I’m here to show that you can help fight climate change even if starting a clean tech company or working on a new programming language is out of reach.

The three actions seem small, but given our industry’s future trajectory (up and to the right, of course), these can have a huge compound effect into the future:

1. Choose carbon-efficient server hosting, from the start
2. Change tech culture around climate change from passive to active
3. Work for a company tackling an aspect of the climate challenge

We often see climate change as something for other industries to handle – after all, those other industries are moving crops or making steel or feeding cows and we are “just moving bits”. How bad can moving bits be for the environment? Aren’t we already doing well?

It’s true that the tech industry is less carbon-intensive than other industries. However, we are only as “green” as the power our servers draw. While some companies have spent massive efforts on clean energy (kudos, Google!), no one expects or should reasonably expect companies to work outside their core competency.

Luckily for the environment, the more accurately carbon is priced, the better the tech industry does as a whole (see item #2), and so the entire tech industry should be united in working for a solution to climate change.

1) Use carbon-efficient server hosting

Again, we don’t need to smelt aluminum, move wheat, or drive a tractor to do our jobs. But if cloud computing were a country, it would rank 6th in the world for energy usage. This gives us an outsized impact on the energy sector, about the same size as Germany!

If tech demands clean energy, utilities will have to start providing the clean option, and economies of scale and political barriers start to tip in favor of non-carbon energy sources.

If you’re in one of the green bubbles in the image below, skip to the next section, you’re doing great. However most of us when starting a business just opt for AWS, and while they have some efforts to improve their carbon footprint, there’s little transparency.

If you do use AWS, set your default to us-west-2/Oregon or another carbon-neutral datacenter. At least for the US, us-west-2 has consistently been the cheapest datacenter so this also helps your business. Of course you may need to use some east-coast centers for web latency, but it makes complete sense that data processing should be done with cheap, water-powered, renewable energy.

When you have 100% carbon-neutral servers, your salespeople will happily use this as a selling point, another positive impact to your business. Go ask them how useful that point would be – just send a single email…

Some things you personally can do:

• Use Google or Rackspace to host your servers if it’s easy or you’re starting out. AWS is pretty pricey these days, so it might be a good move for the future
• If using AWS, use one of the carbon-neutral datacenters
• Ask your sales team how effective “our servers are 100% carbon neutral” is as a selling point
• Bug your AWS rep to release their plans for achieving sustainability goals – they won’t continue the program if they think no one is watching, and they’ve been very secretive so far
• If you work at these companies, start pushing internally for cleaner power:
  • Oracle
  • EBay
  • HP
  • IBM
  • Microsoft

  At the next all-hands, submit a question: “How is X working to reduce the carbon content of our electricity?”. Don’t be appeased by promises to reduce carbon footprints of campus buildings, etc – these are not as effective at changing the energy sector, which is the most important contributor to climate change.

2) Change the tech industry from politically passive on climate change to politically active

Dirty energy allows the old industries (which we often are pushing to change) a free ride at the expense of our future world. For instance, the negative externality of emissions pollution from a gas-powered delivery truck compared to an electric-powered truck (or drone!) isn’t yet priced into the market.

A quick list of the technologies which face headwinds without a carbon price:

• LyftLine and UberPool vs taxis and cars
• Electric cars (Tesla, Nissan Leaf, BMW i-series) vs gas cars
• Cloud computing vs self-hosted computing
• Amazon’s delivery vs Walmart stores
• Airbnb using unused rooms over excess capacity built into hotels for peak times
• Netflix vs Blockbuster (obviously Netflix is stronger than the headwinds…)
• Nest vs traditional thermostats
• Obviously any green tech targeting energy production like OPower, Mosaic, SolarCity, etc

We’ve united to fight for Net Neutrality, but we haven’t lobbied as hard to end carbon-emission corporate welfare. Again, in this case I’m not even talking about the direct ~$10 billion/year subsidies of fossil fuels in the US alone, but just the invisible negative externality that we’ll all have to pay down the road for each gallon of gas burned and each ton of coal sent up a chimney.

One of the issues holding back cleaner power for our datacenters is a lack of renewable energy available where we need to place datacenters. I’m looking at you, mid-atlantic states…

Some tech companies are spending millions building out their own renewable power because local utilities are fighting against even providing clean energy as an option. Only this year, after years of lobbying, has Google succeeded in changing policy in North Carolina. Our industry should have the ability to purchase the cleaner power we want – reactionary politics shouldn’t stop us from paying for something that is actively better for the community.

So how do we change the culture of tech?

For one – fight the idea that companies and employees should stay apolitical on climate change issues. I believe that companies should not try to support democrats over republicans (or vice versa, etc) or even speak out on less economically focused issues such as gun rights. However, that climate change exists and will be damaging is not a scientifically seriously debated phenomenon, and the health of the economy and the climate is important for the well being of all tech companies.

Do you want your company to thrive for decades? A global economy under pressure, spending billions to fix basic infrastructure issues from climate change is not the best environment to grow a business in. Let’s start acting like the future of the economy matters to our industry, simply because it’s the truth.

So if we’re united, what can we actually do to change policy?

You may not believe it, but politicians listen to us. Yes, the big tech companies have lobbyists with cash briefcases on Capitol Hill and that helps, but there are also a lot of small donations which come from the tech industry employees and executives.

Less cynically, politicians also listen to us because they believe we have some sort of innovation “secret sauce” that keeps American competition alive. This might be true, or it might have been something ad-libbed to get funding from DARPA at some point and everyone’s in on the joke. Doesn’t matter: they believe it!

• On Davos/TED/Atlantic panels, talk about how carbon pricing would help your innovative business
• At Obama fundraising events, ask awkwardly-well-researched questions on renewable energy standards
• If you happen to rub shoulders with the Washington DC power crowd, chit-chat about Tesla or clean energy, and make it clear that the tech industry expects carbon emissions to be fairly priced, soon

They’ll trust that you can see your way around corners that they can’t, and will start thinking about how they’ll transition their own constituencies to the future that we in the tech industry already take for granted.

If you personally don’t have that kind of access, framing carbon emission pricing as welfare to fossil fuel companies is sure to score a point with your annoyingly-political uncle Joe at the Thanksgiving table. Also, I’m sure you have friends who one day will be a part of the power structure in DC – make sure they understand this idea!

3) Work for a company which is trying to solve the problem

You, personally, have skills which can be literally impossible to purchase. While Bret Victor lays out a number of new projects to tackle, there are also tons of existing organizations out there working on solutions to the crisis. Let’s face it – the job you currently have is unlikely to be your last job. Why not use your skills in the next job to help tackle the climate problem?

Some examples (after 5 minutes of Googling) of places to apply your skills:

• Tesla, especially Tesla Power
• Solar Power Financing: Mosaic or SolarCity
• Less fashionable, but all the more important: angel.co/energy-efficiency
• Dynamic consumer power demand: OhmConnect
• Efficient industrial lighting: transcendlighting.com
• Drone delivery: Flirtey
• Construction efficiency: Vernox Labs
• Solar in developing countries: Oolu Solar
• Efficient industrial lighting: Transcend Lighting
• Even just regular utility companies: NRG Energy
• 350.org and other climate groups

You may have to accept a lower paycheck, but I’d argue that the intangible benefits are worth it. You have the means to work on one of the most important projects in human history; consider this an invitation to join the project.

All three points have some common elements:

• Tackling climate change is good business for the tech industry
• Your company can help, even if it isn’t directly working on cleantech, and even if you’re only a regular employee
• There are plenty of ways to earn your paycheck fixing climate issues. You don’t have to try to squeeze it in as a side project

Of course, there is always donating and side projects / volunteering. Those are great options, but make sure you’re actually being effective when doing so! Otherwise, enjoy the rest of your Thanksgiving, thankful for the opportunities you have to not just make a living, but also to make an impact on a crisis critical to solve for the well-being of centuries of human life.

The post Three ways to fight climate change that Bret Victor missed appeared first on Schimmy's Thoughts.

There was one thing which really blew my mind, though. We visited the beautiful Bruce Peninsula and took a ferry out to Flowerpot Island on Lake Huron.

It had not really hit me how arid, how much of a desert California is, until I was on a boat with drinkable, clean, clear water stretching out past the horizon. So much water that you could get on a vessel which floats on the water and travel to the horizon multiple times before reaching the end of the lake. An ocean of drinkable water!

At the time, it reminded me of Dune. It felt to me like I was from Arrakis (the desert planet), and had just landed on Caladan (the home world of the Atreides). This thought was probably triggered by this post. It’s actually inspired me to reread Dune!

The thing is, I’m from a place (Massachusetts) with abundant water – looking back from California, I could hardly believe that as children we would have watergun fights and have little wars with hoses. Visiting Ontario reminded me that there are places which don’t have the water pressure that we do… at least not yet.

The post Ontario is different appeared first on Schimmy's Thoughts.

This is an obviously biased post (see the title) but I think its better to have an explicitly biased post than to make an “objective” post that can’t help but be influenced by my own opinions. Whether you agree or disagree, I hope this post is useful. Please let me know what you think below!

This is a long post, so here’s a short version of it:

• Swarthmore cares about Climate Change
• I start with the assumption that we agree (like 97% of scientists) that human-created climate change is real and if left unchecked will drastically change the way humans interact with our climate.
• I also assume that we agree that those changes will be catastrophic and should be avoided at great cost, as those changes involve at the very least massive loss of life and hardship.
• There is no doubt that this assessment and the need to act is agreed upon by the wider Swarthmore community.
• We now can talk tactics and pragmatic priorities – the Swarthmore community also cares about financial aid, the long-term success of the college, etc. and must balance those priorities.
• Divestment is useful:
• Divestment is worthwhile, but not to affect share price directly. Instead divestment is effective as a way to change the perception of the fossil fuel industry.
• Swarthmore is well positioned to affect those whose opinions have the most affect on investment in fossil fuels.
• The current college’s sustainability plan is weak and ineffectual. When looking at this tactically, divestment is a smaller cost for more benefit than retrofitting all the buildings on campus.
• Even if you don’t care about divestment…
• It’s actually not clear that divestment will cost anything – in fact we would likely avoid significant losses in the future due to overvaluation of fossil fuel stocks now.
• Divesting preserves Swarthmore’s values and brand – failure to divest chooses short-term savings at the cost of institutional integrity and perceived brand.

A Quick History of Divestment (focused on fossil fuel divestment and Swarthmore)

The Swarthmore community agrees it should help combat Climate Change

In writing this post, I assume that the entire Swarthmore community agrees on a few basic things:

1. Human-caused Climate Change is real (97% of scientists agree, it’s hard to get more certain than that)
2. If left unchecked, Climate Change will cause significant changes to how our civilization functions
3. These changes will be catastrophic, causing large loss of life and wealth, and should be avoided at great cost

Note that I don’t specify that we agree on how much cost we should bear to avoid Climate Change, nor do I suggest that there is a consensus on how to combat it.

However, these three items show that it is not “political” in the Swarthmore community to suggest that Climate Change is a problem that must be solved. Indeed, our presidents and deans have been speaking for the community recently when they have touched on the topic:

I believe we all share a deep commitment to finding effective ways to combat the myriad ills that threaten the environment, indeed, the very future of our planet. It is obvious that we agree that sustainability is among the foremost priorities facing our society—and the world—today.
– President Rebecca Chopp, April 2014

The managers of Swarthmore College agree that climate change is the most pressing issue of our time and that Swarthmore College can—and must—play a leadership role in helping to curb the seemingly insatiable appetite for fossil fuel.
– Board of Managers, May 2015

We see that Swarthmore community believes that:

1. Swarthmore is able to help tackle the issue of Climate Change
2. Swarthmore is morally obligated to do so given its privileged position

Pragmatic concerns

So we have determined that Swarthmore as a community is unanimously (or close enough) on board to help solve Climate Change. Now it just becomes a discussion about how we balance our resources between Climate Change and other agreed-upon priorities. This is the political debate – a discussion of how to allocate limited resources amongst a set of priorities.

In an ideal world, Swarthmore has infinite money, time, and focus to address all the wrongs in the world that we agree about. In the real world, Swarthmore has a few other significant obligations and goals that we must take into account.

The Swarthmore community also:

• Desires to continue as an organization as long as possible
• Desires to help less-wealthy applicants thrive at Swarthmore
• Desires to gain the highest status possible amongst universities and colleges
• Desires to end racism, sexism, etc in the wider world

That’s a lot, but we do have some powerful resources to help us:

• A $1.88 billion dollar endowment (in the top 20 in the U.S. for per-capita endowment)
• Respect amongst the academic, cultural, and political elite
• A strong network of alumni who also share these values

The first three other desires Swarthmore as a community agrees on are directly tied to the size of the endowment and the returns on it. In order to continue as an organization in perpetuity, a large endowment helps – returns from the endowment helps Swarthmore pay for buildings, faculty, etc. and serves as a reserve fund in times of need. Those funds also help offset tuition breaks offered to less wealthy applicants (and help offset full-price tuition as well). Finally, one mark of respect amongst institutions comes from the size of one’s endowment.

The last desire is a set of other socially beneficial causes that the community agrees on which we would like to help with. I don’t pretend that Climate Change is the be-all-end-all social cause, but I will argue that much progress in other causes would be undone due to the pressure from Climate Change in the future, and so it would be wise to tackle this issue with a higher priority.

Additionally, there are fewer clear paths forward for the other social causes: combatting Climate Change requires the world to emit fewer greenhouse gases and ideally reduce the amount of greenhouse gases already in the atmosphere. Simple and clear.

Influencing (as an example) the Black Lives Matter issue is not as straightforward – the Swarthmore community agrees that our society does not value the lives of our black citizens enough, but how do we help? Should we divest from St. Louis-based businesses? Should we support body cameras on police? etc. It is not quite as clear, at least yet, that divestment would be the most effective use of our resources in helping that cause. One could imagine a situation in which divestment would help (for instance divesting from Woolworth’s during the civil rights era to pressure change), and in that case I believe it would be fine to use the endowment as well.

The Logic of Divestment

So we have unanimous agreement that there is a problem and we have a clear goal to avoid catastrophic Climate Change: reduce greenhouse gases across the world. So how do we do this in practice?

The divestment movement suggests that one way to reduce usage of fossil fuels is by altering the perception of the fossil fuel industry amongst investors, particularly large, influential investors. This will inspire less investment in fossil fuels and less consumption following that decrease in investment. Note that the divestment movement does not think that selling the shares themselves will actually cause the share price to change, not without a wider change in perception.

Currently, fossil fuel companies claim large amounts of coal, oil, and gas reserves as assets on their balance sheets. These companies use investment capital provided by the financial markets to fund more exploration for new resources and to fund R&D to better exploit their current holdings. Investors fund these companies (and by extension, further exploration and consumption of fossil fuels) because it has historically been a good investment. Ideally, however, the negative externalities of carbon in the atmosphere would be priced into the costs of fossil fuels, and the value of these reserves (and therefore the value of the stock) would decrease. This is called the Carbon Bubble.

Right now, the stock prices of these companies reflect the assumption by investors that the negative externalities of carbon will never be taxed. However, for our civilization to avoid catastrophic Climate Change (see above that the Swarthmore community agrees that we should avoid this), those fossil fuels must not be burned or the negative effects of emitting the carbon should be included in the price of the fuel itself. As an example, each gallon of gas might be priced to include carbon capturing and sequestration of an equivalent amount of carbon elsewhere in the world, similar to offsets you can optionally buy on an airplane. Or more depressingly, the tax on every 100 gallons of gas might go towards resettling a Bangladeshi refugee from sinking land.

Divestment is a powerful statement about this situation:

We believe that Climate Change is real, and that the costs of burning fossil fuels will be priced into the fuel itself at some point in the future. We believe that it is unjust to push the burden of dealing with the negative externalities of carbon onto the rest of the world, and that this injustice will end sooner rather than later. We are so confident in this that we are betting large sums of money on this outcome.

That such powerful institutions both believe that this outcome of carbon being accurately priced will occur and have vested interests in this outcome occurring should encourage all investors to reevaluate the true value and future of fossil fuels. Politicians should as well take notice that fossil fuel jobs are no longer as desirable to attract as before, and that the fossil fuel industry is likely not a reliable, powerful ally beyond the near future.

Or more succinctly:

The Carbon Bubble exists, and we as an institution find that the status quo is fundamentally shifting. Divestment is our institution acting upon that finding.

This statement is somewhat symbolic, but that is the point – divestment highlights to other large institutions and investors that the world has changed, and that investments in fossil fuels are no longer likely to offer decent returns. When the elites of our society suggest that the future will look different, and back that suggestion up with the money that they steward, they’re probably onto something, and you as an investor should probably listen.

Arguments against divestment by the board

There are a few common arguments against divestment, starting with the glib response that “someone else will buy the shares”, which is true but misses the point as shown above. The Swarthmore Board of Managers (a body of individuals who elect their own successors under no obligation to listen to the wider community) asserts that divestment will be very expensive and will compromise other priorities the college cares about:

The College’s budget is dependent on the endowment to support financial aid, sustain its exceptional faculty, provide academic and extracurricular programing, and build and maintain facilities.

In particular, we seek to preserve our increasingly rare stance of need-blind admissions, funding student need with all scholarships and no loans, and expanding access to our education for those who cannot afford it. In fact, increasing the access of exceptional low-income, first generation, and minority students to Swarthmore is a top priority.

If we were not able to work with these investment managers, it would cost the college between $10 and $20 million annually based on the past performance of our current managers.

However, the Board is enthusiastic about spending tens of millions of dollars on sustainability measures on campus. So the Board and the divestment advocates agree: Climate Change is important to combat and we should be willing to spend millions of dollars to do so. The Board’s argument is not that divestment will not work or that it would not be a useful step, but that it is too expensive relative to other alternatives. I’ll detail later on why I think individual action like building a sustainable building is not actually high-impact when it comes to the collective-action problem of Climate Change.

Additionally, the Board is (rightfully) worried that opening up the endowment to divestment from fossil fuels will encourage activists to approach the Board seeking to use the endowment for other social causes. However, few causes are as apolitical as Climate Change is in the Swarthmore community – there can still be a strong barrier to using the endowment, requiring a sustained campaign to convince the Board that, yes, issue X has near-unanimous support amongst faculty, students, and informed alums.

Another suggestion which the Board has proposed is using the fractional ownership of these fossil fuel companies to push for sustainability measures. However, I highly doubt this would be effective: without a divestment movement there would always be others to purchase shares, and there is no chance that Climate activist investors will form a large enough section of the shareholder body to effect change.

As for the Board’s (paraphrased) argument that: “in the past (in 1991) an unelected body decided not to consider social objectives in endowment investments, so we will not consider social objectives today”, well, I can’t imagine any member of the community finding that argument convincing.

Arguments against divestment by Professor Burke

A separate and more interesting discussion came from professor Timothy Burke, who has a few great points and one strong concern about tactics. He suggests that:

• We need to stop treating people who disagree on tactics as if they reject the scientific consensus – there are legitimate debates to be had on the most effective use of limited funds, time, focus, etc.
• Screening the endowment for “moral purity” is impossible – the college will always end up invested in some form of exploitation
• Colleges are no longer institutions which can lead the broader nation on social issues, a condition which has been true for at least 30 years

The first point is important – the ferocity of activists turns off many people I know, and the divestment movement at Swarthmore still has a bad reputation amongst alums from when activists shut down healthy debate and discussion via chanting a few years ago.

The second point is probably true, but less interesting; complete moral purity is not an outcome which many in the divestment community are actively seeking. Impact is the more important goal of the movement.

The third point is the most interesting, as we are now talking broader tactics. Professor Burke argues that starting the divestment movement from elite bastions that have little connection to normal Americans and are often resented by a broad spectrum of the country does the movement no favors. He contrasts it with the anti-apartheid movement, a campaign that divestment supporters often reference:

The anti-apartheid coalition moved outward from progressive activism to a wider political base, and was largely careful to attend to the conditions that would facilitate that movement. It used the university as one stepping-stone because the university was part of a constellation of respected civic institutions that included churches, community groups, local municipal governments, and mainstream journalism.

That cluster of institutions was already beginning to fragment in the 1980s, and is now almost wholly dispersed. You cannot keep running the same plays if the game itself has fundamentally changed.

Professor Burke is 100% right that the game has changed. However, I don’t think he realizes how it has changed. The 1970s and early 1980s were a time of institutions and characterized by people having the power to affect change en masse. Unions, coalitions of faith groups, and student groups were successful in actualizing change. This is no longer the case, even amongst people who still belong to unions and who still belong to organized religious groups. In today’s world, star power is more important than ever, and only a few people have the power and influence to make change succeed. For policy, we can take a look at the influence of George Soros or the Koch brothers on energy & finance legislation, or how selective applications of funding from the Gates foundation have transformed large sectors of education. Even teachers unions have been continually on the defensive, and both union and church enrollments have been in decline for decades. Culturally speaking, the local pastor or union leader is an endangered species – an endorsement from Ben & Jerry is probably more valuable than the support of the Methodist churches, for instance, and will get you more press and notice from the people who actually have influence.

So trying to convince large numbers of Americans is actually not very valuable in today’s society if you actually want to get anything done, and is a hell of a lot harder than the alternative. That alternative is to convince the people with power that you are right. This is even easier than you might think as currently the 400 wealthiest Americans have more wealth than half of all Americans combined! As the divestment movement is structured, it doesn’t even need to appeal to the moral side of those with power, just to the desire for those with power to avoid the risk for the “Carbon Bubble”. As discussed before, Swarthmore actually does have a good amount of influence and respect amongst other education institutions, the media (i.e. David Brooks, Arthur Chu, etc) and the political world, and is thus a good candidate to lead the movement.

So yes, I agree with Professor Burke that Swarthmore is a terrible place to start a mass movement. However, we don’t need a mass movement – we just need to affect a very small, elite segment of the world population which holds most of the cultural, political, and financial capital. Undemocratic? Yes. Cynical? Yes. The only way to avoid effect real change and avoid catastrophe? I believe so.

Why individual sustainability actions are not very worthwhile

The Board suggests that Swarthmore should lead by example and conserve in an individual way. I find this plan weak and vain, and the money spent on building sustainability essentially wasted in comparison to how it could be used to drive meaningful change. This is a strange position – every little bit helps, right?

While individual action might buy us time in resolving Climate Change, individual action is fruitless in the long-term for this problem. Professor Burke’s criticism that Swarthmore is not the right place to start a worldwide social movement rings true – fossil fuels are consumed by individuals everywhere, and realistically no one really cares how many barrels of oil Swarthmore saves, or how many trees it plants in the Crum. Those individuals will continue to drive and consume, and if oil is slightly cheaper because Swarthmore uses less of it, someone else out in the world who has never heard of Swarthmore will use more of it.

Climate Change is a collective action problem on a global scale. The businesswoman in China starting a coal mine and seeking favorable investment from global finance will never hear about nor care about how “green” the new biology building is, she will decide to open the mine based on economic considerations. The carbon emissions of those economic considerations dwarf the savings that Swarthmore can provide, even if we became 100% efficient. It is those economic considerations you must change.

A particularly sharp reader might object that this parallels share price – when Swarthmore divests, wouldn’t someone who has never heard of Swarthmore or doesn’t care will simply purchase the shares or provide the loan for the mine? However, we have shown that the true purpose of divesting is to advance the idea that the Carbon Bubble exists and will materially affect the fortunes of fossil fuel companies. As long as an investor has heard of the divestment movement (and at this point all large investors have), understands the concept of the Carbon Bubble, and has their own self-interest in mind, that investor is less likely to invest.

If you want the college to divest, why not just donate to the special fund set up by the Board?

In May of 2015 the Board reiterated that the general endowment was off-limits for divestment, but opened a special fossil-fuel-free fund one could donate to. The argument is: Others in the past donated to the college for the explicit purpose of running of the college, not for affecting the social issues that a future generation might care about. Thus it is improper to use those funds for any other purpose.

I find this argument weak as well. Swarthmore itself was started by radical Quaker abolitionists – these original benefactors strongly believed that Swarthmore should push forward on issues the community believed in, even if these issues were not central to the day-to-day mission of education. As an example, the first Board was made up partly of women, which at the time in Pennsylvania was illegal and highly unusual. Could the college have started with a Board officially made up of only men? Certainly, and it would have been less distracted from its mission of creating an environment to educate in. However, the founders of Swarthmore decided that the morally right thing to do was not the most short-term advantageous thing to do. This is a value that Swarthmore strongly holds, and always has.

Donating to the college is not like donating to a factory trying to make as much ‘education’ as possible, but instead a donation to a living community which has agency to govern themselves as it sees fit. The donation to the college is just that – a gift, something which the community can use as it sees fit, and it is pretty obvious what values the community holds.

On a tactical level, that special fund did not get any press and is useless to combat Climate Change (again, an outcome that the community desires). The headlines are along the lines of: “Swarthmore chooses not to divest”, and are not even along the lines of: “Swarthmore allows for some divestment, going forward, which will be a very very small fraction of the funds it manages”. For divestment to be worthwhile, Swarthmore needs to indicate that the entire community sees the danger of the Carbon Bubble and has decided to avoid the risk. Silent divestment via the special fund is worse than doing nothing – at least when you’re doing nothing you know that you’re doing nothing instead of believing that you are having an impact.

Still think we shouldn’t touch the endowment for moral reasons?

Fair enough – I understand the reluctance. This section is to convince you that divestment is actually a necessary step to:

• Avoid downside risk to the endowment (aka that we’ll lose money) from the Carbon Bubble
• Ensure that Swarthmore is still seen as a leader, with the benefits that come with that position
• Ensure that Swarthmore avoids hypocrisy and maintains its values

While I could write about this, someone with better qualifications has already done a better job than I would do: http://daily.swarthmore.edu/2015/03/05/the-financial-advantages-of-divestment/

This article was written by a financial professional who spent time looking at Swarthmore’s case specifically, and who concluded that it is actually a wise investment decision to divest. The Board suggests that Swarthmore’s endowment will lose $10-20 million a year if we divest. That number is almost certainly an exaggeration, and ignores the downside risk of the Carbon Bubble, as the investment professional explains:

If we agree that climate change is a huge threat that society will act on, then it necessarily follows that divestment will occur to limit losses, that fossil fuel company prices will drop substantially and that institutions with these stocks in their portfolios will experience large losses.

He then identifies the other reputational risks that come from failing to lead:

Aside from the financial risk of being a late exiter, the moral and brand damage to Swarthmore from being a late mover would likely be large.

A January 15, 2015 letter by many of Stanford’s faculty to the Stanford President and Board of trustees puts the issue this way: “If a university seeks to educate extraordinary youth so they may achieve the brightest possible future, what does it mean for that university simultaneously to invest in the destruction of that future?”

This analysis lays a convincing argument that by divesting we avoid significant risks to Swarthmore, both financial and reputational. This is without even considering any moral argument for divestment.

So how do I help?

Great – thanks for joining us! It might seem hard to affect change, as the Board’s response recently seems final. However, the student activists at Swarthmore are not quitting anytime soon, and your power as an alum is greater than you might think.

Ways to help:

• Join in actions when you return to campus for your reunion. Email me if you want to help plan.
• Help spread this information to others. There are divestment movements on many many campuses, and many alums who don’t yet have enough information to make a decision. At the very least the conversation about divestment will be pretty interesting.
• Next time the college asks you for a donation, let the college know that you won’t be donating until they divest the entire endowment. Alumni giving rates are very important to elite colleges, and this is one of the stronger levers we have. Make sure you can explain why donating to the side fund is not worthwhile (see the section above).
• To still donate but actually put pressure on the administration, donate here
• Like these groups on Facebook: 350.org and Swat MJ
• Personally pledge to divest from fossil fuels (I find this less effective than getting an institution to divest – your personal divestment probably will make few headlines!)

Conclusion

Thanks for reading this far. Hopefully you feel informed about the debate, even if the presentation was highly opinionated.

Again, the divestment movement seems complex, but ultimately boils down to a set of simple assertions:

• Human caused Climate Change is real.
• The Swarthmore community agrees that Swarthmore College should help fight Climate Change.
• The Swarthmore is able to be a leader in changing the status quo.
• Divestment can help change the flow of global capital away from carbon-intensive fuels.
• The Carbon Bubble exists.
• Divestment will actually help the college’s endowment value in the long-term.
• There are risks to our reputation from not divesting which have not been examined by the Board.
• Divestment is a more effective strategy than individual efforts by the college and the community.

I believe that all of those assertions are true (although all do not need to be true for divestment to be worthwhile), and I hope that I have shown in this post why I think so. I am always open to new information, however, and would love any perspectives, ideas, or information that I may have missed.

How about it – do you think Swarthmore should divest?

The post Why Swarthmore Should Divest appeared first on Schimmy's Thoughts.

For those interested, here is:

• An article arguing that divestment is fiscally prudent
• An article arguing that divestment is tactically useful
• A great article by Tim Burke arguing that divestment is not the right course of action for balance

Dear Mr. Kemp and Swarthmore Board,

I know you are busy people, and I will try to be brief.

I understand your concerns and truly appreciate your stewardship of the college through presidents, new generations, recessions, and more. The steadiness and sobriety of the board is important to keep Swarthmore on the right path.

However, after much consideration, I have to respectfully disagree with the board’s decision not to divest our endowment from fossil fuels. Our college for many years has espoused ideals around sustainability, and to keep ourselves honest we must take this step and lead. Yes, we should not use the endowment as an active political tool without great hesitation. Yet, when 97% of scientists agree on an issue and the college’s public statements for years have agreed that climate change is an issue, to not act would be in violation of our Swarthmore’s principles.

Others more elegant have argued why this is useful morally, and others have also demonstrated its utility as a tactical move (it will not be an empty symbolic gesture, but an important signal in how fossil fuels are perceived).

As you all are practical people, however, I’d like to point out some reasons why this is prudent for Swarthmore, moral arguments aside:

• We must align our investments with our values, or risk reputationally being seen as hypocritical
• There is a very strong likelihood that the Carbon Bubble is real – removing our investment in fossil fuels avoids the large downside we are risking if those fossil fuels stay in the ground, which basic logic suggests is likely
• We gain reputation & prestige by leading the charge instead of following meekly

As the moral and financial evidence that this is a good idea becomes more clear, the risk that we are leading down the wrong path diminishes. Let us reap the practical gains by leading this movement, as well as some of the financial gains by being among the first to divest.

Young alums are watching this issue closely, as we know that ultimately it will be us who have to deal with the more extreme effects of climate change. We know that you are working with the best interests of Swarthmore and future generations at heart, and hope that the many arguments in favor of divestment are strong enough to stand up to your intellectual scrutiny. I believe they are strong enough, and that it is time to divest. I believe the moral, financial, and other pragmatic reasons suggest it is time as well, and that we will look back at this decision with pride as a time Swarthmore led the way to a better outcome for both humanity and for itself.

Thank you for your time,
Colin Schimmelfing 2010

The post Letter to Swarthmore’s Board Supporting Divestment appeared first on Schimmy's Thoughts.

We should divest not to force a corporation into action, but instead to clear our own minds on the issue. Humans are notoriously afraid of loss. When those invested in the university (via having attended and donated, or by receiving monthly paychecks) have an opportunity to confront climate change, it is impossible to ignore that the health of one’s investment depends, even only very slightly, on the decision being made via that opportunity.

This effect might be enough to sway a vote, or to make it less likely someone would share a 350.org post on Facebook; small stuff, but it can add up. While the loss might seem too small to affect someone’s behavior, I suspect a stronger influence given what we know about human irrationality around aversion to loss. I would like scientific validation of this idea – perhaps a psychology department at one of the universities opposed to divestment might take up the investigation…

We must enable our own leadership on the issue of Climate Change. Our voices should be certain, and our judgement unclouded by financial doubts. Divestment is an investment in our integrity and our independence, and I encourage Swarthmore College and all other institutions to take this necessary step.

The post Divest not for them, but for you appeared first on Schimmy's Thoughts.

Recently I was discussing my Limits of Acceptable Terribleness post with a coworker and we disagreed about my assertions about highways. My argument there is that building more highways with the goal of decreasing travel or commute time is fruitless – perhaps some would have shorter commutes, especially right after the new capacity was added. Ultimately, however, the average commute time will creep back up. Instead, if you want to decrease overall commute times, it would be better to invest in transit.

Recently, a few articles came out bolstering that viewpoint, so I no longer have to do the heavy lifting myself. This Vox article in particular directly addresses the uselessness of building highway capacity, and points out concrete examples where adding a lane caused more congestion!

In addition, it seems as though an added bonus of working public transit is that it can make a city more affordable. It seems as though, when it comes to massive city projects, hosting the Olympics and building stadiums comes out with fewer benefits to the residents of a city than advertised, while public transit still doesn’t do a good job of demonstrating its considerable value. This makes me think that, if we just accounted properly for this value, the high speed rail project between LA and SF might be an easier sell…

So those articles show that well-functioning and subsidized public transit makes it easier for low-income residents of the city to afford that city, but we still have an important argument to discuss. I often hear that the policies which come at the expense of cars makes life harder for low-income people who are being pushed to the suburbs and the exurbs.

First, I’d like to point out that, if those with the highest incomes and social capital desire to live in the city, then there is no intrinsic reason that the suburbs are ‘better’ for low-income residents. Often there’s some sort of echo of a paternalist 1930s social program that suggests it would be beneficial to have poorer residents live in the suburbs because there is grass or something. Thus, for our conversation I am assuming that the suburbs and the city are equivalent from a personal desire viewpoint. However, I do acknowledge that the simplification might affect our discussion – obviously some people prefer living in the suburbs and some prefer the city, and it is possible that the preferences are different for different wealth strata.

But back to the argument I’m worried about: Since less-wealthy people are being pushed to the suburbs, access to the city via car is now a social justice issue. This worries me – it could easily be a wedge to split progressives. One assumption in the argument pops right out at you: access to the city from the suburbs does not necessarily need to be via car. If the funds spent on highways were diverted into spending on public transit infrastructure and subsidies to ride that infrastructure (and to parking by those transit stations, for instance, a problem that the Bay Area is currently facing), the same end goal is met: fast, affordable access to the city by those in the suburbs.

I’d also argue that there is somewhat of a sovereignty issue as well: who are people in the suburbs to dictate to the city what infrastructure to build? To put it in a less emotional frame: why is it that the interests of the suburban visitors to the city should predominate at the expense of the residents of the city? I think historically the answer to that question has been decided in favor of the suburban residents partially due to race and class power dynamics. I currently see the pendulum swinging back the other way (including this blog post) as a symptom of those with the cultural capital starting to live in cities and exercising influence on behalf of city residents. So we shouldn’t pat ourselves on the back too hard for questioning the orthodoxy here: we’ve got a pretty solid incentive to justify screwing over the suburbs.

Obviously, cities do not want to drive away commuters from the suburbs – while residents might have a different zip code, they still root for the Giants and help drive the economic engine of the city. Of course, some people who contribute to the city also do not want to live in an urban environment, and it’s good to have a mix of available housing. However, for the good of all residents, the city should be prizing density and walkability. There are many studies which show that these increase the economic vitality of the city, improving economic conditions for all. There is much more in the city lab article above on that.

Additionally, if we are looking at the whole picture and questioning our ideas of what is normal, catering to cars has more drawbacks than you’d think. For one thing, as the stencil on the panhandle states, cars are death monsters:

~30,000 people die every year from cars, compared to the number of deaths from transit (~1000, likely many of these are suicides). In an urban environment often the risk is to pedestrians and bicyclists; so now we have people from the suburbs specifically causing bodily harm to city residents as a result of the transit choices of those from the suburbs. A less visceral (but also important) negative externality is the pollution from cars – how many cases of asthma are car commuters responsible for? Luckily, our gasoline is no longer leaded, but any internal combustion engines on the streets today still cause negative health effects.

But after all of that, the main thing that I care about is: we can have all we want using public transit from the suburbs, why do we have to argue about this? It’s like the old comic about global warming:

What if I’m wrong and we create a stronger city with more transit options, which is more walkable and healthy, for no reason?

In comparison to climate change, this is an even easier solution – if we change our minds, we can always rip out the BART line and turn it into another lane of I-580 if we want, far faster than we can change fuel sources. In the meantime we can do what reason and human experience tell us and decrease our reliance on personal cars.

The post Are transit-first policies bad for poorer residents pushed out of the urban core? appeared first on Schimmy's Thoughts.

The post Schimmy’s guide to personal finance appeared first on Schimmy's Thoughts.

To fix this, we have some space heaters, but that’s not enough, and not the best for the environment. One problem is that the windows are single-pane, another is that the windows are pretty loose in the frame.

What you really need for the gaps around the windows are some of these:
http://www.amazon.com/Duck-1278771-Self-Adhesive-Weatherstrip-16-Inch/dp/B0025KUSXC/ref=sr_1_fkmr0_2?ie=UTF8&qid=1386552168&sr=8-2-fkmr0&keywords=rubberized+window+gap

(Probably go for the narrowest you can- depends on how loose your windows are)

To try to mimic double-pane glass, try this:
http://www.amazon.com/3M-Indoor-Window-Insulator-5-Window/dp/B00002NCJI/ref=sr_1_fkmr0_1?ie=UTF8&qid=1386552240&sr=8-1-fkmr0&keywords=brush+window+weather+draft+protection

If you have a house or want other more general tips, check out this guide from someone in Alaska – I imagine the Alaskans are pretty good at this…

Hopefully this will help- it has certainly made a difference in my room. And remember: the way PG&E calculates your bill, anything above the ‘normal’ range can really add up.

The post How to keep the cold out of your freezing apartment appeared first on Schimmy's Thoughts.

The report itself can be broken down into a few parts:

To very quickly summarize, according to Skocpol:

The account of the fight is quite gripping, and Skocpol’s arguments are very convincing. However, in looking through the responses to the paper, it is clear that there is more to the story. In particular, you should read David Robert’s breakdown of the paper and its arguments to get the full story- if there is one link you should follow from this post, Robert’s analysis is it. I actually do not suggest you read the 133 page report unless you really, really liked The West Wing!

A few responses:

Bill McKibben doesn’t say too much  He agrees with most of Skocpol’s arguments and her harsh criticism of the blaming after the fact, but does defend some of the green movement’s choices. He argues that, at the time, it was far more plausible that the insider strategy could work. It does make sense that he likes the grassroots approach – he suggests that the 350.org organization he’s running could be very useful the next time climate change legislation is on deck.

Joseph Romm strongly disagrees with Skocpol’s conclusions. He points out that the administration allowed the ‘reconciliation’ process in the senate for the health care bill, but not for Cap and Trade. To be fair, this was a huge difference and shows the priority given to health care at the expense of climate change legislation:

Now, you may hold the opinion that reconciliation was not possible for the climate bill, but it was certainly more possible than cap-and-dividend — or more possible than rapidly setting up a grassroots movement, another key omission by the environmental community according to Skocpol and the Yale analysis.

Finally, the most complete and seemingly clear-eyed view is written by David Robert. Robert appreciates the paper, but disagrees strongly with the dividend idea.

The premise of cap-and-dividend is that the government will steadily ratchet up the price of everything you buy — gas, food, plastic gewgaws, everything with carbon energy in the supply chain — and in exchange, cut you a check that makes up the difference. Will that appeal to the American public?

Why did cap-and-trade fail? Because of filibuster abuse. That’s the simplest and most directly causal answer. Enviros had business and public opinion on their side. They had majorities in both houses of Congress on their side. That’s a lot! And it ought to be enough. But the bill failed because, unlike every other democratic institution in the damn world, including state legislatures, juries, and the judge’s panel on American Idol, the U.S. Senate now requires a supermajority. And that’s in an institution that is already corrupt, in which rural and fossil interests are already overrepresented, in which money is ubiquitous. It’s just an impossible bar to clear.

He also points out that, while the power of the Tea Party in the Republican rank-and-file was obvious to Skocpol, it was far from clear to everyone else in the world, even Republicans in congress! As he reminds us, Skocpol has literally written the book on the Tea Party and therefore is a little more aware than even your average political science professor.

Finally, Theda Skocpol responds, reiterating her points and re-emphasizing that the climate groups can not ignore the financial hardships of normal people.

So what do I think about this?

Well, I think it is incredibly important to look back at this, as disheartening as it is. It seems like 2009/2010 was the last chance in 10 years to get a law passed, and it’s frustrating to see what could have been done differently. It does seem like the green movement is pretty divorced from regular people, and the cost of mitigating climate change does seem to be borne by low-income Americans, even if it is a positive bet in the long run for everyone.

One aspect that I don’t think Skocpol looks at is that, in the health care debate, there was a more extreme liberal position that Republican legislators and the public could compare the bill against: the public option.

It was clear from at least the public liberal grumbling (yours truly as one of the grumblers) that Obamacare was not the most liberal option out there, not the most “big government” you could go. Thus, a legislator could say that “well, something was going to get passed, and while I’m not happy about all of Obamacare at least we kept the public option out”, and cover their ass [example needed]. Perhaps there could have been a far more drastic Carbon Tax on the table to push the ‘Overton Window’ and make Cap and Trade look like the reasonable compromise that it is. I also think that the dividend route has promise- if you can spin the fossil fuel companies as hurting everyday Americans to line their pockets (which is how it works – asthma rates, anyone?), I think people will respond very favorably to 100% even distribution of the auction proceeds amongst Americans.

Unfortunately, I don’t think any of the ideas above would have been enough in 2009/2010 – the rise of the Tea Party, the pain of the economic downturn, the lack of interest by the Obama administration, the stranglehold of rural and fossil-fuel interests in the Senate, all of these were powerful enough to make a failure seem inevitable in hindsight. I do think it was unfortunate timing, and I agree that these conditions will never exist again (if they even did exist for a moment).

Hopefully we’ll get another chance. I see Robert’s analysis of how impossible reform is in the Senate and think about the new voter ID rules and despair. Perhaps a national campaign to make Voting Day a federal holiday could help overcome the bias toward moneyed interests and low voter turnout that allows Republican primaries in moderate districts to determine the course of the entire nation. That’ll happen right after Republicans sing kumbaya around the Maypole…

In any case, I’m glad 350.org exists and I hope groups like OrganizeMO are able to help counteract the massive marketing machine driven by the fossil fuel interests in the states that actually have a say in our legislation. It is also heartening that California can start driving these changes by itself- since it is large enough, it’s a good testing ground for policies that hopefully can be rolled out quickly nationwide.

The post What went wrong in climate legislation in 2009/2010 appeared first on Schimmy's Thoughts.

This post will show you how to use these tools to automatically monitor any web page to notify you when there are changes you might be interested in.

The steps to monitor any page are:

1. Identify what changes on the page, and what keywords always are present during the change
2. Create a Page2RSS for that page
3. If simple enough, subscribe with Feedly. If not, create an IFTTT that filters based on one of the keywords and send to Feedly.

At step 3, you can also email yourself with a change, post to twitter, etc- anything that you can do in IFTTT.

Quick question, Colin: what does all that jargon mean???

Yes, there are some new terms here. Let’s make a quick glossary:

RSS feed: a way to organize updates to websites in easily-automatable and simple, bite-sized chunks

Page2RSS: An awesome web service that checks in on a page every now and again and packages the difference between the versions of the website into an RSS feed

Feedly: A service like (the now dead) Google Reader which you can use to collect items from RSS feeds. It takes care of reading the RSS feed and presenting the update in a human-readable form.

IFTTT: “If this then that”, a simple service that can hook together parts of the internet to make you a super-activist. It is worth learning this tool very well.

What you’ll need:

• An IFTTT account, with the ‘Email’ and ‘Feedly’ channels activated
• A Feedly account or an email account
• A Page2RSS account (optional, but useful to organize)

Workflow:

The examples below follow these three tracks. The simplest is subscribing to all changes to the page using Feedly, while the most complicated is using IFTTT to filter out only the changes you want to be notified by. Don’t worry, once you get the hang of things it’s really very simple!

Examples:

Herman, MO – simple any change to page and email:

In this case, we are just checking for any change to the city council page, and we want an email any time it changes. This represents the  yellow track above.

Here’s the Herman, MO page:

We want to be notified of any change to this page. Let’s first turn the page into an RSS feed, using Page2RSS:

(If you install the Chrome extension you can cut down your manual work even more – log into Page2RSS and download the extension to boost your productivity!)

Now, if we want to just add this to our Feedly stream, we can just click on the ‘Feedly’ button on that page and we’re done! This is the purple track in the workflow above.

However, for this example, we want an email every time this page changes. Click on the ‘RSS’ button and copy the url:

Now head over to IFTTT. Let’s create a new ‘recipe’ choosing the RSS ‘channel’. The icon looks like this:

We can paste the URL saved from Page2RSS into the creation box:

IFTTT is a tool that allows you to automatically take action without human intervention. You can specify different ‘Triggers’ which then kick off ‘Actions’. If <Trigger happens> then <Take action>. “If this, then that”. In our case: “If the RSS feed is updated, email me”. So choose the ‘Email’ Channel for our ‘Action’. You will then see:

There will be some confusing text already entered into this page for you. Don’t delete what’s here but:

1. Add a subject that makes sense to you before the “EntryTitle” text in the subject line. In this case, I added “Herman, MO City Council”
2. Make a link directly to the city council page in the email- this will save you time later

Click ‘Create Action’, and you’re done! Whenever that page changes, you’ll get an email. This is the yellow track in the workflow above.

Columbia, MO – filter by ‘Minutes’ and post to Feedly:

I want to know when the minutes from the latest city council meeting of Columbia, MO, are updated. In this example, I’ll show how to only alert when the page changes in a specific way. I will also have the update post to Feedly instead of emailing. This is the red track in the workflow above.

Let’s take a look at the city of Columbia, MO:

We can see that there are three likely items that change on the page on a regular basis:

1. New meeting dates (e.g. December 16, 2013 | Columbia City Council Regular Meeting)
2. Agendas are posted, as a link with the word “Agenda”
3. Minutes are posted, as a link with the word “Minutes”

Let’s say we only care about when minutes are posted, so we don’t want to just subscribe to any changes on the page.

First we grab the URL and go to page2rss.com:

Press the ‘to RSS’ button, and you should see:

Great. If we wanted to just subscribe to this feed, we could click on the “Feedly” button on this page (the purple track). However, in this case we don’t want an update when Agendas or future events are posted, so we need to grab the RSS link and head over to IFTTT. You can press the ‘RSS’ button in the “Subscribe to Feed” section and copy the link:

Head over to IFTTT.com and create a new ‘Recipe’ using the RSS ‘Channel’:

Choose “New feed item matches”

We’ve completed the ‘this’ portion of IFTTT, now we need to make the ‘that’ action:

Let’s choose to publish to Feedly, although you could also have it send you an email you, tweet at you, text you, whatever you want!

Choose “Add new source”, and perhaps edit the URL to make it easier for you to read. In this case I added ” – Columbia City Council – Minutes”:

Finally, accept the new recipe, again perhaps changing the ‘description’ field to be a little more human-readable.

That’s it! Whenever the Columbia, MO city council updates their minutes, a post will appear in your Feedly stream.

You now only need to look at your Feedly page to see which city councils have updated their minutes- no more clicking though to each town and scanning the site to see if there’s been an update.

Conclusion

Using Page2RSS, IFTTT, and Feedly/Email, we can automate away some of the most tedious parts of activism. This helps you stay on top of any situation more quickly, and saves you time to work on more important things. Share this with your fellow activists- let’s use technology to improve our reach for the same amount of effort!

If you have any questions, please comment below- I’d love to have feedback on how to improve this guide.

The post Automated monitoring of web pages using Page2RSS, Feedly and IFTTT appeared first on Schimmy's Thoughts.

I was recently telling a friend that he should consider investing via the Mosaic platform, a sort of crowdfunding platform for solar installations. Similar to Lendingtree or Prosper, investors see vetted projects with varying rates of return based on the riskiness of the loan, as determined by Mosaic. Mosaic takes a 1% cut, as well as origination fees for the loans, while providing risk analysis, paperwork / regulatory help to the borrowers, and a snazzy web platform for investors to analyze possible investments.

When I was explaining this to my friend, he started asking more detailed questions about how it works – who actually is getting the checks, who is liable, what happens when a loan goes bad, etc. I then realized when I couldn’t answer all of his questions that I had forgotten to do proper due diligence! The social benefit of the investments and the positive mentions of the platform was enough for me to start investing, but if I was going to recommend it, I had better know what I was talking about. So here’s my analysis, after reading a few prospectuses and the fine print. Any corrections or clarifications are very welcome.

Pros:

• Higher rate of return than your bank account, between 4ish and 7ish percent compared to 1% in your savings account
• Positive social impact, which will come back to you as ‘dividends’ in a world in which we invade fewer oil-rich countries and fewer mountain tops are blasted off for coal. If you are looking very-long-term, climate change must be dealt with for human society to be prosperous in the future
• Stocks are likely overpriced currently, or at the very least expecting 8% returns YOY is optimistic
• Small investments down to $25 are possible, which is convenient especially when you want to reinvest your interest payments
• You probably have lots of stocks and lots of cash, but few bonds (if your portfolio looked like mine before investing in Mosaic-selected loans) – diversify a bit!
• Impress possible significant others with your commitment to the environment. Although maybe not the best thing to bring up at a party…
• Mint.com integration is on its way

Interesting and Important Risks:

• Mosaic is the middleman- it has no obligation to repay in a default situation
• That inflation will rise drastically from the ~2% now to over the return of the bond in the time before bond maturity. However, this is very unlikely especially given that such inflation is not desired by Wall Street
• There is little governmental oversight. From the prospectus:
  

  “We are not subject to the periodic examinations to which commercial banks and other thrift institutions are subject. Consequently, our financing decisions and our decisions regarding establishing loan loss reserves are not subject to period review by any governmental agency. Moreover, we are not subject to regulatory oversight relating to our capital, asset quality, management or compliance with laws”

  (how the hell do they get away with that? good job, sirs)

• In the case of a default, the things you can grab on the way out (aka as collateral) are very limited: only the solar capital equipment is allowed as collateral, which is something that probably quickly depreciates especially with new tech coming out all the time.
• Mosaic can charge max(35% of the recovered funds, lawyers fees) in an attempt to regain funds in a default situation
• Early repayment can happen without penalty by the borrower, however given the low interest rates currently, this does not seem like a big deal
• Mosaic itself could go bankrupt, and that could make things very complicated. However the funds are probably safe from seizure in that case as the loan is technically between you and the business, not with Mosaic. See Mosaic’s assertion.

Annoyances:

• Mosaic takes 1% of cash sitting around in the account more than a month as well as the 1% from the loan– as payments slowly trickle in from investments it is annoying to have to clear that cash out each month. My other investment account actually gives me interest on the cash stored there (a pittance, but it keeps you happy to have cash sitting in their system and is probably a smart move long-term).
• The terms of the loans are generally around 10 years, a very long time! However ultimately this may be a good thing- short term financial outlooks are part of the reason why the Global Financial Crisis happened, and I figure if I ever screw up too badly in the next 10 years I’ll at least have a little bit of income coming in that I can’t easily raid for beer money.
• The constraints on who can invest (set by the government) mean that you can’t really recommend it to people outside of CA or NY unless they’re a ‘qualified investor’. Even in CA and NY you can’t invest more than a small fraction of your wealth (although you shouldn’t put more in yet anyway!). Unfortunately Mosaic is not covered by the JOBS act, either, so smaller investors in other states probably won’t be able to contribute for a while.

Open Questions:

• There is one item in the prospectus that I am particularly confused by:
  

  “You will not receive any payments we may receive after the final maturity date of your Note.
  The Notes will mature on the initial maturity date, unless any installment payments in respect of the corresponding Loan Obligations remain due and payable upon the initial maturity date, in which case the maturity of the Notes will be automatically extended to the final maturity date. If we receive any payments from the Borrower after the final maturity date, we may retain 100% of these payments and will not be obligated to distribute those payments to you.”

It seems as though the extension of the maturity date would cover all cases in which you would have a claim on the funds paid by the borrower… perhaps this is just cover-your-ass-legalese?

• What happens if the solar panels get destroyed?

I invested in the solar panels on the Wildwood Convention center in New Jersey, and I can easily see Hurricane Sandy v2 coming by and knocking them out. Wildwood would still have to pay off the solar panels, but how easy would it be for them to declare bankruptcy and shed their responsibility in that case? I did see in the FAQ that Mosaic ensures that there is proper physical capital insurance to handle this, but perhaps in a catastrophic event that coverage would not be sufficient. This also seems like one of the first corner-cuts that Mosaic might do if they desperately needed the revenue. See Mosaic’s take on the issue.

Also there is one open question which can not be answered currently:

• What is the default rate of commercial loans for solar panel installs?

There is a very small default rate for residential installs, but since no one has done this kind of program for a long enough time or for commercial properties, there is very, very little historical data about default rates for the types of loans Mosaic is facilitating.

Analysis:

I’m still definitely pro-Mosaic, and will suggest it to anyone living in CA or NY who is looking for a long-term place to park their cash which will give better returns than a savings account or a CD. I would still advise the person to realize that the cash is locked up for a while, and that since these types of investments are somewhat experimental they should only invest < 10% of their wealth in them, if not less.

Essentially, I see it as a relatively safe investment for the benefits, particularly for California projects. Suppose a business installs solar panels on their roof and goes out of business. Likely the buyer of that commercial property will also undertake the loan on the solar panels- after all, the solar investment was a good one at the beginning of the loan term, halfway through the investment is just as good. This calculus would only change if the price of solar electricity decreased in CA, which I really don’t see happening – we love our green energy subsidies! Since the money coming in from PG&E is pretty steady in the next 10 years, and inflation is likely to stay within a percentage point of 2% in that time as well, I feel comfortable signing up for the long term.

The list of risks is long, but much of it comes down to trust in Mosaic and in the business that they are trying to create, which Mosaic seems to understand. In a not-well-developed and somewhat experimental market, they need to do what it takes to gain trust in both the company and the investments offered. As such, their diligence on credit-worthiness is probably going to be less motivated by the short term, and more focused towards building a trusted business and keeping the stinkers out.

Additionally, I think that overall the incentives are properly aligned. They do make a good amount from origination fees, which means that the company also does have an incentive to push less-than quality loans out the door, however the 1% loan lifetime cut of the loan means that Mosaic also has skin in the game. The returns from seeing a project to completion are more than the origination fee, and the ‘business-building’ incentive to keep the quality of loans high is a strong force.

TL;DR:

Mosaic is a good, experimental investment with a definite social good and a positive fiscal return. Since it is still experimental, only put a small fraction of your wealth into Mosaic. Given how much you’ve probably put into bitcoins, you probably can spare enough to test this out ; )

The post Is investing in Mosaic a smart move? appeared first on Schimmy's Thoughts.