The Former Goldman Quant Taking On Climate Change

Now government adviser, Robert Litterman promotes steps to manage the risk of global warming

By Scott Patterson, The Wall Street Journal, May 8, 2020

When he managed billions of dollars for Goldman Sachs Group Inc., GS -1.62% Robert Litterman used sophisticated mathematical models to control risk. Now he is advising the government, and he believes it isn’t doing enough to avoid serious losses, including taking drastic steps to deal with the coronavirus pandemic.

The coronavirus crisis shows the cost of failing to properly assess risks. “It’s a perfect example of when you have a risk-management problem—it’s urgent, you don’t know how much time you have,” Mr. Litterman said. “With coronavirus, we wasted so many weeks.”

In his work with federal regulators, Mr. Litterman’s main focus is climate change. “We’ve got to slam on the brakes” on carbon emissions to stop climate change, he said in an interview. “It’s way past time.”

While he doesn’t invest for Goldman anymore, he is betting his personal cash that the world will more rapidly address the risks of climate change.

Mr. Litterman now chairs a group working on the risks of climate change for the Commodity Futures Trading Commission. In March, he testified before a congressional committee looking into the economic impact of global warming.

Mr. Litterman, who left Goldman a decade ago, told Congress that his analysis of the issue, partly based on models he used to manage risk in financial markets, shows failure to act quickly could result in a “tragic and potentially catastrophic mistake.” The way to offset that risk, he says, is to rapidly decrease emissions of carbon dioxide, a key greenhouse gas.

Rostin Behnam, the CFTC commissioner who launched the climate-change group, said he chose Mr. Litterman to lead the effort because of his “gravitas on financial markets” and experience in the economics of global warming.

One way to curb fossil-fuel emissions, Mr. Litterman says, is through a carbon-tax proposal named after two former Republican secretaries of state, James Baker and George Shultz. The Baker-Shultz plan envisions a $40 per ton tax that would increase every year by roughly 5%. Money collected would be returned to U.S. citizens at a rate of $500 per person a year.

A goal of the tax—which Mr. Litterman thinks might be too low—is to affect incentives for consumers, business owners and investors, possibly changing their behavior. A higher price for gasoline could prompt people to drive less, and they might purchase an electric car instead of an SUV. Businesses might switch to solar- or wind-generated electricity.

Incentives granted the fossil-fuel industry today, such as state-sponsored subsidies, are wrongheaded, Mr. Litterman said in his congressional testimony. They push investments in directions, he said, “that increase emissions, causing a growing accumulation of greenhouse gases in the atmosphere.”

He concedes that the current economic downturn likely makes a tax on fossil fuels politically unpalatable for the time being. “I don’t expect anything to happen before the [November] election,” he said.

President Trump has long played down the risk of global warming, at one time calling it a Chinese hoax. His administration has rolled back steps taken by President Obama to curb carbon emissions, such as restrictions on coal-fired power plants.

Mr. Litterman is putting his money where his mouth is. After leaving Goldman, he helped found a New York trading firm, Kepos Capital, that is planning a fund that will invest in assets related to a rapid transition to a low-carbon economy. The fund, whose launch has been delayed by the coronavirus outbreak, is based in part on his analysis of the need for action to quickly cut carbon-dioxide emissions.

In his personal account, Mr. Litterman says he owns a derivative constituting a bet that one basket of stocks—coal, tar sands and oil companies—will underperform the broader market. He says the stranded-asset total return swap has gained about 13% this year as oil prices slump world-wide. So-called stranded assets are fossil fuels some expect will be left in the ground as the world shifts toward renewable-energy sources, such as solar and wind.

Mr. Litterman, who is 68 years old, enjoyed a storied career at Goldman, working for a time alongside legendary “quant” economist Fischer Black, with whom he helped design a widely used model for managing assets. As head of a giant quantitative investment team that used mathematical models to buy and sell assets, Mr. Litterman helped manage billions of dollars’ worth of investments for Goldman.

In the late 2000s, near the end of Mr. Litterman’s 23-year stint at the New York firm, a former colleague asked him if he had given much thought to environmental issues such as climate change. The global financial crisis was still raging, and Mr. Litterman said he had other things on his mind.

After leaving Goldman, he began meeting with a variety of people in the environmental community, and joined the board of the World Wildlife Fund. He agreed about the risk of climate change but thought the potential cost wasn’t being properly calibrated.

“No one knew where to price the risk,” he said. “I took that as a challenge.”

He started applying methods he had used to assess risk in his many years of managing assets on Wall Street.

The problem with many conventional models of climate change, including other carbon-tax proposals, is that they factor too much certainty into future outcomes, according to Mr. Litterman. Because of that, they don’t apply a high enough price on carbon right now.

Instead, the models should take into account periods of extreme volatility in global circumstances—just like the stock market has seen in recent months. The world needs to do the same with climate change, Mr. Litterman argues.

A twist in Mr. Litterman’s model is that over time, as the tax influences behavior and as new carbon-free technologies are implemented, the levy on carbon should decline. But the longer the world waits to curb emissions, the longer it’s going to take to tackle the problem—and the outcome is going to be much worse.

“It’s just like Covid,” Mr. Litterman said. “The parallel is clear.”

Global warming to push billions outside climate range that has sustained society for 6,000 years, study finds

By Andrew Freedman, The Washington Post, May 4, 2020

Just like insects, birds and animals, humans have a particular climate niche, scientists have found, with 6,000 years of human history demonstrating how society thrives when we stay within it and the turbulence that ensues when it is pushed out of this zone.

In a stark new finding about the planet’s rapidly warming climate, a study finds that for every 1.8 degrees Fahrenheit (1 degree Celsius) of global average warming, 1 billion people will have to adapt or migrate to stay within climate conditions that are best suited for crop production, livestock and a sustainable outdoor work environment.

The study, published in the Proceedings of the National Academy of Sciences on Monday, breaks new ground by quantifying the temperature range society is most adapted to and projecting how climate change will push people outside it.

“What we have looked for is humanity’s sensitivity to warming, and that is about 1 billion people in trouble per degree [Celsius] of warming,” said study co-author and Dutch research ecologist Marten Scheffer of the Santa Fe Institute and Wageningen University.

Scheffer and his colleagues examined the history of global temperature, human population and land-use estimates from the mid-Holocene period, starting about 6,000 years ago, to 2015.

They found that people, crops and livestock have heavily concentrated in a narrow band of relatively constrained climate conditions. This range, referred to in the study as the human “climate niche,” has remained largely unchanged since 6,000 years ago.

Projecting into the future using a scenario with high emissions of heat-trapping greenhouse gases, the researchers found that the position of the human climate niche is projected to change more in the next 50 years than it has during the past 6,000. Such a shift would leave 1 billion to 3 billion people outside the climate conditions that have nurtured human society to date.

Because of recent trends and projections in greenhouse gas emissions, which are slightly less extreme, the shifts may not reach the highest estimates by 2070, but even a less aggressive emissions scenario would still bring about radical change.

The study, from a group of anthropologists, climate scientists and ecologists, is the first of its kind to show what the optimum climatic conditions for human society have been across the past millennia, and then to project how they will shift under various global warming scenarios.

According to the study, the optimum conditions for human society to flourish have a mean annual temperature of between 51.8 to 59 degrees Fahrenheit (11 to 15 degrees Celsius). For reference, the average annual temperature in Washington is 58.2 degrees.

The study also finds a second band of temperatures that coincides with the region that benefits from the Indian monsoon, which helps support billions of people in South Asia. The average annual temperature in that region is between 68 and 77 degrees (20 to 25 degrees Celsius), the study found.

Study co-author Tim Kohler, an archaeologist at Washington State University, says that while our technological progress has allowed us to settle virtually everywhere on Earth, and even in space, the study shows, “Our preferences (as opposed to our abilities) have long been for a rather narrow band of temperatures in which we typically have our densest numbers and greatest economic success.”

In the past, when climate conditions have been pushed outside of these optimum ranges, upheaval resulted, including mass migration, famine, conflict and other disruptions that the study’s authors say we need to plan for in coming decades.

Already, about 0.8 percent of the Earth’s surface experiences mean annual temperatures above 84.2 degrees (29 degrees Celsius), mostly in the Sahara region of Africa. However, with projected increases in global average surface temperatures, this area is expected to expand significantly to cover about 19 percent of the global land, home to 3.5 billion people, in 2070.

This would not be a huge problem if few people lived in that part of the world, but it happens to be one of the fastest-growing regions on the planet.

“It’s a bit unfortunate that most population growth happens to be in the place that will be hardest to live in,” Scheffer said.

According to the study, the ideal temperature range for human society is expected to expand toward the poles “in unprecedented ways,” while population growth mainly occurs in developing countries in the tropics and sub-Saharan region, thereby exacerbating the disconnect between how humans will be distributed and the new, much warmer and more extreme climate.

The study points to the likelihood of increased climate-induced migration. If a few billion get in trouble because of climate change, Scheffer says, “The people won’t stay where the trouble is.”

The study notes multiple uncertainties, mainly concerning decisions made about reducing emissions of carbon dioxide and other planet-warming greenhouse gases, as well as our ability to adapt to a warmer climate.

“Populations have avoided stifling hot or freezing temperatures in large numbers, concentrating instead on the goldilocks zones,” said Neil Adger, professor of human geography at the University of Exeter. Adger reviewed an early copy of the study but was not involved in the research itself.

“It is likely climatic changes will in effect move large cities and whole countries into temperature niches that present inhabitants would find unimaginable,” he said in an email.

“So will cities move? Unlikely. But will they become less attractive destinations for people to move to? Definitely. And ultimately some present cities will stop growing and ossify,” he said.

Adger points out that questions remain about economic output in areas that are pushed outside their climate niche, as it is known.

“A key unknown is whether labor productivity for outdoor work can adapt to these new niches. Even if plant breeding technologies can solve the temperature tolerance of crops, can technologies help farming practices, which are always labor intensive, to be tolerable?” he said.

“Ultimately, we will witness imperceptible shifts that over decades will represent a profound shift in the economic geography of the human world.”

John Schellnhuber, director emeritus at the Potsdam Institute for Climate Impact Research in Germany, said the study is useful because it quantitatively confirms “the rather small historic habitat of humankind on Earth.” It also shows the coming, dramatic shifts to this habitat due to global warming, he said via email.

Schellnhuber, who has advised German Chancellor Angela Merkel on climate change and was not involved in the study, said the new research lends support to his view that “large-scale (managed, facilitated) migration needs to be part of a global [climate] adaptation strategy.”

German companies call for COVID-19 aid to be tied to climate action

By Arno Schuetze, Reuters, April 28, 2020

FRANKFURT — German companies including ThyssenKrupp, Salzgitter, Bayer, Covestro, E.ON, HeidelbergCement, Puma, Allianz and Deutsche Telekom have called for coronavirus-related state aid to be tied to climate action, daily Handelsblatt reported.

“We appeal to the federal government to closely link economic policy measures to overcome both the climate crisis and the coronavirus crisis,” more than 60 companies said in letter, ahead of the Petersberg climate dialogue starting on Monday.

The companies are concerned that environmental issues will be put on the backburner during the COVID-19 pandemic.

Car makers are already lobbying to prevent the announced tightening of emissions limits on cars, airlines for a waiver on jet fuel taxes, and the plastics industry for an appeal of the ban on some plastics products.

“The pandemic highlights the vulnerability of our globalized economic system to threats that are not limited to regions or industries,” the appeal says. “Climate change is a comparable challenge.”

As part of the initiative, Bernhard Osburg, head of ThyssenKrupp’s steel unit, called for a climate economic stimulus programme, while Joerg Fuhrmann, Chief Executive at peer Salzgitter, said the state should encourage the replacement of coal with hydrogen in steelmaking.

Markus Steilemann, head of plastics maker Covestro said: “It is about making our economy more crisis-resistant and competitive with a view to a truly sustainable, climate-neutral future.”

The German BDI industry association said it was sticking to the European goal of climate neutrality, or net zero greenhouse gas emissions, in 2050, but warned that governments, companies and households will in future have reduced scope for investments.

“The EU’s Green Deal must therefore become a Smart Deal, in which growth, employment and ambitious climate protection targets are linked as efficiently as possible via an intelligent investment and relief package,” said BDI deputy managing director Holger Loesch.

The pandemic could be a call to action on climate change

By Ishaan Tharoor

The Washington Post, April 24, 2020

Amid its horrors and tragedies, the coronavirus pandemic has driven home a startling reality. Travel bans and lockdowns have cleaned the globe, flushing the murk from Venice’s canals, clearing Delhi’s polluted smog, making distant snowy peaks visible for the first time in years from the shores of the Bosporus. With humans in retreat, nature reclaimed what was once its own in whimsical ways: Goats strutted through villages, antlered deer grazed on manicured city lawns and mountain lions found perches by suburban fences.

U.S. scientists still predict 2020 will be the hottest year on record, even as experts forecast the largest annual drop in carbon emissions in modern history — a direct consequence of the pandemic’s freeze on human activity, trade and travel. The crisis isn’t uniformly good news for the planet: For example, satellite data shows that deforestation in the Brazilian Amazon is at its fastest pace in years, with environmental officials otherwise sidelined or preoccupied by the outbreak.

The pandemic is not just a reminder of the human impact on the environment, including the significance of man-made emissions on global warming and air pollution. It’s also similar: an imperceptible menace that knows no borders, overwhelms aging infrastructure and bedevils policymakers and politicians who struggle to grapple with the scale of the threat.

“A good way to think about the coronavirus pandemic is that it is like climate change at warp speed. What takes decades and centuries for the climate takes days or weeks for a contagious disease,” New York University climate economist Gernot Wagner wrote last month. “That speed focuses the mind and offers lessons in how to think about risk in an interconnected world.”

The question now is who’s learning what lessons. The commemorations for the 50th annual Earth Day saw a litany of prominent climate campaigners link action on that front to the experience of the outbreak. For years, climate scientists have been calling on governments to “flatten the curve” — that is, reduce emissions to lessen the likely catastrophic toll global warming will exact on societies in decades to come.

In the Boston Globe, former U.S. secretary of state John F. Kerry pointed to evidence suggesting climate change could be a “threat multiplier” for zoonotic and pandemic diseases. He also took aim at President Trump and other politicians who cling to positions outside the scientific consensus and impede collective action.

“Just as in today’s pandemic, progress has been halted by finger-pointing, denial, replacing real science with junk science, misinformation, and flat-out lies, elevating political hacks instead of scientists and experts, refusal to work with allies and even adversaries, and leaving states and cities to fend for themselves,” wrote Kerry.

“The coronavirus pandemic has delivered sharp and painful reminders of our collective vulnerability and the value of paying very close attention to reality,” wrote physicist Mark Buchanan. “If there’s any good to come out of the current tragedy, it may be in helping to persuade a few people to help tip the scales and get our leaders to take the next looming issue much more seriously.”

The Trump administration isn’t quite set on tipping the scales. Stimulus money the White House has been empowered to spend in the pandemic’s aftermath may go to U.S. fossil fuel companies that were already in financial trouble before the crisis. On Earth Day, Andrew Wheeler, Trump’s administrator for the Environmental Protection Agency, sought to shift focus away from climate change to government efforts to curb pollution.

“We’re taking climate change seriously,” Wheeler told The Washington Post’s PowerUp newsletter. “But it’s not the only environmental issue that we face as a planet.”

But away from the White House, others are seeking to take the lead. Under the aegis of the World Economic Forum, major financial firms — including some that may help manage elements of the federal response to the pandemic — have pledged to divest from fossil fuels. Campaigners are calling for government stimulus to fund sustainable development projects that could build the green economy. The World Bank is proposing linking governments’ post-pandemic spending to greener infrastructure projects and future disaster-proofing.

In Washington, there’s a cautious hope that the urgency presented both by climate change and the pandemic may cool the geopolitical tensions between the United States and China and force greater global collaboration.

“We all breathe the same air and we’re all going to live with the same rising seas,” Michael Chertoff, a former head of the Department of Homeland Security in the George W. Bush administration, told Today’s WorldView during a webinar this week. “And whatever we may disagree about some things, we’re going to need to sit down with them and our like-minded allies and everybody else and figure out what can we do collectively to protect the global commons against either pandemic diseases or disastrous climate change.”

But, as Slate’s Joshua Keating noted, the opposite may well be true, given the growing hostility between both countries. He added that some right-wing parties elsewhere in the West have already seized on the threat of climate change not as a call for collective action, but as a justification for limiting migration and unraveling globalization.

“It’s not hard to imagine a future U.S. administration, rather than denying the increasingly obvious reality of climate change, using it to argue that the country needs tougher immigration controls and fewer refugees,” wrote Keating. “The alternative, they will argue, is to be overwhelmed by the human invaders and see our own natural resources depleted in the way other countries already have.”

https://www.washingtonpost.com/world/2020/04/24/pandemic-could-be-call-action-climate-change/

Wildlife Collapse From Climate Change Is Predicted to Hit Suddenly and Sooner

Scientists found a “cliff edge” instead of the slippery slope they expected.

By Catrin Einhorn, The New York Times, April 15, 2020

Climate change could result in a more abrupt collapse of many animal species than previously thought, starting in the next decade if greenhouse gas emissions are not reduced, according to a study published this month in Nature.

The study predicted that large swaths of ecosystems would falter in waves, creating sudden die-offs that would be catastrophic not only for wildlife, but for the humans who depend on it.

“For a long time things can seem OK and then suddenly they’re not,” said Alex L. Pigot, a scientist at University College London and one of the study’s authors. “Then, it’s too late to do anything about it because you’ve already fallen over this cliff edge.”

The latest research adds to an already bleak picture for the world’s wildlife unless urgent action is taken to preserve habitats and limit climate change. More than a million plant and animal species are at risk of extinction because of the myriad ways humans are changing the earth by farming, fishing, logging, mining, poaching and burning fossil fuels.

The study looked at more than 30,000 species on land and in water to predict how soon climate change would affect population levels and whether those levels would change gradually or suddenly. To answer these questions, the authors determined the hottest temperature that a species is known to have withstood, and then predicted when that temperature would be surpassed around the world under different emissions scenarios.

When they examined the projections, the researchers were surprised that sudden collapses appeared across almost all species — fish, reptiles, amphibians, birds and mammals — and across almost all regions.

“It’s not that it happens in some places,” said Cory Merow, an ecologist at the University of Connecticut and one of the study’s authors. “No matter how you slice the analysis, it always seems to happen.”

If greenhouse gas emissions remain on current trajectories, the research showed that abrupt collapses in tropical oceans could begin in the next decade. Coral bleaching events over the last several years suggest that these losses have already started, the scientists said. Collapse in tropical forests, home to some of the most diverse ecosystems on earth, could follow by the 2040s.

But if global warming was held to below 2 degrees Celsius, the number of species exposed to dangerous climate change would drop by 60 percent. That, in turn, would limit the number of ecosystems exposed to catastrophic collapse to about 2 percent.

“The benefits of early and rapid action are massive and prevent the extinction of thousands of species,” said Christopher H. Trisos, a scientist at the University of Cape Town and one of the study’s authors.

The study does not take into account other factors that could help or hurt a species’ survival. For example, some species may tolerate or adapt to higher temperatures; on the other hand, if their food sources could not, they would die off just the same.

“It provides yet another, critical wake-up call about the massive repercussions of a rapidly warming world,” said Walter Jetz, an ecologist at Yale University who did not participate in the study. He added that it was more evidence of the importance of following through on the pledges that nations around the world made in the Paris Agreement on climate change. The Trump administration is in the process of withdrawing from that commitment.

The study suggested that even keeping global warming to less than 2 degrees Celsius, in accordance with the Paris Agreement, would still leave many people and ecosystems vulnerable.

“If we take action now, we limit this abrupt disruption to 2 percent of the planet,” Dr. Trisos said. “But that two percent of the planet still has a lot of people living there in tropical regions. And they need our help.”

https://www.nytimes.com/2020/04/15/climate/wildlife-population-collapse-climate-change.html

Oil Companies Are Collapsing, but Wind and Solar Energy Keep Growing

The renewable-energy business is expected to keep growing, though more slowly, in contrast to fossil fuel companies, which have been hammered by low oil and gas prices.

By Ivan Penn, New York Times, April 7, 2020

A few years ago, the kind of double-digit drop in oil and gas prices the world is experiencing now because of the coronavirus pandemic might have increased the use of fossil fuels and hurt renewable energy sources like wind and solar farms.

That is not happening.

In fact, renewable energy sources are set to account for nearly 21 percent of the electricity the United States uses for the first time this year, up from about 18 percent last year and 10 percent in 2010, according to one forecast published last week. And while work on some solar and wind projects has been delayed by the outbreak, industry executives and analysts expect the renewable business to continue growing in 2020 and next year even as oil, gas and coal companies struggle financially or seek bankruptcy protection.

In many parts of the world, including California and Texas, wind turbines and solar panels now produce electricity more cheaply than natural gas and coal. That has made them attractive to electric utilities and investors alike. It also helps that while oil prices have been more than halved since the pandemic forced most state governments to order people to stay home, natural gas and coal prices have not dropped nearly as much.

Even the decline in electricity use in recent weeks as businesses halted operations could help renewables, according to analysts at Raymond James & Associates. That’s because utilities, as revenue suffers, will try to get more electricity from wind and solar farms, which cost little to operate, and less from power plants fueled by fossil fuels.

“Renewables are on a growth trajectory today that I think isn’t going to be set back long term,” said Dan Reicher, the founding executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford University and an assistant energy secretary in the Clinton administration. “This will be a bump in the road.”

Of course, the economic slowdown caused by the fight against the coronavirus is taking a toll on parts of the renewable energy industry just as it is on the rest of the economy. Businesses that until recently were adding workers are laying people off and putting off investments. Among the hardest hit are smaller companies that sell solar panels for rooftops. Their orders have dropped steeply as customers put off installations to avoid possible contact with the virus.

Luminalt, a solar and electricity storage company based in San Francisco that employs 42 people, recently told most of its installers to seek unemployment benefits as the company’s residential jobs — normally six a week — have all but evaporated. Jeanine Cotter, Luminalt’s chief executive, told workers that the company would cover their benefits but that there was no money coming in to pay all of them.

A half-dozen employees are installing solar at an affordable-housing project that has kept them working, and some who handle business operations are working from home. But Ms. Cotter worries about some installers who joined the company through San Francisco’s work force development program and depend on weekly paychecks to make ends meet.

“Revenue has stopped,” said Ms. Cotter, who helped found the business 15 years ago. “It’s very confusing right now.”

The Solar Energy Industries Association, a trade group, estimates that half of the 250,000 workers in the industry could lose their jobs at least temporarily because of the coronavirus outbreak. The association has downgraded projected growth by as much as one-third of the more than 19 gigawatts of new solar capacity that was expected this year.

But independent experts, including Wood Mackenzie, an energy research and consulting firm, say those projections could be overly pessimistic. “It’s still too early to call,” Ravi Manghani, head of solar at research at Wood Mackenzie. “The situation is changing on a daily basis.”

His firm estimates that solar and wind power will continue adding capacity this year and next. New wind installations might be down only about 3 percent from earlier projections, largely because wind turbines are typically erected outside urban areas, and many states have deemed construction an essential activity during the pandemic.

In a report last week, Raymond James analysts estimated that renewable energy sources would provide 20.7 percent of the nation’s electricity this year and at least 20 percent through 2022.

Although hydroelectric plants have long helped power homes and businesses, solar and wind power emerged as major energy sources only over the last 15 years or so. A sharp drop in the price of solar panels has helped the industry expand. Last year, solar capacity increased 23 percent from the year before. It added 13.3 gigawatts, exceeding new wind and natural-gas generation, according to industry data.

“We blew through all of the projections,” said Caton Fenz, chief executive of ConnectGen, a wind, solar and electricity-storage developer based in Houston. “We’re surfing a long-term wave,” he said. “We just can’t get specific things done because of the pandemic, but I don’t think that affects the broader trajectory.”

His company, which is 22 months old, has 3,000 megawatts — the equivalent of three large power plants — under development in 11 states. About 40 percent is wind projects, 40 percent solar and the rest electricity storage.

Among the company’s backers is 547 Energy, an investment firm that specializes in renewable energy. Gabriel Alonso, who runs 547 Energy, said his firm received its funding from Quantum Energy Partners, which had long been an investor in oil and natural gas.

“As an investor in clean energy, renewable energy, the fundamentals that drove us to invest have not changed,” Mr. Alonso said.

Even as the pandemic spread, Mr. Alonso’s company won a bid last week for part of a new electricity project in Greece. His company will develop a wind farm in the northern regions of Imathia and Kozani. The auction, on Thursday, was part of a larger effort by Greece to retire fossil fuel plants and replace them with renewables.

Many renewable companies have projects around the world and have benefited from government efforts to address climate change. That has helped drive down costs of wind and solar equipment and made the industry more resilient to economic swings.

In addition, because developers can build wind and solar farms more quickly than natural-gas, coal and nuclear plants, Mr. Alonso said, the renewables have become more attractive financially. In difficult economic times like these, he said, private equity investors like Quantum are eager to seize on businesses that can quickly scale up and start earning money.

That said, solar businesses in particular are worried that the disruptions caused by the pandemic are serious enough that they are seeking help from Congress. Lobbyists for renewable energy are asking lawmakers to make it easier for their industry to take advantage of tax credits the government provides for wind and solar power.

Developers usually enter into partnerships with banks and other financial institutions that can more efficiently make use of the tax credits than the contractors building renewable energy projects. The banks receive the tax credit and a share of the cash flow from the project typically for six to 10 years.

But because demand for loans has shot up as businesses across the economy struggle, banks have been less able to finance new projects, said Josh Goldstein, chief operating officer at 8minute Solar Energy, a developer of large solar farms. Solar and wind industry officials want Congress to streamline the process for obtaining tax credits and make the credits refundable so that their businesses could benefit directly.

“Their credit committees are in crisis mode,” Mr. Goldstein said about banks. “This disruption can have a particularly damaging effect.”

8minute Solar was recently forced to suspend work on the Lotus Solar Project, a 67-megawatt solar farm north of Fresno, Calif., that it is building for Allianz Global Investors. Officials said it was unclear whether the work, which employed about 50 people, was considered “essential.”

But the Department of Homeland Security included electricity production on its list of essential activities last month, affirming legal advice that 8minute had received, and the company sent workers back to finish construction.

The solar industry expected to add more panels in 2020 than in any other previous year, said Abigail Hopper, president of the Solar Energy Industries Association. That won’t happen now, but the industry is still poised to add capacity.

“We believe, over the long run, we are well positioned to outcompete incumbent generators,” Ms. Hopper said.

https://www.nytimes.com/2020/04/07/business/energy-environment/coronavirus-oil-wind-solar-energy.html