Whatever your thoughts on the impact that human activity has on climate change, there really can’t be all that many folks out there who think that energy generated by coal-fired plants is a good thing.
As The Wall was falling in 1989, I spent the week between Christmas and New Year in Berlin. This was winter, so the heat was on.
And heat in East Berlin was generated by coal. Really dirty coal. And if you think that The Berlin Wall kept filthy air from wafting over into West Berlin, where we were staying a few minutes walk from Checkpoint Charlie, you think wrong.
The air was brown, gritty almost. And it smelled awful. We first noticed it when we got to our hotel room, and I thought my husband was having a gas attack. Talk about rotten eggs.
Not that air quality in the U.S. was always so great.
Boston used to have a lot more smoggy days than it does now.
But when coal-generated electricity is replaced by something better (i.e., cleaner), the air gets cleaner.
As for clean coal. No. Such. Thing.
I’m also old enough to remember when home heating with coal was a thing. Until I was 7, my family lived in my grandmother’s three-flat, and, although oil eventually replaced coal, when I was little, each flat had its own furnace and coal cellar. I can still hear the rattle of the coal as it was sent down the chute.
But coal?Ugh!
Basically, coal is good for making a snowman’s face.
That and making steel.
Despite the efforts of coal companies, and the current rage for rolling back anti-coal regulations by the entity that used to be known as the Environmental Protection Agency, coal for power generation has been the way out in the U.S. for decades.
And this trend will be accelerating, thanks to American insurance companies.
Other insurers are expected to follow suit, but first up is Chubb, which is banning coverage for coal companies.
Chubb, facing increasing pressure from environmental action groups, said Monday it will no longer sell insurance to new coal-fired power plants or sell new policies to companies that derive more than 30% of their revenues from thermal coal mining…
“Chubb recognises the reality of climate change and the substantial impact of human activity on our planet,” said Evan Greenberg, Chubb’s chief executive.
The company, which is officially based in Switzerland but does much of its business in the U.S., will also stop making new investments in companies that have a big exposure to thermal coal mining or coal-based energy production.(Source: LA Times)
This decision is, of course, an economic one.
And it won’t end with coal-fired plants.
When it comes to climate change, insurance companies are already living in the future. There are a lot more natural catastrophe claims being made than there used to be, and while they’re not all climate-change related, plenty of them (think California wildfires) are.
So insurance companies are facing the money-making challenge of charging organizations and homeowners premiums that put insurance out of reach. If no one can afford to buy insurance, well, that’s not good for the insurers or the insurees. But insurance companies can’t stay in business if they can’t charge enough to make payouts. They’ll back right away from losing business.
Their risk models are telling them that something’s got to give. And for Chubb, that means giving up on coal.
Not everyone believes that environmental salvation is going to be up to the insurance companies:
In an interview with the Financial Times in April, Warren Buffett said decisions around how to deal with the declining use of coal “overwhelmingly ... has to be a government activity.”
But the insurance companies are doing their bit:
Last week, Zurich extended its policy, saying that it would not underwrite or invest in companies that generate more than 30% of their revenues from oil sands or oil shale. It also said it would avoid companies that operated infrastructure such as pipelines and railways for oil sands projects.
At the time, Mario Greco, Zurich chief executive, said that the policy was “simply the right thing to do.”
“We see first-hand the devastation natural disasters inflict on people and communities,” he added.
I’m with Warren Buffett that we can and do need government to step on the side of the environment. The stakes (and not just the temperatures) are too high.
But Chubb and Zurich are sure showing where a little capitalism can lead us.
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