Shareholder activists need to ask plenty more questions

John Kane-Berman on the hard questions that can be asked about renewable energy

Welcome to the past. When the National Party was still ruling South Africa, Barclays, a major and highly visible British bank, was one of the favourite targets of the British anti-apartheid movement and various other lobbyists seeking disinvestment from South Africa. Eventually, Barclays dumped its South African subsidiary (which is now First National Bank). Many other multinational corporations did likewise.

South Africa was just not worth the adverse publicity every time the annual general meeting (AGM) came round. Now, once again, Barclays is in the firing line, this time over “climate change”. According to the Bloomberg news agency, Barclays is Europe’s biggest financier of “corporate carbon emitters” and is under growing pressure from shareholder activists to burnish its green credentials.

In South Africa, Sasol has also been facing increasing demands from shareholder activists. Supposedly the country’s largest emitter of greenhouse gases, Sasol has agreed to table a climate-related resolution at its 2021 AGM. Slowly, but surely, it appears, the corporate sector is bowing to pressures from green activists. Financing of coal projects has already been declared a no-no by numerous banks and other financial institutions in various countries.

But why the focus on coal and other fossil fuels? The assumption is that “renewable energy” is cleaner and better for the environment. This may or may not be true, but it is odd that the renewables sector – manufacturers, suppliers, and financiers – are not subjected to scrutiny by shareholder activists in the same way as the coal sector. If all the various types of energy on offer were subjected to the same scrutiny, we would all be in a better position to determine which types of energy are the most friendly to the environment.

Renewables, including solar panels, wind turbines, and storage batteries, require iron ore, steel, glass, concrete, plastic, and various kinds of rare-earth and other minerals in their manufacture. So one question shareholder activists could ask is what quantities of these materials would be required for renewables in large enough quantities to replace fossil fuels to meet the net zero carbon target envisaged by the Paris agreement of 2015.

A paper last year by Mark Mills of the Manhattan Institute claimed that “compared with hydrocarbons, green materials entail, on average, a tenfold increase in the quantities of materials extracted and processed to produce the  same amount of energy”. The renewables industry could be asked whether or not this is true.                

Another question is where these various components would come from. Is there any truth in reports that some of the minerals are produced by child labour? Are local communities in Africa or South America or elsewhere ever displaced when mining activity is undertaken or expanded to meet rising demand for the components of renewables? Is there any truth in reports that some of these communities have lost not only their land but also reliable supplies of water?

How much of this new mining would take place in unspoiled areas that environmental organisations are normally keen to preserve in that state?      

How much energy is used to transport the components of renewables from where they originate to wherever the panels, turbines, and battery plants are built?

An article published in 2010 by the Stanford Environmental Law Journal quoted findings that the more renewable energy was used, the more land would be required. The land impacts would be “staggering”. This was because “renewable energy requires more land to produce the same amount of power as the fossil fuels altering our climate”.

Biofuels have by far the largest “energy sprawl”, but wind, solar, and petroleum also have a much larger land footprint than coal. These studies may, of course, be outdated, but unless shareholder activists start asking the searching questions, the public will not be able to judge the relative merits and environmental costs of various types of energy.

Biofuels cannot be produced without using energy to power tractors, manufacture fertilizers, and the like. Biofuel producers, financiers, and enthusiasts can accordingly be asked to tell us not only how much land they require but also how much fossil fuel is needed to produce a given quantity of biofuel.

How many millions of acres of forested and other unspoiled land will have to be cleared to make way for solar and wind farms and battery storage plants?

Further questions relate to waste and land reclamation. What happens to the concrete foundations of wind turbines that are no longer useable? Are they left in place or chopped up and removed? What proportion of used panels, turbines, and batteries can be recycled? How much energy will this require? What proportions cannot be recycled? What plans are in place for the disposal of this waste? How much of it is toxic?

Where is the waste dumped? When worn-out or obsolete British or European renewables are dumped, does this happen at home or is the waste exported to other countries? If so, which? If some of the waste is indeed toxic, why is it exported? Is a “nimby” factor perhaps at work in determining where rich countries send their waste?    

Then there’s wildlife. It is well known that wind turbines threaten eagles and other birds of prey. But they are not the only creatures under threat when land is cleared for renewables, whether wind, solar, biofuels, or batteries. The renewables industry and those who invest in it should be asked by shareholder activists to publish whatever studies they have conducted into the impacts of their activities on birds, animals, reptiles, and insects.

At present renewables account for only a small proportion of global energy demand. But if the intention of the renewables industry, and of governments that have signed up to the Paris agreement, is to steadily increase the supply of renewables, we need to know how big the eco-footprint will be.

Governments already signed up to Paris are unlikely to ask the right questions, even though Angela Merkel said last week that countries around the world should protect biodiversity and natural habitats, while also stopping deforestation. Nor will the vast, influential, and growing renewables sector want to ask them.

That leaves the onus on environmentalists and shareholder activists.

* John Kane-Ber.man is a policy fellow at the IRR, a think-tank that promotes political and economic freedom. Readers are invited to take a stand with the IRR by clicking here or sending an SMS with your name to 32823. Each SMS costs R1. Ts and Cs apply