Thomas Van Dyck – Traction: The Clean Energy Revolution | Bioneers 2017

Thomas Van Dyck – Traction: The Clean Energy Revolution | Bioneers 2017


KENNY: Energy is a
nation’s master resource. Each empire throughout history
has had an idiosyncratic ability to exploit a particular
energy source. The Dutch learned how to tap
wood, wind and water. The British Empire fueled
its ascendancy on coal. The American empire has
dominated with oil. The cautionary tale is this:
No empire has been able to manage the transition to
the next energy source. The joker in the deck this go-round
is the climate imperative to rapidly shift off fossil
fuels globally, completely. It requires the most complex and
fiercely urgent transition in history. Nothing like it has
ever been done. But just as the economics
have driven the destruction, they’re now powering
the restoration. In 2016, global clean energy
investment was two-thirds of all new energy investment. [APPLAUSE] Clean energy in the U.S.
has spiked in 2007 from 1% to 15% in 2016. China is putting close to
$400 billion into domestic clean energy
infrastructure by 2020. India is going to end sales
of gasoline cars and is going big on solar. The numbers are staggering
across the board. Follow the money. That’s what the visionary socially
responsible investment manager Thomas Van Dyck has been
doing for 35 years. As managing director and financial advisor
at the SRI Wealth Management Group at World Bank of Canada,
one of the good banks, he consults on over $2 billion
of assets screened for environmental, social and governance criteria. But Tom has not just
followed the money, he’s been moving the money. From his role as
an investment advisor to his co-founding of the
divest/invest movement with Ellen Dorsey of the
Wallace Global Fund, who I believe is here
with us this weekend, to his decades of leadership
in the nonprofit shareholder advocacy organization,
As You Sow, Tom has been seeding a clean energy
and clean technology future while defending human
rights and democracy. He’s long been active with
environmental and human rights groups including many, many years
on the Bioneers board. After Tom founded one of the
first socially responsible brokerages, Progressive Asset Management
in 1987, he’s worked for years at the very highest levels of
finance to encourage major pension funds like CalPERS
and CalSTRS to consider issues such as environmental
investment strategies and in earlier years, divestment
from South Africa way back when. Tom’s current team at
RBC Wealth Management is one of the largest sustainability-based
wealth management practices in North America. Today he’s playing a vital role
in advancing the California climate policy that’s the lighthouse
for the world right now. He’s authored numerous articles and
studies on the economics of sustainable investing. In 2014, he was a featured guest
on Bill Moyers & Company to highlight the emerging
divest/invest movement. That movement has gone in four years
from zero to $5.2 trillion in fossil fuel divestment
by 688 institutions. [APPLAUSE] But what people don’t
generally understand is that the invest side
is a lot harder. It’s not easy to build new businesses,
especially at the scale that we need. Business must play and is playing
a key role in this energy transition. If anyone can move business into
doing the right thing, it’s Tom. Having known Tom since 1991,
I’ve watched him move ideas and practices into the mainstream that
had not only not been on the radar screen, they might as well
have been UFOs. He knows the world
is at stake. He never stops
pushing the envelope. He knows this epic transition is
inevitable but cannot wait. He brings all his intelligence,
creativity and passion to solve this greatest
crisis of our time. Please join me in welcoming
one of the great visionary, financial activists and leaders,
Thomas Van Dyck. [APPLAUSE] TOM: Thank you, Kenny, for those
very kind words and heartfelt words. It’s greatly appreciated. Here we are in
beautiful Marin County, so I’m going to do my best
to honor Robin Williams by saying, Good morning, Bioneers! [APPLAUSE] It’s wonderful to be with you
here in the republic of California. [LAUGHTER] Before I moved here 34 years ago,
I was a no-nukes activist back East. I worked for the
Fund for Secure Energy, and we raised money to do
media to close down your local nuclear power plant.
[CHEERS] How many of you were no-nukes
activists back in the day? Excellent. My campaign was Indian Point,
which was located 30 miles upriver from Manhattan. Now a few years earlier, Three Mile
Island had its meltdown, so they required people to
evacuate from 10-mile zones, 20-mile zones, and 30-mile
zones around their nukes. In the case of Indian Point, there were
millions of people located within 30 miles of Indian Point. The Shoreham nuclear power plant
was actually completed, loaded with rods. It was on Long Island,
but because you couldn’t evacuate Long Island,
it never started. Do you all remember what
the industry experts said about nuclear power
back then? Remember what they said?
What did they say? Too cheap to be metered. Right? Nuclear power was to be
too cheap to be metered. In fact, nuclear power is the
most dangerous and expensive way to boil water
on the planet. The industry experts used
to say to me, Okay, hotshot, so if you’re going to
grow an economy, how are you going to do it
without growing your power source? How are you going to do it
without nuclear power? This was their line. They said this is how much power
you need to grow an economy. And I said, Well, do you know
who this young man is? Who all know who this is?
[CHEERS] Let’s hear it. Who is it?
AUDIENCE: Amory Lovins. Amory Lovins. Absolutely.
It’s a Bioneers crowd. Of course you
know who he is. So Amory wrote a paper in
1976 that said in fact, he didn’t think you needed to
grow your energy source to grow your economy. Using soft technologies,
which was energy efficiency and renewable energy,
you actually could still grow your economy and not expand
your energy base. Who was right?
It’s a loaded question for Bioneers. Amory was right,
as it turns out. Now the reason I tell
you this story is because industry experts consistently
underestimate the power of disruption and how quickly it
can take place. They make very
bad predictions, like the time that McKinsey and AT&T
in 1985 predicted there would be 900,000 cell phone
subscribers by the year 2000. Industry experts.
What was the actual number? 109 million. They were off by
a factor of 120. Think about that. In addition, when technology disrupts
an industry it happens much quicker than what they expect. Like the time the horse and buggy
and the car came into place. This is a picture of Manhattan in 1900
on Fifth Avenue on Easter morning. On the lefthand side, the circle
is the car, the red circle. Horses and buggies are
everywhere else. A mere 13 years later you can’t find a horse
on Fifth Avenue on Easter morning. Think of how fast
that took place. Or the time with digital imaging
entering the film era. Remember Eastman Kodak? Eastman Kodak used to be a
Dow-Jones industrial company with a $30 billion market
cap for decades. The digital camera came into place,
then the Smartphone. Now Eastman Kodak
is down 94%. It’s a small company
in Rochester, New York. How long did that take?
Nine years. Nine years. Also cell phone versus Smartphone. Nokia and Blackberry,
where are they today? It’s Apple and Samsung.
How long? Eight years. Speed of disruption. This is an index of all
the coal companies over the last nine years. It’s down 70%
in nine years. [APPLAUSE] Not a very good investment if
you’re looking at investing in coal. So when the divestment movement
started with people like Ellen Dorsey at Wallace Global,
who is here today, and who will be presenting
later this afternoon and talking about some of the work
they’re doing with the Dakota Sioux in putting wind farms in where they
were building the Dakota Access pipeline, [APPLAUSE] But when Ellen Dorsey
and Wallace Global, and her grantees 350.org,
Carbon Tracker, The Park Foundation, University of Dayton,
the Educational Foundation of America and Rockefeller launched divest/invest,
it was $50 billion, as Kenny was mentioning,
in September of 2014. And today there’s over $5 trillion
of assets that have divested. How many of you were part of
that divest movement in their college campuses and universities?
[CHEERS] Excellent. Keep doing it! See, here’s some of the arguments
that we used to point out to people who own carbon in their portfolio,
the risk of owning fossil fuels. First is stranded asset risk. This is the great carbon tracker paper
that Bill McKibben made famous in his Rolling Stone articles. Carbon Tracker, by the way,
is a group based in London, all ex-oil analysts. And they said
that you have to keep 80% of the reserves that are reflected on the balance sheets
of the oil companies today in the ground in order to keep
the temperature of the planet below the 2 degree Celsius level
that everyone in Paris agreed that we have to achieve. So the battle that’s taking place is
are the oil companies going to be allowed to burn that 80% and transfer
those costs on to who? Us, the taxpayer. Or are they
going to stay in the ground? Something’s gotta give. That’s the battle that’s
taking place right now, and that reserve is priced into
their stock today, and that’s a risk. Litigation risk. You’re here in
Marin County. You may not know it,
Marin, San Mateo, Imperial County, San Francisco
and Oakland have all filed suit against the oil companies
for climate damages. [APPLAUSE] And I’m sure that Sonoma and Napa
will join them after the fires. But those suits were just
filed in the last month. Where are they going to go?
Are they going to go the way of tobacco? That’s a huge liability
if you own fossil fuels. Carbon pricing risk. Here in California we have
something called cap and trade that puts the price of carbon
at about $15 to $16 a ton today. We know we need carbon
prices at about $50 a ton in order to create innovation. And since we’re cutting
everyone’s taxes, the government actually needs
a revenue stream to come in. So it might not be a bad idea
to put a carbon tax on at $50, increase it $10 a ton for
the next 20 years, so that everyone knows where
it’s going to be priced and they can allocate
capital accordingly. [APPLAUSE] Regulatory risk. Now we know that Pruitt
has trumped the regulatory situation because he’s gutting
the EPA. Right? But it’s nice to know that regulatory
cannot stop technology innovation. It can slow it down.
It can speed it up, but it can’t stop technology’s
disruption from taking place. Peak demand versus
peak supply for oil. The oil companies think they’re going
to keep looking for supply until 2050. They don’t think peak
demand’s going to happen. Personally, we think peak demand
for oil is going to happen when we move to
electrical cars. Technology risk. We’re going to
go into some detail here because technology risk is the
biggest disrupter to the fossil fuel industry today,
and then investment risk. This is a busy chart. In the upper lefthand
corner it shows solar, but it shows that solar
has gone from $3.80 a watt to 40 cents a watt in price
in less than 10 years. Massive adaptation has
happened as a result. Wind power’s blow
3 cents a kilowatt hour. All externalities priced in. LED lights have dropped
over 85 to 90%. And battery storage, the Holy Grail,
has dropped almost 85%. Why is that so important? Because when the sun and
wind are not shining, if you can store that
electron in a battery, you can release it during those times
when the sun and wind aren’t shining. You need to get the price of
battery storage below $200 a kilowatt hour,
and this is according to Jim Rogers, who is the
former CEO of Duke Energy, the big North Carolina utility,
in order to make it utility scalable. Well when Elon finishes the
plant in Nevada next year, the price for battery storage
is below $180 a kilowatt hour. [APPLAUSE] When the Chinese and the Koreans
finish their gigaplants, by 2020 the price will be
below $100 a kilowatt hour. Think about that from
the idea of scalability. Now let’s look at the arguments
for the invest side as Kenny mentioned,
because that’s a disrupter. And let’s frame it in a way
that the other side can hear it, because these are the
arguments they make. National security. Microgrids are much safer than
centralized grids in two ways. The CIA and FBI worry extensively
about the centralized grid structure in United States. Why?
Because it’s easily hacked. Microgrids are much more
difficult to hack. In addition, centralized grids,
you can have accidents, climate disasters – look at
Maria taking out Puerto Rico or look at that tree that fell
across the power line in Ohio about 15 years ago, took out
the whole East Coast and almost melted down
a nuclear power plant, by accident,
not by design. So microgrids, from a national
security perspective, are much safer. Immigration. Access to affordable, clean,
sustainable energy is a human right. There are a billion people on this
planet that do not have access to power. If we improve the standard of living
where people live, that is a right they’re
entitled to have. Jobs.
Let’s talk about jobs. Solar jobs are over 200,000
in United States and they increased by
over 25% in the last year. Wind jobs, almost 100,000,
increased by 16%. Coal jobs contracted
by about 15%. What’s the beautiful thing
about solar jobs? They’re in every single
Congressional district. Right? You don’t need an oil reserve
or a carbon reserve to go mine it. They are in urban areas;
they’re in rural areas; they’re in red states;
they’re in blue states. It’s every single district,
and we need to be putting solar on every single rooftop,
whether it’s commercial or housing or in the fields.
[APPLAUSE] These are high-paying jobs.
They’ll be around for 20 or 30 years. So the job creation is much
better on the renewable side. Let’s look at healthcare costs. We as the US taxpayer give the
oil industry $25 billion in subsidies to go drill off our coasts, in
depletion allowances every year. In return they give us over
$200 billion of healthcare costs. [LAUGHTER] If you go to a town
in Fontana, in California, and you ask the gradeschool kids
there how many of their family members or sisters or relatives have been
to the hospital in the last year because of respiratory problems,
because Fontana’s between two fossil fuel plants,
and they breathe the air every single day that we’ve been
breathing here in Sonoma and Napa, and Marin and San Francisco
for the last two weeks. They breathe it
every single day. If you ask that elementary school kid
how many have been there, every one of them
will raise their hand. Clean renewable energy will
solve that problem because those externalities will not
be landing on our balance sheets and in their lungs
and killing them. [APPLAUSE] Now let’s look at what
the market’s doing. Because businesses who have electricity
as their second highest cost are saying, Well, Mr. CEO of solar company,
can we go ahead and lock in the price of energy for the
next 20 or 25 years by getting a power purchase agreement
at 6 cents a kilowatt hour? Solar CEO says, Absolutely,
lock in your cost. Done. Wind, 3 cents. Done. You go to a CEO of a natural gas
company or a coal company and say, Can we lock in a price?
They say, Absolutely not. Why? Because the commodity
goes up and down. You can’t predict that. Now if you’re a large company,
like a Salesforce or Apple or Microsoft, where you have huge server farms,
right, you want to manage that second largest cost of human
capital on your balance sheet. And the best way to manage that
is to lock in that price so you can then allocate capital
more efficiently over the next 20 years to your other parts of your business.
Why wouldn’t you want to do that? It’s the best way to run a business. It’s the best economic
way to run a business. In addition, you get the benefit
of trying to help solve climate change. It benefits your employees and
benefits your shareholders. So you’re seeing hundreds and
hundreds of businesses, regardless of regulations,
moving to solar and wind because it’s the best business
decision that they can make. The economics are
driving their decisions. This transition is not just going
to be in the solar and wind space. It’s going to affect every single
element of our economy. It’s going to be
in the water area where we do infrastructure
in pumping technology. It’s going to be in the area of energy,
as we just talked about, with grid optimization and
microgrids, battery storage. Transportation. We need to view the
car as a mobile computer. That’s what’s going to happen.
Think about that. Also, in areas of building,
LED lighting, HVAC systems, waste reduction, agriculture, it’s going
to be across the entire economy. Let’s talk about investments because the experts would say to you,
when we started the investment campaign, you can’t wipe out an entire
sector of the S&P 500. You’ll lose diversity,
you’ll increase your risk and you’ll lower your
return. Right? How many times have
you heard that? Countless times. Well let’s just look at what
happened over the last five years. So these are all the sectors
of the S&P up here. Energy, by the way—
Oh, by the way, energy— there’s not a single renewable energy
company in the S&P 500 energy sector. It’s 100% carbon.
Oil and gas companies only. Alright? Look at the return for this year,
down 12% through June. Not too good with the S&P up. By the way, energy’s
a part of the S&P. Up 27 in 2016.
That’s pretty good. Down 21% in 2015.
Wow, that’s volatility. Up down, up down. How’s it done over the
last five years? 1.6%. How have the other
sectors done? Quite a bit better. In fact, energy is the worst
performing sector in the S&P 500 over the last five years. It’s just done
a little bit better than bonds, which is at the bottom with
a lot more volatility. So if you’re about investing,
you’re about risk and return, you’re getting huge risk
with no return in energy. This has been a tail wind for everyone
who divested over five years ago. It’s helped the return. Now this is a very, very busy
slide but what this shows – because it’s just like, well,
that’s five years, let’s take it back
10 years. Okay. Let’s go back to the peak
of the market in 2007. How has energy done?
9.7% total return, not annualized, total return
over the last decade – 9.7%. The S&P has almost doubled
over that same time frame, with energy as part
of the component. In addition to it being—
not performing well, it’s the most overpriced sector,
which is the circle in the green, in the S&P 500 today,
based on four percentage ratios. So not only has it not performed
but it’s also the most overvalued sector today. So if you haven’t
divested from fossil fuels, my question for you is:
What is inspiring you to underperform? [LAUGHTER] Right? What’s inspiring you to not
keep pace with the benchmarks? And for all those—I’m sure
everyone here has divested, but for those who haven’t,
go to fossilfreefunds.org, or the As You Sow website,
look up your mutual fund, find a five badge fund that’s
fossil fuel free, integrates environment, social governance factors,
and join the divestment movement and get out of
fossil fuels. It’s not helping your return
or retirement at all. Now, one thing we haven’t
really talked about directly are the costs of climate change–
droughts, floods, fires, hurricanes, tornadoes. Just in the last year,
these are all the climate disasters with a billion dollars or more
in damages in the United States, only in the first nine months
of this year. It doesn’t even have Nate on it
or the Sonoma fires. In fact, if it had that on it, we would
have $17 billion climate disasters – 17. If you look at this line,
look at in the last 5 to 10 years. How many billion dollar climate
disasters have we had happening? The cost estimated for
this year with Irma, Maria, Sonoma is about $170 billion
in unbudgeted expenses. It’s no wonder FEMA’s broke. Now not all that lands on the
US taxpayer’s balance sheets, but a big chunk of it does. Unbudgeted expenses. The discretionary part of the
US budget is $1.1 trillion, so if you’re having on
average $100 billion hitting unexpectedly every year,
that’s more than we spend on education and environment. Now Jay Inslee said, he’s the
governor of Washington state, he said, you know,
we’re the first generation to understand the risks
of climate change and we’re the last generation to
be able to do anything about it. Remember when I mentioned
what those industry experts said in their predictions earlier? So, this is— the WEO,
it’s the World Energy Office. It’s part of the International
Energy Association. In the lower lines there,
in the kind of Dutch orange and yellow, show in 2002 and 2006 where
they predicted solar would be. The red line is actually
what happened. Same thing with wind. Now the dotted line is like
what will be our reality. What will be our reality? This is electrical cars. The oil companies are all
the lower lines there— Exxon, BP, OPEC. In fact, OPEC just doubled their line
in the last couple of months. It was way down before. Bloomberg actually shows a little
bit more of a real ramp, but what is going to be our reality
when it comes to the red line? In fact, you are the red line. You are what makes
the red line a reality. You are the people who install
solar panels on your house. You are the people who buy
LED lights and energy efficient appliances. You are the people who
drive electrical cars and put battery storage on garages. You are the people investing in clean
tech and divesting from fossil fuels. You are the people that believe investment
is the economic expression of your thinking
and your values. You are the people that vote
for progressive politicians that are going to get
us out of this mess and are going to take it to the streets
and the public utilities commission. You are the people that
made the red line happen. [APPLAUSE] Collectively, collectively.
Collectively. Let us do what Bioneers teaches us,
to use what nature provides us to make our reality carbon free
with power that will truly be too cheap to be metered. And in the theme of
this year’s Bioneers, let’s rise up and make
the red line a reality for the seven generations
that follow us. Thank you very much.
[APPLAUSE] Thank you. Thank you.
Thank you. Thank you. Thank you.
[APPLAUSE]

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