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The Economic Case for Fossil Fuel Free Investing

We really loved Betsy Moszeter’s article, “The Economic Case for Fossil Fuel Free Investing,” published in the November/December ’17 issue of Investments & Wealth Monitor. Moszeter is Partner & COO at Green Alpha Advisors, a responsible investment management firm in Boulder, Co. She is also good friend and colleague of us here at Earth Equity Advisors. Read the excerpt below and click through for the full content. 


The Economic Case for Fossil Fuel Free Investing

Investment industry practitioners and academics increasingly are talking about the financial and economic reasons why an investment advisor should offer clients investment strategies that are void of fossil fuel extractors, utilities, pipelines, and service providers. As advisors evaluate the economic and financial risk presented by fossil fuels, it’s also necessary to consider the resulting investment opportunities presented by companies innovating around the growing renewables industry. Even former U.S. Securities and Exchange Commission (SEC) Commissioner Bevis Longstreth is working hard to educate investors and investment professionals about why it’s entirely within one’s fiduciary duty to rethink the current and near­future investing paradigm of the sector.

In his article, “The Financial Case for Divestment of Fossil Fuel Companies by Endowment Fiduciaries,”1 Longstreth writes, “At some point down the road towards the red light of 2 Degrees Centigrade … it is entirely plausible, even predictable, that continuing to hold equities in fossil fuel companies will be ruled negligence.” Who knows more about potential negligence and what falls within one’s duciary duty than a former SEC commissioner? Let’s explore a few of the factors leading him and many others to recommend that invest­ ment portfolios be divested from fossil fuel companies.

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EARTH EQUITY ADVISORS IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Renewable Energy 101: Say Hello To Geothermal

Geothermal energy is simply the use of the heat from the earth we live on.

Generally, it’s captured by pulling hot water and steam from beneath the surface and once the heat energy is utilized, returning it in the form of warm water to be heated again.

Many regions of the world are already capturing geothermal heat for a sustainable source of energy to replace our reliance on fossil fuels. Geothermal plants account for more than 25% of the electricity produced in both Iceland and El Salvador (source).

Like other sustainable energy sources, the main cost for geothermal power is in the initial investment phase of building the plants.

However, running and maintenance costs are minimal because there’s no fuel used, and therefore no purchasing, transport, or cleanup costs involved in the operation of the plants. The cost can be recouped in a few years via a 30%-60% heating bill savings and a 25%-50% savings on cooling costs. (source) Because the hot water and steam utilized is renewable, scientists have surmised that with proper reservoir management of the steam and water levels, the energy potential in geothermal reservoirs will last literally billions of years. (source)

Because geothermal energy is predictable, it is an excellent resource for a base load of power which can be relied upon with remarkable accuracy.

This is not the case with solar and wind, which are weather dependent.

Geothermal capabilities can be harnessed on a grand scale, such as in Reykjavik, Iceland (pop. 118,000), where virtually every building is heated with hot spring water from the earth.

Both large and small systems can be installed depending on the needs of the property owner, and such a reliable source can reduce traditional energy costs significantly. (source)

Geothermal plants are not only beneficial as utility suppliers, but as direct power refineries for industries such as milk pasteurization and agricultural processing, and gold and silver mining facilities, and temperature regulation at fish farms. There’s also the potential for crop irrigation improvements around the western half of the United States, relieving a burden on rural water co-ops, private water conveyors, and the Western Area Power Administration. (source)

Benefits to local and rural economies are also realized through federal and state royalties paid by geothermal plants.

The Department of Interior’s Office of Natural Resources reported in 2013, geothermal power suppliers were responsible for around $15 million in royalties and rents from federal lands used for geothermal production. (source)

While geothermal power may not be as widely available due to location specific requirements such as proximity to volcanic and geyser activity or tectonic plate movement, the areas that are conducive to geothermal power can significantly benefit from the infrastructure advantages of well-paying jobs, influx of property taxes, and reduction of traditional power usage and savings on traditional utility bills through a resource more reliable and potentially more sustainable than fossil fuels—the earth itself.


PETER KRULL IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Renewable Energy 101: The Power of Wind

As an option for sustainable alternative power resources, wind energy is in the forefront as a viable choice. It is a renewable resource, so the supply will never deplete, and unlike conventional power plants, wind turbines or wind farms produce no pollutants or greenhouse gases.

Wind energy is captured by windmills or wind turbines, which look like large fans with blades that can be as large as a football field. The wind turns the blades, which generates kinetic energy used to turn turbines attached to generators. The generators convert the motion of the turbines into electricity and feed into the power grid.

Small businesses or private residences can also harness wind energy with much smaller turbines connected to the power grid.

If the business or resident uses less energy than the wind turbine produces, it can actually result in credit from the power company.

Because wind energy is a drought resistant crop, farmers and ranchers have been taking advantage of its production as a way to supplement income alongside their planted crops and keep the land their families have worked for generations.

According to the Department of Labor, “wind turbine technician” is the fastest growing job in America.

As of January 2016, wind energy supports 88,000 high-paying American jobs, 21,000 of which are manufacturing.

The initial investment in a wind turbine, while having drastically decreased in the last 10 years, is still significant, with site preparation and installation of the machinery responsible for 80% of the cost. However, on a life-cycle cost basis, wind turbines are much more competitive than other technologies because there is no fuel to purchase and ongoing operating expenses are minimal.

Perhaps the biggest benefit of all is the projected health benefits of wind energy.

According to the Harvard School of Public Health, as of 2015, wind energy produced $7.3 billion a year in public health benefits by cutting pollutants that contributed to asthma attacks and other lung diseases.

Drawbacks, however, include the weather-dependent nature of wind. The wind doesn’t always blow when electricity is needed, and the way the energy is harnessed, there’s currently no way to store power in times of surplus to be used in times of shortfall.

It is also not feasible for the power to be supplied over long distances. Those benefiting from wind farms are limited to the location where the wind blows strongest.

This, however, isn’t necessarily prohibitive, given highly populated coastal communities can benefit from offshore wind farms, like one being built off the coast of Long Island, just recently approved by the Long Island Power Authority in January 2017.

The goal is to add low-carbon energy sources to the power mix by producing 2.4 gigawatts of offshore wind, enough to power 1.25 million homes and add high paying jobs while combating climate change. (Source)

With current estimates putting wind energy potential at ten times greater than the current US electrical consumption, wind energy, in combination with other forms of renewable energy, could be the wave of the future.


PETER KRULL IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Renewable Energy 101: Hydro Power

Hydroelectric power, or hydropower, is the kinetic energy created by moving water captured by turbines and converted to electricity by generators.

Hydropower is actually one of the oldest forms of power production on earth, dating as far back as ancient Greek farmers using it for mechanical tasks such as grinding grain.

Paddlewheels were used in everything from mills and factories to boats built to cruise down the Mississippi River.

Hydropower is the product of damming up a river or lake and controlling the flow of that water through the dam. Used in conjunction with rainwater storage and proper management of the flow, hydropower harnesses a renewable resource that can’t be depleted.

Unlike wind and solar power, hydropower can be stored for times when the burden on the power grid is greatest.

Water can be pumped from a lower reservoir to a higher reservoir during times of low power usage—like overnight, when power consumption is at its lowest—and released again to the lower reservoir during times of high consumption, where the volume of water released can generate more kinetic energy to transfer to the power grid via the generators.

While the infrastructure to build hydropower is extensive, maintenance and technological improvements over time are easily done, making it a heavy investment up front but cost effective in the longer term. With an average lifetime of 50 to 100 years, hydroelectric plants can benefit generations, and have the ability to go from zero power to maximum output very quickly, making them ideal backup systems for sudden changes in demand, such as power supply interruptions due to weather.

All 50 states have some form of hydroelectric capacity already in place, with places like Washington State getting 70% of their entire power supply from hydropower.

Eleven other states get more than 10% of their capacity from hydropower. (source) Dams can also produce recreational opportunities, with the lakes formed by the reservoirs providing ideal destinations for fishing, boating, swimming, camping, and other outdoor activities. Reservoir water can also be used for irrigation, and the dams themselves are often considered tourist attractions, like the Hoover Dam.

While the environmental impact of the placement of dams is a very important consideration, teams of environmental engineers can be brought in to assess how to minimize this impact. The implementation of fish ladders and fish elevators help reduce or eliminate changes to the migratory and feeding habits of those dependent on the water being used in the dam system.  Dams can (and do) control flood prone areas to keep people safe.

Less than 3% of the United States’ dams are set up for hydropower (source).

This leaves room for expansion of already existing infrastructure through renovation rather than new construction that will further impact the environment, and in the long run, hydropower runs far cleaner, is more controllable, and has the potential to provide much more than the 16% of total electricity function it produces today (source).


PETER KRULL IS A REGISTERED INVESTMENT ADVISER. INFORMATION PRESENTED IS FOR EDUCATONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.

Plastic Reduction for the Already Savvy Environmentalist

Every day, millions of Americans do it, teach their children about it, and quite possibly think they’re doing enough of it. It’s plastic reduction, and the truth is, there’s more we could be doing. Right now, the biggest plastic-waste landfill is not on land. It’s in the Pacific Ocean, and it’s estimated to be the size of Texas or bigger.

Toting our recycle buckets to the curb on trash pick up day isn’t enough. We have to keep renovating what the word recycling means. Here are a variety of ways to expand our plastic reduction efforts beyond water bottle recycling.

Take your own bags to the store

With up to 500 billion to 1 trillion plastic bags used annually worldwide, combined with the fact most recycling programs do not consider them acceptable recyclables, plastic bags are the number one villain in the plastics reduction fight. There’s no good way to safely dispose of them. Solution? Don’t use them. Stores have been selling cloth alternatives for years, for as little as a dollar each. But don’t stop with the bags at the checkout counter; most of us put our produce in plastic bags without thinking about it. These are thinner and break into smaller microplastics faster, but they still do not biodegrade.

Familiarize yourself with what kinds of plastic are recyclable

Most recycling centers accept plastic Nos 1, 2, and 5, which make up water bottles and leftovers containers. Plastic Nos 3, 4, and 6 are moderately recyclable, like disposable cups and shower curtains. This leaves plastic No 7, a mishmash of different types of plastic nearly impossible to recycle. Total avoidance of 7 and careful usage of the others according to their recyclability can help.

Make liberal use of bulk bins

Purchasing items like cereal, rice, pasta, nuts, coffee, beans and even dried fruits limits the amount of packaging you’re taking home. Many stores have various methods of deducting the container weight, so you can often bring in your own bags to transport your bulk items home.

Plastics are in things you’d have never considered

Did you know chewing gum contains plastic? Gum started out as a tree sap known as chicle, but scientists in the mid-century began to replace it with synthetics. There are places that will recycle your gum, but perhaps it’s better to avoid it—and the plastic packaging it comes in—altogether. Face washes and scrubs and toothpastes also contain little beads of plastic, added as exfoliators. Wastewater plants aren’t equipped to filter them out, so they end up in our water supply. There are sustainable alternatives, however, so check ingredients lists on the products and avoid the ones with polypropylene and polyethylene.

Bring your own thermos or refillable bottle and straw

Most paper cups are coated in a layer of plastic intended to preserve the cup for the time it takes to consume the drink, so while you think you’re drinking green, you’re not. Not to mention the lids and stirrers people think nothing of discarding. Bringing your own thermos eliminates this problem, and asking your waiter or waitress at a restaurant to skip the straw is usually no skin off their nose.

Recycle electronics responsibly

We all love getting a new camera or laptop or TV, but what do we do with the one we’re replacing? It depends on how functional it still is, but if it’s broken, take the time to find a responsible electronics recycler who’s just as concerned about the environment as you are.

It’s easy to reduce plastic use on a regular basis with a little practice. Ensure good habits and encourage your family, children, and friends to do the same.