What We’re Reading
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.
CHESAPEAKE REQUIEM: A YEAR WITH THE WATERMEN OF VANISHING TANGIER ISLANDS
By Earl Swift
Review by Sean Keller, Associate – Portfolio Management
Life in the town of Tangier, Virginia, has never been easy. Early 1800s Methodist inhabitants prayed for an afterlife free of island hardships. Today, the roughly 450 residents of Tangier are praying to be able to continue to withstand these hardships in their homeland. In the last ~160 years, Tangier has lost two-thirds of its landmass, with experts predicting Tangier can be uninhabitable in as few as 20 years. They are desperately trying to avoid becoming the United States’ first climate refugees, as their island shrinks due to sea-level rise, erosion, and post-glacial rebound (a.k.a. sinking). The residents of Tangier are primarily commercial watermen. Their livelihood depends on the water, and now water is what is threatening their everyday lives.
In Earl Swift’s New York Times best-selling book, Chesapeake Requiem: A Year with the Watermen of Vanishing Tangier Islands, Swift reports on his roughly two years of life on Tangier, on and off from late 2015 through 2017. He tells the story of Tangier’s townfolk on a person to person basis, using one-on-one interactions to provide a unique look into both the history of the island and the daily life of its people. Swift goes into tremendous detail in relaying both his own experiences on Tangier, and the rich stories the Tangier Island residents reveal. This apt usage of colorful dialogue and vivid storytelling makes for an enjoyable and page-turning read.
One of the more powerful notions portrayed in the book is the notion that with formerly inhabited areas now covered by the sea, Tangier residents are literally and metaphorically stepping into the past, while also seeing into their future. You do not have to look very hard to quickly learn that Tangier has a very religious and conservative population, with roughly 87% of the population voting for Donald Trump. Many residents do not believe in climate change, and while Swift does, he presents his opinions about Tangier in a far more unbiased way than others who have chronicled the plight of the Island and its people.
I split my consumption of the book between the print copy and audiobook, which is narrated beautifully and is equally enjoyable as the written version. In sum, Chesapeake Requiem offers a poignant and deeply personal glimpse into a community on the front lines of a climate breakdown that will eventually reach everyone, indifferent to whether they believe in the science and urgency of the climate crisis.
More From Less
By Andrew McAfee
Review by Chaz Gladden, Analyst – Portfolio Management
In an age where environmental “doomsday” scenarios have become increasingly common, it was refreshing to read McAfee’s optimistic perspective on the future of humankind.
The book takes the reader through various catastrophic views in our history, including the theories of Robert Malthus on population fluctuations, William Jevon’s fear of resource depletion (a.k.a. Jevon’s Paradox), and Paul Ehrlich’s belief that global famine was an inevitability.
In McAfee’s view, the common denominator in the fallacy put forth by these peddlers of catastrophism is that they grossly underestimate the power of human ingenuity. It is this ingenuity that has led to technological innovations such as the steam engine, vaccines, computers, and more. McAfee argues that capitalism is the main driver behind these innovative technologies which have significantly improved the human condition.
Another great example McAfee provides is the aluminum can. Amazingly, when the aluminum cans were first introduced to the market in 1959, they weighed 85 grams. In 2011, aluminum cans only weighted 13 grams. This continued effort to drive down costs in the United States is a big reason why the nation is past its peak resource consumption but producing more than ever before.
Later in More from Less, McAfee goes on to contrast the relative efficiency of capitalism with the inefficacious economic philosophies of socialism and communism. The most startling example of this is highlighted by the ghastly overhunting of whales done by the USSR, which helped drive the humpback whale to near extinction. The Soviet Union had little economic use for the whale, as often the dead whales were simply thrown back into the water. This overhunting of the whale was simply an unscrupulous way of meeting the fishing quotas set by central planners.
While McAfee does an excellent job guiding the reader through the history of dematerialization, the book left me wanting more from the “What Happens Next” notion expressed in the subtitle. For example, McAfee proposes nuclear as a potential long-term energy solution but does little to detail how nuclear will be able to overcome the safety and waste management concerns. Instead, he writes off nuclear’s lack of widespread implementation as something primarily due to the irrational fears of the public. In general, McAfee’s view on the future could be summarized as: smart people have figured out solutions in the past, and if adequately incentivized, the intelligent people of the future are bound to find solutions in the future. Personally, I think that this mindset can be dangerous in that it often leads to apathy and inaction.
While the analysis of the future is a bit limited, More from Less is a well-written and thought-provoking book that I would recommend to anyone who would like solace in these uncertain times.
Drawdown: The Most Comprehensive Plan Ever Proposed to Reverse Global Warming
By Paul Hawken
Review by Gil Jenkins, Director of Corporate Communications
Edited by the longtime environmental advocate, entrepreneur, and author, Paul Hawken, Project Drawdown: The Most Comprehensive Plan Ever Proposed to Reverse Global Warming, is a wide-ranging and mostly approachable collection of short essays from leading scientists, researchers, and policymakers.
The title of the book refers to the atmospheric point where greenhouse gas emissions peak and begin to decline year to year. Using this notion, Hawken’s Project Drawdown team of 70+ research fellows and a related coalition of scientists, policymakers, students, activists, philanthropists, and investors have aimed to identify, measure, and model the 100 most substantive climate solutions that our society could accomplish by 2050.
80 of the 100 total solutions in the book, (which was first published in 2016, and updated online at drawdown.org are organized into chapters covering energy, food & women, buildings & cities, land use, transport, and materials.
Importantly, the actions listed among that 80 are concrete approaches that are already taking place across the globe today – many of which will surprise the reader both in terms of ingenuity and practicality. There’s also a bookend chapter of “coming attractions” that highlights 20 more climate solutions that could be game-changers in decades ahead but aren’t quite ready for prime time today.
In interviews, Hawken has talked about a sequel that would offer 60 more coming attractions. That sounds great, but I wonder if that’s necessary, given the diversity of the 100 solutions already laid out here, which deserve further analysis and modeling.
While I wish this book was published 30 years ago, it’s still an incredibly valuable resource for the times we live in. It’s very easy to go to that dark place if you’re a regular climate news consumer. And if you find yourself that camp occasionally, as I do, Hawken’s book does deliver a steady dose of optimism. You get the sense that “humanity is on the case and humanity is brilliant,” as Hawken remarked on an episode of Real Time with Bill Maher while promoting the book.
As I read Drawdown and reflected on my own time working on clean energy, climate policy, and corporate sustainability issues, it was valuable to garner digestible new insight on both the prominent and relatively unknown clean energy technologies that I’ve endeavored to promote at various points in my communications career. It was pleasing to see chapters devoted to unheralded but novel solutions – such as the section on smart glass, or “transition lens, except for buildings” as I use to tell folks.
Given what we do at Hannon Armstrong – climate solutions investing – it was encouraging but not surprising to see many top-ranked solutions where we currently have a financial stake. In the energy chapter, these investment interests include onshore wind (#2), energy microgrids (#78), rooftop solar (#10), solar farms (#8), energy cogeneration (#50), grid flexibility and energy storage (tied for #77). Under land use / And in building & cities, we’ve got a stake in net-zero buildings (#79), retrofitting (#80), green roofs (#73), LED lighting (#44), heat pumps (#42), and building automation (#45).
In chapters where our firm isn’t currently invested, such as food & agriculture, it is surprising to learn that food waste is the number three solution overall. In this chapter, I was also pleased to see the inclusion of what is probably the best available primer on regenerative agriculture as a practice (#11) – a solution that is getting a bit more visibility now having popped up during a recent Democratic Party presidential primary debate.
The chapter on transport offers the least amount of surprises for me personally, although I was surprised that electric vehicles weren’t ranked higher than the number 26 given their dominance in the conversation around low-carbon solutions.
Drawdown isn’t without flaws. Critics have rightly pointed out the gaps in the measurement approach – namely that it does not consider the physical and economic interdependence among the top 80 solutions, such as access to capital and resource scarcity from growing demand.
However, Hawken and the Project Drawdown team that put this together have readily acknowledged that their work will continue to evolve and adapt to any perceived inconsistencies. They see this entry as just the “tip of the iceberg”. And I find that kind of ambition in service of educating the world about carbon reduction pathways laudable.
Despite a few limitations, Drawdown remains one of the few books out there which focuses more on solutions than the doom and gloom apocalyptic narrative of climate change.
Drawdown offers a necessary injection of hope for avoiding the worst impacts of climate change. And if you are a curious soul seeking a reference guide on how to solve global warming, this book is for you.
Superpower: One Man’s Quest to Transform American Energy
By Russell Gold
Review by Susan Nickey, Managing Director
So close, but yet so far is the sentiment that kept popping into my mind as I pored over this heart-wrenching documentary of an ambitious quest by a renewable energy pioneer and visionary to transform the energy landscape in the U.S. Superpower deftly chronicles the history of the utility-scale wind industry in the U.S. from an alternative small “green weenies” group (1-2% of the energy mix) to becoming a mainstream, competitive energy source with fossil fuels and a solution to meaningfully address climate change.
The author, longtime Wall Street Journal energy reporter Russell Gold, offers a historical framework of regulatory policies that have both promoted renewable development and thwarted the transformation of our grid powered predominately by renewables. In doing so, readers are left with a deep appreciation for the role policy leadership plays in the eventual outcome.
Gold’s background sets the stage to introduce the grand vision of Michael Skelly and his quest to build a new transmission superhighway system to connect the country’s best renewable energy resources to areas that demand a lot of power — in the most cost-effective way possible. The story of Skelly’s company, Clean Line Energy, highlights what is now technologically and economically possible for private sector investment in a modern grid infrastructure desperately needed in America. While time ran out for Clean Line, the groundwork laid provided a critical path forward that others will undoubtably follow. Moreover, the lessons we learned from this episode will be essential to overcome the remaining roadblocks thwarting our clean energy future.
I was moved by the very first introduction of Michael Skelly, the protagonist of the story, and his inspiration to do something about climate change with an ambitious plan to change the U.S. transmission system. Gold writes entertainingly about Michael’s background as he entered the U.S. wind industry in 2000, learning what it takes to be a successful developer, and to be profitable at it! Michael led Horizon Wind (and its predecessors) as the Chief Development Officer at the beginning of the U.S. wind industry business until it was sold to EDPR Renewables for over $2 billion in 2008, then the second-largest wind power company in the U.S.
Reading these passages took me back to the time when I was working in the U.S. wind industry as an investment banker in the late 90s. I still remember when Michael first called me looking for tax equity solutions – a desert at the time before JPMorgan entered the market.
As the book unfolds, we learn more about the incredible tale of Clean Line Energy Partners. Wind power was now becoming mainstream, reliable, and economical, but the transition to a meaningful renewable energy supply requires a new transmission system – billions of dollars of infrastructure investment. Knowing the best wind resources in the U.S. blow in sparsely populated places like the Oklahoma Panhandle while the large demand centers are far away, Michael saw the novel solution of an interstate transmission system. The analogy is drawn between the interstate highway system built with vision and federal eminent domain powers and its transformation from the intrastate, local highway system for road travel. Gold’s approach helps the reader visualize the problem and opportunity with our current outdated transmission system. A key difference, which would seem to be positive, was Michael’s vision to build this infrastructure privately and profitably. I can personally attest that when Michael surveyed the wind industry and financial leaders – “is this crazy?” – there was an acknowledgment of the huge challenge, and at the same time, it spurred new thinking about how to participate in a strategy to overcome the problems that would come up. It’s a strategy that if successful, would brilliantly address the opportunity to capture the abundant wind resources in the middle in the country.
The human, political, and economic capital invested in Clean Line’s strategy is a testimony to the viability of the grid transformation strategy we need in this country. And the heart of the issue lies with the Founding Fathers’ compromise to form our government – and the classic tension between federal vs. state powers. Given that climate change issues cut across all state lines let us hope this book is a wakeup call to rally for a greener future which is technically feasible, and economically profitable.
I loved how the book’s title was chosen to refer to people like Michael Skelly who think big and have the inspiration and drive to tackle the biggest challenges of our time, while persistently overcoming obstacles.
Michael, like the people in our company, share a commitment to showcasing how business can tackle climate change while generating a positive capital return. Many of us have devoted our careers (long or short) to create a virtuous cycle between capital and climate action. And despite these setbacks, the promise of clean energy chronicled in Superpower illustrates the vital payoff.
Amity and Prosperity: One Family and the Fracturing of America
By Eliza Griswold
Review by Jeff Lipson, Chief Financial Officer
At the core of this well-written, non-fiction story is several themes. As with the 2016 best-seller Hillbilly Elegy, Amity and Prosperity provide a thoughtful glimpse into life in Appalachia (Amity and Prosperity are two towns in rural Washington County, Pennsylvania). Another theme is of an overwhelmed single mother relentlessly attempting to determine the cause of her son’s persistent illness, which she is certain is the result of the nearby fracking pond dug by Range Resources. A third theme is government agencies at all levels failing to provide any support to a citizen in need of its services, but rather providing indifference, incompetence, and often the support of the large energy company.
The book does not deviate into any lengthy descriptions of fracking and energy policy but is focused on the human toll of energy extraction.
Stacey Haney is the book’s protagonist.The reader immediately embraces Stacey as a small-town nurse, daughter of a Vietnam veteran, and mother of two, who loves living on a farm enjoying her children participating in small-town rites-of-passage such as showing their goats at the 4-H fair. As the book begins, Amity is at the center of a fracking boom. The townspeople have two attitudes toward fracking – it’s patriotic as it reduces reliance on foreign oil and creates jobs, and it’s an opportunity to cash in as the historical perspective is that coal was extracted from local land, but the community never participated in the profits.
Stacey and her neighbor Beth Voyles readily sign drilling leases, although the reader cringes as Stacey and Beth are ushered into an office at 4:30 p.m. without legal representation to sign their leases. Problems with noise, dust, air quality, and most notably water quality begin almost immediately; and Stacey’s son Harley becomes severely ill missing an entire year of school.
Stacey begins an incredibly long, complex, and frustrating journey of attempting to obtain clean water, keep her home, battle Range Resources, and secure the assistance of government agencies. She is relentless but facing impossible odds as she encounters the corporate/energy/regulatory structure that has too many entrenched resources. Even many locals see her as a “trouble-maker” and a risk to their fracking profits.
Stacey is joined in this mission by Kendra Smith and incredibly diligent small-town lawyer. With a relentless work ethic, Kendra uncovers shocking hubris and fraud. She battles Range Resources, the Pennsylvania Department of Environmental Protection, and various other corporate and regulatory entities. She solicits the assistance of the EPA and Justice Department, both of which shockingly fail to act.
Ultimately, the complex relationship between government and Appalachia is an interesting backdrop of this story. Ironically, Washington County is home to the Whiskey Rebellion of 1791-94 in which locals tar-and-feathered the tax collector of Alexander Hamilton’s whiskey tax. President Washington sent 13,000 federal troops to quash the rebellion in the young country’s first test of its willingness to enforce federal laws and utilize federal troops against its citizens. Two hundred and thirty years later, rural distrust of government remains an important component of small-town life, particularly as related to energy policy. In discussing federal regulation, one Amity resident claims “people from Philadelphia and Pittsburgh are bottom-feeders who don’t want to know where their meat or energy comes from.”
The human toll of fracking and other energy extraction, particularly in areas primarily populated by persons of limited means is a thought-provoking and long-standing challenge. Amity and Prosperity causes one to confront these issues in the context of a struggling but relentless small-town woman. This book will cause you to cheer for Stacey with all your heart, and perhaps re-think your impression of Appalachia and energy policy. For all these reasons, an excellent read.
Enlightenment Now: The Case for Reason, Science, Humanism, and Progress
By Steven Pinker
Review by Jeff Eckel, Chairman and 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!
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 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.
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
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.
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.