for other developing countries to follow. It is also critical that countries avoid policy backtracking, such as the U.K. government’s recent cuts to renewable energy subsidies, which sends a damaging signal to the private sector. Likewise, U.S. policy-makers must show resolve in keeping the Environmental Protection Agency’s Clean Power Plan on track, despite legal challenges. More investment products: Investors are constrained in their ability to invest in clean energy because there are not enough low-carbon investment products for them to invest in. The US$2 billion low-carbon index fund announced last month by the New York state comptroller and Goldman Sachs is an encouraging step. The fund will exclude or reduce investment in high-carbon sectors such as coal. Another promising product is the fast-growing green bond market, one of the most popular ways investors are backing clean energy projects in emerging markets. A record US$42 billion of green bonds were issued in 2015, including first-ever green bonds in China and India. But we need more. Products that would enable off-grid rooftop solar projects to be bundled and sold to investors would be enormously helpful, for example, in places like India and Africa. Stronger partnerships: Investors need to form closer alliances with progressive venture capitalists, countries and banks to help de-risk investments in clean energy projects in emerging economies. While the World Bank and multilateral development banks are getting more of these projects over the finish line — among those, a US$1 billion wind farm in Kenyabeing financed in part by a Danish pension fund — high capital costs, currency risks and other barriers are still keeping many institutional investors on the sidelines, especially in developing countries. One intriguing idea for fixing this is the Call to Action on Climate Finance, a consortium of investors proposing to create country-specific climate investment plans tied to national climate commitments at COP 21 (disclosure: Ceres is one of the organizations behind Call to Action on Climate Finance). These plans could lead to a pipeline of “investment ready” commercial projects for institutional investors. More than ever before, the world is ready to accelerate the transition to a low-carbon future. But heeding the lesson of the three-legged stool will be critical for hastening this transition. Simply put, we need sufficient financing for clean energy solutions in all corners of the world. With this in mind, 500 investors are gathering this week at the Investor Summit on Climate Risk co-hosted by Ceres, the United Nations Foundation and the U.N. Office for Partnerships. Many have already called for a global carbon price and the elimination of fossil fuel subsidies. They’ve also long advocated for strong low-carbon market signals. Now that COP 21 has provided that signal, I hope investors are ready to open up their wallets so we can turn billions into trillions for clean energy. See the original blog post on Ensia here.