What We’re Reading

2019 Hannon Armstrong Reading List Collection

The books lining our shelves help us to reflect on our core values and our ongoing engagement and connection with the world we all share. On a monthly basis, we gather to share insights on selected books that relate to our investment thesis, the economics, the politics, physics, and the reality of climate change.

enlightenment now book cover photo

Amity and Prosperity: One Family and the Fracturing of America

by Eliza Griswold

Review coming soon

enlightenment now book cover photo

Enlightenment Now: The Case for Reason, Science, Humanism, and Progress

by Steven Pinker

Review by Jeffrey Eckel, CEO

Oh, to be an author and have Bill Gates call your work “My new favorite book of all time.” Pinker writes a vast survey of the human condition and finds it in the best shape it has ever been. From life expectancy, health and decline of diseases worldwide, to peace, democracy and human rights, data is convincingly presented to support the conclusion that people, and society have never had it better.

The first section of the book is a refresher of the Enlightenment, when reason and science triumphed over blind faith in religion, particularly it’s human purveyors. It encouragingly contains a prominent review of the Second Law of Thermodynamics the “foundation of the universe and our place in it” and quotes Eddington who calls it “the supreme law of nature.” My entire four-decade career has been focused on the 2nd Law, since a Geography of Energy course as a junior in college. It underpins one-third of our investment thesis and is the foundation of energy efficiency, our largest business. How promising!

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The second and largest part of the book focuses on the spectacular improvements in 13 dimensions of the human condition and one, chapter 10, in the middle of the section, on the environment. This is the first sign that he might also need to focus on the First Law of Thermodynamics, energy in a system is a constant, as well as the Second. How did so many good things happen to humans? What is the source of this bounty? Physics requires balance in the system. Pinker does not. Rather than sticking to the good start of integrating the 2nd Law into the progress of the human condition, he separates it and then needlessly enters a diatribe on the long history of environmental alarmists from the first “Limits to Growth” to Naomi Klein bashing. He ignores the possibility that the environmental issues, that were perhaps overstated in hindsight, might also have substantial elements of truth. He concludes “But resources just refuse to give out”, forgetting the Second Law, that there is entropy (e.g. excess CO2) in the resources that ‘refuse to give out’. Pinker believes climate change is serious and must be addressed now and has useful solutions (carbon pricing, nuclear power and even ‘moderate’ climate engineering). But somehow it sits awkwardly outside of the other 13 chapters, as if it can be separated.

The final section is a plea to return to reason, science and humanism, set against the modern complications of dogmatism, digital information explosion and unprecedented complexity in everything. He surveys a lifetime of reading suggestions, convincing me that I can learn much from more study of this section. In the end the plea to ‘apply knowledge to enhance human flourishing’ is of course compelling.

In an email correspondence with Pinker last summer, I congratulated him on the book and suggested he could improve the second edition with a more integrated consideration of the Second Law. He referred me to the orphaned Chapter 10. I will send him the link to this review and see if I can’t get him more engaged. I’m no Bill Gates, but that doesn’t mean this compelling book can’t be improved.

modernizing americas electricity infrastructure book cover photo

Modernizing America’s Electricity Infrastructure

by Mason Willrich

Review by Bessie Clark, Director – Private Investment Team

Willrich proposes a comprehensive national strategy to modernize the electric grid sustainably, affordably and reliably. He is the first to detail a coherent framework, and in doing so thoughtfully considers the vast complexities of our critical infrastructure across multiple stakeholders, participants and jurisdictions.

In Part I “The Past”, Willrich guides readers through the history of the grid, from the invention of the lightbulb through the evolution of today’s regional power markets. Willrich explains the key industry-shaping events over the 140-year history of electricity, including Three Mile Island, enactment of PURPA, collapse of Enron, and the creation of IPP model.

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Part II, “The Present” offers a snapshot of the U.S. electric power sector in 2015, including resource mix, ownership, and regulatory regime. This sets the stage for Willrich’s recommendations in the final section, Part III, where he lays out a vision for the future of the electricity grid. Willrich’s strategy focuses on four overarching principles – reliability, security, sustainability, financeability – and concludes with 15 detailed recommendations for putting a transformative plan into action.

Of particular interest is his suggestion that intensive financial oversight will be required for modernization of the grid, to avoid excessive leverage and address high technology and market risks. Here I think he misses the mark and believe the analysis would benefit from further discussion of the critical role that private sector financing will continue to play in achieving grid modernization.

For anyone in the energy industry, this is a must-read that offers valuable context for the evolution of the grid, acts as a guide to its regulatory complexities and, most importantly, provides a foundation for understanding the immense opportunity that lies ahead.

energy and civilization a history book cover photo

Energy and Civilization: A History

by Vaclav Smil

Review by Tyler Broyles, Manager – Accounting 

Over the course of 440 pages, Vaclav Smil takes readers from humanity’s first application of energy – using campfires for cooking – through the many advances on the path to our modern electrified world.

Rather than limiting his discussion to high-level sea changes, Smil explores a host of incremental advances that humans have used to harness energy, including detailed sections covering improvements in plows and harnesses as well as the transition from undershot-style to overshot-style waterwheels.

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As you might expect, this makes for a dense read. Thankfully, Smil provides a variety of graphics to bring the story to life – including charts and drawings of the various industrial mills and machines. As the story unfolds, Smil provides a keen analysis of the industrial era and the 20th century, highlighting both the increase in the availability of energy and our ability to use it efficiently. While several of the examples such as lighting and transportation are quite obvious, Smil also dives into the less familiar but equally impactful ways we’ve put energy to work over the years – such as Haber-Bosch ammonia synthesis, which is employed in fertilizing a large portion of the planet’s crops. By not limiting the discussion to Western Europe and North America in this section, Smil deserves extra credit for his broad geographic and cultural focus.

While the majority of Energy and Civilization is a well-researched matter of fact historical readout, Smil chose to editorialize more in the final chapter when highlighting the carbon crisis and his appropriate fears for the future. However, Smil does not devote many pages to what he believes the answer is to this growing problem. While it’s reasonable to assume this is may be outside the scope of an already voluminous work, one can’t help but be curious of the author’s views on possible solutions given his vast knowledge on the subject at hand.

In closing, Smil emphasizes that change comes gradually and that various eras of energy production generally overlap, pointing out that draft horse usage in American agriculture did not peak until 1917, well after coal began to rise. We know that to meet the goals of the Paris Climate Accord, we will need to transition to new, cleaner energy sources faster than we have been able to historically.

Despite the lack of emphasis on the future, Energy and Civilization is a thorough and intelligent text – a reliable resource for students of energy and history alike.