[Mb-civic] It's possible to be clean, green, and profitable - Paul Epstein, Frank Smizik - Boston Globe Op-Ed

[William Swiggard]

  It's possible to be clean, green, and profitable

By Paul R. Epstein and Frank I. Smizik  |  April 21, 2006  |  The Boston 
Globe

THE CLIMATE is changing; we know that. And the change is caused by 
global warming from burning fossil fuels. It's time we turned to 
solutions, and New England can take some bold steps.

Many forces are lining up to drive a change in energy policies. Oil and 
gas prices are climbing; conflicts in supply regions are multiplying. 
Oil will run out at some point, and climate volatility is sending 
shivers throughout insurance and investment communities.

Insurers, banks, and pension and mutual funds face new, huge, and 
uncertain risks. Hurricane Katrina, which spread misery, disease, and 
social disruption, marks a turning point. As insurers and coastal 
communities brace for a third consecutive dreadful storm season -- 
projected by all four of this nation's hurricane prediction centers -- 
the unmanageable is no longer unimaginable.

The financial sector is the central nervous system of the global 
economy. It is feeling the pain of catastrophic weather events around 
the world, and its signals can ripple through economies and affect 
public policies that can enable a real shift in investments.

Disaster damages -- overwhelmingly weather-related -- rose exponentially 
in the past two decades. Before 1990, annual losses were about $4 
billion a year, with $400 million insured. Last year, losses were $225 
billion, with $83 billion insured. That is a two-hundredfold increase in 
payouts. More extremes are hitting the United States, Europe, and Japan.

Some of the losses are because of increases in coastal populations, real 
estate prices, and insurance penetration. And there are more frequent 
and intense extremes of all types and novel events, such as hurricanes 
hitting Brazil, Spain, and Portugal -- areas that never considered 
buying hurricane insurance.

Insurers and reinsurers are reacting. The first response is defensive: 
higher premiums, wider exclusions, and hedging their bets. But the 
largest companies, like Swiss Re, Munich Re, and A.I.G., are also trying 
to reduce risks and stabilize the climate. Large banks, such as JP 
Morgan Chase, Goldman Sachs, Bank of America, and Citigroup, are 
crafting guidelines for investing in nonpolluting industries, and city 
and state pension funds are reexamining their risks and resetting their 
compasses to seek new opportunities. Meanwhile, Standard and Poor's, 
Moody's, and Fitch are reexamining the way they rate companies, deals, 
real estate, projects, and nations, in light of climate change.

All are taking a hard look at General Motors and Ford, stumbling, in 
part, because they failed to keep up with consumer demands for smaller, 
efficient cars. In 2005 venture capitalists invested more than $44 
billion in ''smart technologies" for the grid, hybrids, solar, wind, 
tidal, wave, and geothermal energy. It's becoming cool to be green, and 
the trick is to be clean, green, and profitable.

In the absence of a national plan, we need local and regional plans for 
safe, healthy, and economically sustainable measures to address 
electricity, buildings, and transport. To make this happen, capital 
markets need seminal policy signals from the public sector.

Here's a suggestion: While we're formulating plans, let's start with 
''no-regrets" solutions, with multiple co-benefits, such as ''green 
buildings." Estimated health and performance savings for workers and 
students are in the hundreds of billions of dollars. Geothermal systems 
that tap into the heat of bedrock -- such as at Trinity Church and the 
new Audubon Center in Boston and the American Repertory Theater in 
Cambridge -- let buildings derive 80 percent of their heat free. Better 
insulation, lighting, and ventilation have immediate paybacks. Since 70 
percent of Boston's greenhouse gas emissions come from buildings, a 
change in new construction and retrofitting of old could make a 
significant difference in energy bills and security, and create jobs. 
How can we make this happen? Green, healthy, and affordable housing in 
Boston -- that resonates with Mayor Thomas E. Menino's chief concerns. 
Green, clean, high-end housing also sounds good.

Cities and states can donate land, provide tax abatements, and invest 
their pension plans. In the Bay State -- where renewable energy and 
energy-efficient initiatives have spawned 10,000 new jobs -- the 
Massachusetts Technology Collaborative can provide seed money. Insurance 
companies can alter building codes and reduce premiums to reward green 
developers. Banks and pension and mutual funds can help jump-start 
infant industries and help others make the shift to healthy practices. 
Guided by community development corporations, green buildings can use 
wood from sustainably nurtured forests, nontoxic materials, and 
biodegradable ''plastics."

California is way ahead on solar and automotives. New England's academic 
prowess and progressive spirit can help it create another center for 
clean growth. With the proper incentives, the clean-energy transition 
can be the engine of growth for the global economy and provide the 
underpinning for a healthier, safer, and more peaceful world.

Dr. Paul R. Epstein is associate director of the Center for Health and 
the Global Environment at Harvard Medical School. Representative Frank 
I. Smizik, Democrat of Brookline, is chairman of the Joint Committee on 
Environment, Natural Resources, and Agriculture.

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2006/04/21/its_possible_to_be_clean_green_and_profitable/
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