Socially Responsible Investment News: What's caught our eye - February 2019
25 February 2019
Utilities are often deemed as safer and lower risk investments. So did climate change just play a part in bankrupting one of the biggest and oldest Californian utilities?
The Pacific Gas and Electric Company (PG&E), founded in 1905, was one of the largest combined natural gas and electric energy companies in the United States. PG&E services about two-thirds of utility customers in northern California where local laws state that utilities are responsible for all claims and liabilities caused by fires that were started by their equipment. Regardless if it was due to negligence by the utility or outside of their control (i.e. a tree from a private property fell on the power lines).
The recent catastrophic wildfires that occurred in Northern California in 2017 and 2018 were devastating for PG&E. Potential wildfire claims are estimated to be in excess of US$30b, the stock price has plunged by more than 70%, the CEO has stepped down and the company has recently filed for Chapter 11 bankruptcy.
While it is still yet to be determined what exactly caused those fires, one factor is considered to play a major part in terms of frequency and size of those fires and that is climate change. California is becoming drier and hotter, technically turning into a large tinderbox, a dangerous and risky environment for an electrical utility.
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Extreme weather events more frequent and more intense – climate change
One of the consequences of climate change is the increased frequency and intensity of extreme weather events where, during January, opposite sides of the world simultaneously experienced record-breaking extremes.
In the Northern Hemisphere, across much of Canada and the Midwest US, temperatures dropped below minus 30 degrees Celsius. It was caused by the polar vortex experiencing distortion in atmospheric pressures (argued due to global warming) causing it to tracking southwards. In Grand Forks, North Dakota, the temperature plunged to a terrifying cold of minus 59 degrees Celsius, colder than the peak of Mt Everest, the North Pole or the surface of Mars (depending on where and when you take the measurement).
Whereas in the Southern Hemisphere, Australia was roasting. January was the hottest month on record with the average temperature exceeding 30 degrees Celsius for the first time. The Australian Bureau of Meteorology called the extreme heat “unprecedented” as at least 5 days in January were among the 10 warmest on record.
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What do Hanmer Springs and Hawaii have in common?
Radical trials and proposals on banning smoking in public have been proposed in Hamner Springs and Hawaii. While slightly different, they seek to achieve similar effects.