Page 1 of 5
Guidance FINA3324 Major Assignment
Part A
A claim by the International Energy Agency (IEA) is that “a typical electric car requires six
times the mineral inputs of a conventional car and an onshore wind plant requires nine times
more mineral resources than a gas-fired plant”.
Countries are committing to reducing carbon emissions in part by investing in renewable
energies.1 This is problematic from a climate change perspective because mining the minerals,
particularly rare earths, entails high levels of polluting emissions.
Required: Is investing in green companies an effective way to achieve climate change goals?
Background
You may find it interesting to know how I came to include this question as part of your major
assignment.
A friend recently recommended I read Rare Metals War: The Dark Side of Clean Energy and
Digital Technologies by Guillaume Pitron, a French lawyer and investigative journalist. Here
is a review of the book. Other reviews may be found on the Net.
Two major claims in the book intrigued me:
(a) That the transition to ostensibly green energy sources requires mining of rare metals that
release large amounts of polluting emissions, and
(b) many countries in “the West” (a term that refers less to a country’s geographical location
than the extent it shares the socio-cultural proclivities of Western Europe, hence Australia and
North America typically being counted as part of “the West”) have put in place policies and
regulations that effectively prevent mining of rare metals on their land and so they import it
from other countries.
In effect countries in the West outsource the polluting processes in producing rare metals that
are used to deliver “green energy”. Pitron’s points are that this is hypocritical and doesn’t
achieve climate change goals.
The book prompted two thoughts. First, how valid is Pitron’s argument? Secondly, if it is
valid, what are the implications for investors who wish to allocate their funds in a way
consistent with the achievement of climate change goals?
I don’t know the answers but I thought they would be the basis for a good assignment question.
Pointers on addressing the question
Definition of a “green company”
The standard definition of a “green company” is one that does not harm the environment. A
conceivable (short) answer to the assignment question is “investing in green companies
contributes to climate change goals since their activities do not make the problem worse”.
The above answer is true by definition and therefore uninformative so it would be awarded
exactly zero marks. What you need to address in your assignment are the practical issues that
1 For example, here is a list of some countries’ climate change goals: Australia has committed to reducing
greenhouse gas emissions by 43% below 2005 levels by 2030, the US has pledged to reduce net greenhouse gas
emissions by 50-52% below 2005 levels by 2030, the United Kingdom is committed to reducing emissions by
68% by 2030 compared to 1990 levels, China has pledged to peak carbon dioxide emissions before 2030, and
India plans reduce the emissions intensity of its GDP by 33% to 35% by 2030 from 2005 levels.
Page 2 of 5
investors face are identifying “green companies” (as opposed to those labelled as such) and
evaluating these companies’ contribution to achievement of climate change goals.
ChatGPT
One reasonable place to start is by putting the question to ChatGPT. I think of ChatGPT in the
same way that mathematics teachers perhaps thought about calculators when they first
appeared: “Oh goody, now we can ask our students more interesting questions!”
I have copied below the grammatically correct, seemingly-plausible output ChatGPT provided
after being fed a prompt of the question, including a requirement to base its arguments on
credible research and data.
I have inserted comments, identifiable by being blue, bold-faced, and underlined.
Output from ChatGPT4 using the assignment question as a prompt
The question of whether investing in green companies is an effective way to achieve climate
change goals is complex, nuanced, and entails consideration of multiple factors, including
the environmental impact of sourcing materials, the lifecycle emissions of green technologies,
and the broader systemic changes they signify. Below, I discuss several relevant issues,
drawing on credible research and data where applicable.
1. Mineral Requirements and Environmental Impact
The International Energy Agency (IEA) claim highlights the significant mineral requirements
for electric vehicles (EVs) and renewable energy infrastructure compared to their fossil fuel
counterparts. This raises concerns about the environmental impact of mining operations,
which can include deforestation, water pollution, and greenhouse gas (GHG) emissions.
However, it's important to assess these impacts in the context of the overall lifecycle of the
technologies. Research indicates that while EVs and renewable energy systems have higher
upfront environmental costs, their total lifecycle emissions are significantly lower than those
of conventional cars and fossil fuel-based power generation, due to their zero or low
operational emissions.2. This claim is disputed by many. How credible is the source on
which the claim is based?
2. Innovation and Efficiency Gains
Technological innovation and efficiency improvements can mitigate the environmental
impact of sourcing critical minerals. Advances in recycling technologies, for example, could
reduce the demand for newly mined materials. Moreover, ongoing research into alternative
materials and technologies may lessen reliance on rare earths and other critical minerals.
The development of new battery chemistries that use more abundant materials could also
decrease the environmental footprint of green technologies.3 What is the likelihood of
achieving the requisite technological innovation and efficiency gains in the time left to
achieve climate change goals?
3. Economic and Policy Considerations
Investing in green companies not only supports the deployment of renewable energy and EVs
but also stimulates innovation and job creation in the clean technology sector. Policy
mechanisms such as carbon pricing, subsidies for green technologies, and regulations on
mining practices can influence the environmental and economic outcomes of such
investments. Effective policies could ensure that the growth of the green economy is
2 International Energy Agency (IEA). "Global EV Outlook 2021: Achieving net-zero emissions by 2050".
3 ScienceDirect. "Advances in battery technology for electric vehicles".
Page 3 of 5
sustainable and aligned with climate change goals.4 Are the required policies in place and,
if not, is it still helpful to invest in green companies?
4. Systemic Impact and Transition to a Low-Carbon Economy
Investing in green companies is part of a broader shift towards a low-carbon economy. This
transition encompasses not just a change in energy sources but also a transformation in
transportation, industry, and infrastructure. The systemic impact of this transition has the
potential to significantly reduce global GHG emissions. For instance, the widespread
adoption of EVs and renewable energy could drastically cut oil and gas demand, contributing
to the decarbonization of the energy sector.5 What about the argument in Rare Metals
War that the transition EVs and renewable entails much pollution?
5. Social and Geopolitical Considerations
The shift to green technologies also has social and geopolitical implications, including the
potential for resource scarcity, impacts on communities near mining sites, and shifts in
global power dynamics as countries vie for control of critical minerals. Ethical and
sustainable sourcing practices, alongside international cooperation to ensure equitable
access to resources, are essential to address these challenges.6 This discussion of social
and geopolitical consideration doesn’t address the actual assignment question. The
discussion sounds relevant but is not.
Conclusion
Investing in green companies can be an effective way to achieve climate change goals,
provided that the environmental, economic, and social impacts of such investments are
carefully managed. This is as helpful and as informative as saying you can make large
returns by investing as long as you buy low and sell high. While the transition to green
technologies presents challenges, including the high mineral requirements of EVs and
renewable energy systems, the potential benefits in terms of reduced GHG emissions and the
stimulation of a sustainable, low-carbon economy are significant. Policymakers, businesses,
and investors must work together to address the challenges and leverage the opportunities
presented by the green transition.
References
This analysis incorporates a range of issues and is supported by credible sources, illustrating
the complexity of the question at hand and the need for a multifaceted approach to
addressing climate change through investments in green technologies. This statement
doesn’t convey anything meaningful.
Some general observation about ChatGPT’s output: ChatGPT’s response usefully identifies
several distinct issues, although the length of discussion of each implies an equal weighting of
importance which is not necessarily true. You will have to judge which issues are more
important and therefore require more discussion.
4 The World Bank. "Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition".
5 BloombergNEF. "Electric Vehicle Outlook 2021".
6 United Nations Environment Programme (UNEP). "Resource Efficiency and Climate Change: Material
Efficiency Strategies for a Low-Carbon Future".
Page 4 of 5
The first issue about the environmental impact of mineral requirements makes a crucial claim
that is disputed by many.
Whether EVs and renewable energy systems have lower total lifecycle emissions than those of
conventional cases and fossil-fuel based energy systems is a more complicated question than
ChaptGPT’s response implies.
An investor who invested on the assumption that all EVs and renewable energy sources have
lower total life-cycle emissions that fossil-fuel based energy systems would likely be mistaken
in some investments.
To get a passing grade, assignments need to indicate the complexity and nuances of the claim
that EVs and renewable energy systems are better. Also, it’s not enough to find one source and
cite that as sufficient authority. Invest time researching whether the claim is credible. Review
competing claims and come to some judgement.
Note: You also need to keep with the page limits. Conveying complexity succinctly takes
effort and time, so make sure you budget your time accordingly.
There are probably more issues than the five that ChatGPT has identified. The fact that I have
copied ChatGPT’s response should not be interpreted as an endorsement by me of those points.
Feel free to ditch some or even all of ChatGPT’s points if you think the issues you identify are
more relevant and important.
Check the references provided by ChatGPT. Make sure they are real and that you have read
them. You are, of course, expected to read and research far beyond ChatGPT.
Range of potential conclusions
In address the assignment question (which is, is investing in green companies an effective way
to achieve climate change goals?), you are free to conclude whatever your research indicates
is the right answer.
For examples, you may conclude “yes, investing in some but not all kinds of green companies
is effective” or you may say, “no, the policy and economic settings at present do not make
investing in any kind of green company an effective way to achieve climate change goals” or
“no, climate change is unstoppable, there is nothing we can do” or “investing in nuclear energy
is a more effective way”, etc.
You won’t be marked on your conclusion. You will be marked on the quality of your argument
and the evidence you marshall in support of it. It is possible for two papers with opposing
opinions to both score the highest mark, if their arguments are equally good. It is also possible
for the worst assignment to have the same conclusion as the best assignment but do badly
because the quality of argument and evidence is terrible.
Assignment Rubric
The markers of the assignments will be looking for the following things:
• Definition of “green company” and issues in identifying and investing in such
companies.
• Broadly defines climate change goals. Goals can differ between countries, so
the answer should provide some aggregated definition.
• Discussion of the best points for and against investing in green companies to
achieve climate change goals.
Page 5 of 5
• Evidence that the writer has read widely and integrated material from competing
perspectives. There is no page or size limit to the number of references that you
can include but all references you include should be cited in the main body of
your assignment. Do not pad out your references by including articles or books
that you have not read or cited.
• A clear statement of your opinion in response to the question along with reasons
why you hold that opinion.
• Clear structure and well written sentences.
• NOTE: Writing your assignment entirely in Cadmus, including revisions etc,
gives the markers evidence of how much time and effort you have spent on the
assignment. This will be helpful to you in the circumstance that you are queried
about the extent the assignment reflects your own work/efforts.
Feel free to email me questions. To ensure that no one is disadvantaged I will publish all
queries from students and my responses on the announcements page. I like to acknowledge
students so let me know if you would prefer that I not mention your name when I publish your
query and answer. There are some queries that I won’t answer because I will judge that doing
so will defeat the purpose of the assignment. If in doubt ask me and I will let you know. Finally,
the likelihood of my answering your query is highest the further away we are from the due
date. I don’t feel compelled to answer questions that students could address for themselves but
which they have left too late to do so.
Finally, this is perhaps where our tastes differ but I think this assignment can be very
stimulating and engaging. I hope you find it so.