CAT 2020 Slot 2 — VARC Question 14

Direction for Reading Comprehension: The pass ages given here are followed by some questions that have four answer choices; read the passage carefully and pick the option whose answer best aligns with the passage

In a low-carbon world, renewable energy technologies are hot business. For investors looking to redirect funds, wind turbines and solar panels, among other technologies, seem a straightforward choice. But renewables need to be further scrutinized before being championed as forging a path toward a low-carbon future. Both the direct and indirect impacts of renewable energy must be examined to ensure that a climate-smart future does not intensify social and environmental harm. As renewable energy production requires land, water, and labor, among other inputs, it imposes costs on people and the environment. Hydropower projects, for instance, have led to community dispossession and exclusion . . .Renewable energy supply chains are also intertwined with mining, and their technologies contribute to growing levels of electronic waste . . . Furthermore, although renewable energy can be produced and distributed through small-scale, local systems, such an approach might not generate the high returns on investment needed to attract capital.

Although an emerging sector, renewables are enmeshed in long-standing resource extraction through their dependence on minerals and metals . . . Scholars document the negative consequences of mining . . . even for mining operations that commit to socially responsible practices[:] “many of the world’s largest reservoirs of minerals like cobalt, copper, lithium,[and] rare earth minerals”—the ones needed for renewable technologies— “are found in fragile states and under communities of marginalized peoples in Africa, Asia, and Latin America.” Since the demand for metals and minerals will increase substantially in a renewable-powered future . . . this intensification could exacerbate the existing consequences of extractive activities.

Among the connections between climate change and waste, O’Neill . . . highlights that “devices developed to reduce our carbon footprint, such as lithium batteries for hybrid and electric cars or solar panels[,] become potentially dangerous electronic waste at the end of their productive life.” The disposal of toxic waste has long perpetuated social injustice through the flows of waste to the Global South and to marginalized communities in the Global North . ..

While renewable energy is a more recent addition to financial portfolios, investments in the sector must be considered in light of our understanding of capital accumulation. As agricultural finance reveals, the concentration of control of corporate activity facilitates profit generation. For some climate activists, the promise of renewables rests on their ability not only to reduce emissions but also to provide distributed, democratized access to energy . . .But Burke and Stephens . . . caution that “renewable energy systems offer a possibility but not a certainty for more democratic energy futures.” Small-scale, distributed forms of energy are only highly profitable to institutional investors if control is consolidated somewhere in the financial chain. Renewable energy can be produced at the household or neighborhood level. However, such small-scale, localized production is unlikely to generate high returns for investors. For financial growth to be sustained and expanded by the renewable sector, production and trade in renewable energy technologies will need to be highly concentrated, and large asset management firms will likely drive those developments.