Bankers Becoming Aware of Financial Risks of Climate Change World Wide

by Duane Nichols on November 17, 2019

The future is in the hands of bankers

World’s Largest Public Bank Ditches Oil and Coal in Victory for the Climate Movement

From an Article by Eoin Higgins, Common Dreams, November 15, 2019

Climate activists celebrated Thursday the decision of the European Investment Bank (EIB) to stop funding most oil and coal projects by 2021, part of a bid to be the world’s first “climate bank.”

The bank’s board made the decision at a meeting on Thursday, CNBC reported. “Truly amazing win,” tweeted environmentalist Bill McKibben.

In a statement following the news, Friends of the Earth Europe fossil free campaigner Colin Roche said the bank’s decision was a big one. “Today’s decision is a significant victory for the climate movement,” said Roche. “Finally, the world’s largest public bank has bowed to public pressure and recognised that funding for all fossil fuels must end—and now all other banks, public and private must follow their lead.”

Nonetheless, Roche cautioned against complacency. “But 2021 is still too late if we are to avoid the worst effects of climate breakdown, the EIB needs to reject any fossil fuel projects and close its loopholes for gas, and not wait till 2021,” Roche said.

As Common Dreams reported, a previous commitment from the bank would have ended fossil fuel projects by the end of 2020.

According to Reuters, the new policy does not outright ban all fossil fuel projects, but makes most of them impossible under the new parameters:

Under the new policy, energy projects applying for EIB funding will need to show they can produce one kilowatt hour of energy while emitting less than 250 grams of carbon dioxide, a move which bans traditional gas-burning power plants.

Gas projects are still possible, but would have to be based on what the bank called “new technologies,” such as carbon capture and storage, combining heat and power generation or mixing in renewable gases with the fossil natural gas.

“This is an important first step, this is not the last step,” EIB vice-president for energy Andrew McDowell told the BBC.

The news was welcomed by climate advocacy group 350 Action. In a statement, the group’s Germany campaigner Kate Cahoon called the decision “the beginning of the end of climate-wrecking fossil fuel finance” but warned there was still work to do.

“The gas lobby has unfortunately managed to get Germany and the European Commission to insert some loopholes into the policy, which leave the door open for funding of dangerous fossil gas projects,” said Cahoon. “They had better take note of the growing list of pipelines, terminals, and fracking wells that are scrapped thanks to local opposition and the unprecedented masses of people mobilizing for climate justice.”

The bank’s move was seen by 350′s France campaigner Clémence Dubois as an example for other financial institutions across the globe.

“This is a clear signal to financial institutions in Europe and around the world that they must take rapid, transformative action to change their financial models, keep fossil fuels in the ground, and support a just transition to sustainable forms of energy for all,” said Dubois.

NOTE: Click on the graph above to display the traces.

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Peter Woit November 17, 2019 at 11:55 am

BOOK: “The Man Who Solved the Market”

Posted on November 14, 2019 by Peter Woit, “Not Even Wrong” Commentary Blog

There’s an excellent new book out about Jim Simons and Renaissance Technologies, The Man Who Solved the Market, by Gregory Zuckerman. I recommend it enthusiastically to anyone interested in the story of how a geometer ended up being worth $23 billion. Lots of other mathematicians and physicists have also been involved in this over the years.

I first heard about Jim Simons and his investment operation when I was a postdoc at Stony Brook in the mid-eighties, and have heard bits and pieces of this story from various sources over the years, sometimes clearly distorted in the retelling.

It’s very satisfying to finally get a reliable explanation of what Simons and those working with him have been up to all this time. For those with more interest than me in the details of quant strategies, the book provides far and away the most information available about how Simons and RenTech have been making so much money so successfully.

The author managed to get some degree of cooperation from Simons, and was thus able to get a lot of those involved with him to talk. As a result, while this isn’t an “authorized” biography, it’s written from a point of view rather sympathetic to Simons.

One question that keeps coming up in the book is that of motivation. Why did Simons abandon a highly successful career doing research mathematics in order to focus on making as much money as possible? Part of the answer is that, from the beginning, Simons always had one foot out of the research math world, playing poker and trading commodities even when he was a graduate student working with Chern at Berkeley.

Later, while employed at the Institute for Defense Analysis (IDA) in Princeton, he spent time working not just on government projects but on the mathematical analysis of stock market trading strategies.

While I’ve often heard the story of how he was fired from IDA after publicly criticizing the Vietnam War, less well known is that a big problem was that he was quoted in Newsweek saying he planned to work on his own projects, not government ones, until the war was over.

Unfortunately, the book has very little to say about a question I’m fascinated by: what does Simons intend to do with the $23 billion (and counting, the RenTech Medallion Fund that he has a large piece of continues to be an incredible money-making machine)?

There’s very little in the book about his philanthropic activities, the most visible of which are at the Simons Foundation, which now has assets of nearly $3 billion with amounts of the order of $300 million/year coming in as income and going out as research funding.

I think that on the whole Simons had made excellent choices with the math and physics that he has decided to fund, from the Simons Center for Geometry and Physics at Stony Brook to a wide array of programs funded by his foundation.

A question that keeps reappearing throughout the book is that of the social significance of RenTech. It’s a rather pure test case for the moral question about quant investing: would the world be better off without it?

In the case of the main money-maker, their Medallion fund, it’s hard to argue that the short-term investment strategies they use provide important market liquidity. The fund is closed to outside investors, and makes money purely personally for those involved with RenTech, not for institutions like pension funds.

So, the social impact of RenTech will come down to that of what Simons and a small number of other mathematicians, physicists and computer scientists decide to do with the trading profits (calculated by Zuckerman at over $100 billion so far).

Simons himself has engaged in some impressive philanthropy, but one perhaps should weight that against the effects of the money spent by Robert Mercer, the co-CEO he left the company to (Zuckerman discusses Mercer in detail). Mercer and his daughter have a lot of responsibility for some of the most destructive recent attacks on US democracy (e.g. Breitbart and the Cambridge Analytica 2016 election story).

In the historical evaluation of whether the world would have been better off with or without RenTech, the fact that RenTech money may have been a determining factor in bringing Trump and those around him to power is going to weigh heavily on one side.

Last Updated on November 15, 2019


Peter Woit November 17, 2019 at 9:57 pm

Peter Woit says: From “Not Even Wrong” November 15, 2019

Thinking a bit more about the book, it seems very likely that Zuckerman was operating under some sort of agreement with Simons which involved him promising to stick to RenTech and say little to nothing about the Simons children or his current activities beyond the Simons Foundation. The only real mention in the book of the children is that Zuckerman does discuss the quite tragic stories of the accidental deaths of two of his sons.

What’s not at all discussed in the book is that Simons has three living children, two daughters and a son. One daughter (Liz Simons) runs the Heising-Simons Foundation with her husband, Mark Heising. In 2017 this had assets of $500 million, in 2018 gave away $100 million. His son (Nathaniel Simons) with his wife runs the Sea Change Foundation, focused on climate change, which supposedly has given away upwards of $500 million.

Also not discussed at all in the book is what must be a huge operation investing Simons’ assets (I doubt he’s putting them in a mutual fund…). This includes at least his family office, Euclidean Capital, and another investment group, Medley Partners.

I also hadn’t noticed that Zuckerman doesn’t mention at all this story, which came out two years ago:

Based on leaked documents, this described an offshore trust with $8 billion back in 2010, as well as giving a lot of other details about Simons’ assets.

This raises the question of the significance of the one number Zuckerman gives about Simons’ current wealth ($23 billion). It’s quite possible this doesn’t include funds in trusts for his children or assets of Foundations he controls, so the size of assets controlled by him and his family may be much larger than this. Possibly his long-term plan is to leave his wealth to philanthropic foundations controlled by his children.


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