Guest essay by Eric Worrall
According to the Australian Financial Review, $30 trillion to provide electricity to people who already have electricity is a greater investment opportunity than the internet.
Climate change ‘biggest investment opportunity since the internet’
An estimated $41 trillion is required to decarbonise the planet, giving investors the chance to profit from a growing mega-trend.
Sep 1, 2021 – 5.00am
A growing chorus in the investment community is warning that investors need to climate-proof their portfolios or risk missing out on potentially overlooked returns offered by the global transition to a zero-carbon economy.
This comes amid an accelerating urgency by many overseas governments to implement measures aimed at achieving net zero emissions by 2050. This is to avoid reaching the critical 1.5-degree tipping point which the United Nations Intergovernmental Panel on Climate Change (IPCC) says at current rates could occur as early as next decade.
Australia remains with the same commitment made in 2015 under then prime minister Tony Abbott – to be 26 to 28 per cent below 2005 levels by 2030.
The investment required to decarbonise the planet is estimated to be more than $US30 trillion ($41.2 trillion), presenting investors with a rare opportunity to invest in companies that will be involved in the race to net zero.
“Climate change is the next major mega-trend, and we believe it represents the biggest investment opportunity since the internet,” says portfolio manager at Munro Partners James Tsinidis.
“We’re just at the beginning of the next big S-curve, a massive and sustainable decades-long growth trend.”
Leaving aside the in my opinion suspect $30 trillion estimate (no mention of grid battery backup storage, which adds at least $50 trillion to that figure by my calculations), there seems very little evidence people will put up with this magnitude of expenditure worked into their energy bills or taxes, for a commodity they already have access to.
In fact quite the opposite, when you consider the Yellow Vest protests in Europe, which started as opposition to French efforts to introduce a climate fuel tax, or surveys showing how few people are willing to pay for climate action.
Return on investment for renewables is utterly dependent on fickle political commitment to funding the boondoggle. As the Spanish government’s retrospective solar tariff cut demonstrated, when governments run out of money, keeping faith with their renewable energy commitments is not at the top of their list of priorities. And there are a lot of reasons to be concerned that Western governments will run short of money over the next 30 years.