A World Bank sponsored project to restore water levels in the Dead Sea while also providing desalinated water and hydropower to the region received a final environmental approval and construction is slated to begin in June.

Final Report (pdf)

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The top 20 banks invested almost £150bn in the coal industry between 2005-2010, a big increase from previous years, says a study published today by German green group Urgewal. According to the Bankrolling Climate Change report, the biggest ‘climate killers’ are JP Morgan Chase, Citi and Bank of America. Continued investment in coal fired power plants, major emitters of CO2, contributes to global warming and runs contrary to the banks’ claims to sustainability.

Full Report

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Clean technology is central to climate cooperation. How can countries promote the development and adoption of new clean technologies? In this article, I examine the strategic benefits of establishing an international technology fund. A game-theoretic analysis shows that a technology fund with a dual mandate of rewarding technology development and subsidizing subsequent adoption can contribute to climate cooperation. Interestingly, a technology fund can also reduce North-South distributional conflict. My institutional analysis reveals two particularly important issues in the design of a technology fund: credible commitment to funding rules and the use of a balanced burden sharing rule. Based on these observations, I propose that a technology fund could be established within the institutional framework of the World Bank.

doi:10.1016/j.envsci.2011.08.007

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I now sketch out a proposal for how society can protect its environmental resources without sacrificing economic activity. The goal here is to privatize the down side as well as the up side of environmentally connected economic growth. The policy instrument is called the ‘Environmental Escrow Account (EEA)’. The concept is as follows: 1) Firms wishing to engage in an environmentally risky business activity (say for instance hydrofracking) are required to pay into an industry-wide EEA. The EEA is an industry wide trust account overseen by an independent accounting firm or other professional trustee. Since the entire industry pays in to the EEA, the amount required from any individual firm is far less (similar to the mathematics of insurance policies). The firms remain the owner of their contributed funds (they remain as assets on their books) and they also receive proportional interest and dividends earned by the fund, but the firms cannot withdraw their principal until many years (on the order of 20 years) after they cease to engage in the activity. This no-access period needs to be long since it could be many years before environmental harm becomes recognized. Shares of the EEA could be transferred between firms so that it would be possible for a firm to liquidate their interest prior to the 20 years. 2) If some environmental harm arises from the activity of a particular firm then that firm’s contributions would be applied to the remedies first, followed by funds contributed by other firms. The entire industry would thus eventually become liable after the individual firm’s resources are exhausted. 3) Any individual firm’s liability would be limited to the amount of their contributions to the EEA, but the entire EEA could respond to environmental harm incurred by any firm within the risk group.

What I like about this arrangement is that it: 1) stimulates the entire industry to implement safe and bet practices, 2) limits the liability of individual firms while still protecting societal interests, 3) avoids possibility of disappearing firms, 4) allows for economic development without sacrificing environmental quality, 5) allocates the risk for environmental harms to those who are responsible.

Of course there are many dots to connect in this sketch and yet I find the model persuasive on many levels. For instance, in the climate change arena, imagine if instead of capping CO2 emissions, something many countries will not agree to, we would instead create a climate change EEA. If and when climate change damages happen, then the EEA would be used to finance the adapatation (in the case of climate change liability there would be not identification of individual players as described above, instead all emitters would be proportionally liable and payments would come from the general EEA fund, proportionally. The saving feature of this concept is that risk taking entities would not be transferring assets until an actual damage occurs. This is a crucial concept in situations where the science remains unclear as to whether actual damage will or will not occur.

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This paper analyses the performance of the Dutch “Green Funds Scheme”. This scheme is a policy instrument to advance green projects. The scheme relies on tax compensation for private investors who save or invest in green institutions below market returns. The green institutions select and monitor certified green projects and pass through part of the lower funding costs to investors. Certification of the green projects is based on environmental value-added and innovation. We provide a description of the characteristics of this incentive scheme and investigate the scheme’s performance.

DOI: http://dx.doi.org/10.1111/j.1477-8947.2011.01387.x

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Asset-backed securities

We expect that the most effective, efficient vehicle for financing bioenergy at scale will be asset-backed securities. These are securities:“whose value and income payments are derived from and collateralized (or “backed”) by a specified pool of underlying assets…Pooling the assets into financial instruments allows them to be sold to general investors, a process called securitization, and allows the risk of investing in the underlying assets to be diversified because each security will represent a fraction of the total value of the diverse pool of underlying assets.”The asset-backed security model has been used for years in the mortgage, credit card, auto loan, and student loan market.

The Big Build-out: Paying for Biofuels at Scale – Flash Player Installation

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