Investing and Climate Change

Discussion of the Week
Climate change has been in the news enough that scientists worry “green fatigue” may set in “if every change in temperature and every storm is attributed to global warming.”

Energy investors, however, must constantly weigh whether an investment in fossil fuel stocks is appropriate given the now undeniable change in climate happening as a result of carbon emissions. A new infographic by Allison Lee shows the extent of the problem. Here it is in its entirety, with more written below:

How climate change is destroying the Earth

Even if we agree that humans must change their ways, and assume that the world must move on from fossil fuels, we have to ask when it will do so, how it will do so, and what will happen along the path.

For example, most of what’s proffered as alternative energy makes a pathetic investment case. Our future planet will be packed with more people, each of whom demands more energy. Society will not be powered by windmills or solar cells, and the currently hip “all of the above” strategy is a cop-out. All of the above means that fossil fuels will continue emitting more than the zero emissions scientists say we need to achieve, pronto, to avoid ruinous temperature rise.

My suggestion for years has been that we need a nuclear power grid paired with electric automobiles for a nearly emissionless environment. The pushback against this is enormous, however, even from supposedly green groups, which is exasperating. No energy source up to the scale of demand on the horizon is cleaner than nuclear. Gen IV reactors yield enormous energy from small amounts of fuel, can consume nuclear waste from previous generations of reactors, produce little new waste, and their waste remains radioactive for much less time than does the waste of previous generations of reactors. Plus, they’re safer.

MIT Professor Richard Lester wrote at Cognoscenti earlier this month: “According to the International Energy Agency, without nuclear power meeting about 25 percent of global electricity demand by 2050, it’s effectively impossible to reduce carbon emissions enough to avoid what could be catastrophic changes in global climate. To reach that goal, we would have to build more than two times as many nuclear plants in the next 40 years as we did in the last 40 years.”

Yet, politicians and the public still consider nuclear to be anathema, and nuclear investing is on a par with owning utility stocks.

It seems the best that energy investors can do is buy the most profitable fossil fuel companies following the industry’s best environmental practices. It’s not ideal, akin to selecting the least dirty socks from a pile, but investing in supposedly green options at this juncture is a sure path to mediocre investment returns. We would all love to own stock in companies behind clean, profitable energy. Too bad there aren’t any.

What do you think is an appropriate course for energy investors to take now? Join the discussion in the comment area below.

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  1. Eugene
    Posted March 8, 2013 at 2:55 am | Permalink

    I signed up for this company to provide my energy in PA

    It offers wind, hydro, solid waste, captured methane, wood or other biomass, and solar. I feel good knowing that I am not contributing as much to global warming and supporting the producers of environmentally friendly energy.

  2. Capt Kent
    Posted March 8, 2013 at 4:06 am | Permalink

    Each time you publish the “undeniable” connection between energy and global warming it gives me pause to think… maybe it is deniable? I could think of many other reasons that the earth’s weather and temps cycle up and down. Certainly it is undeniable that ice ages have come and gone many times. Some have been minor ice ages and some major, and yes, in between the earth warmed up and the ice retreated.

    No matter where these changes come from, it may be just another human folly to think we can control the weather on Earth. I have been at sea and in the mountains, and along the coast of New England in some pretty extreme weather conditions. I have never found a living soul who can control the weather. Sometimes just surviving is accomplishment enough.

    It is my understanding that a large portion of various pollutants originate in “third world” countries and therefore any steps taken here at home to adjust some flow of something into the air or water is such a small percentage of the total on Earth that the effort will have no measurable effect. If it makes someone feel good to go through the motions that is fine, but please don’t try and tell everyone that they must do what you do. In the end, this is a belief, often emotional, and science at its best is maybe 10 percent along the way of being sure about anything.

    If you want to tackle a real problem, take a look at population control. Oh, I forgot, that is not politically correct to talk about. Sorry. But it is the new people on Earth who will be using the extra energy you so worry about. If we could manage population then we would find energy use and food and water issues would be much easier to supply.

  3. Luigi
    Posted March 8, 2013 at 9:42 am | Permalink


    You know my opinion on global warming. The data indeed indicated that that is the case. As for the causes, that’s “where the donkey falls” (old Italian saying).

    If you remember our conversation at Red Frog, I pointed out that the cause of global warming is me getting older. It is an undeniable fact that, as I got older, the world got warmer.

    I also pointed out to you the nuclear winter bullcrap that Carl Sagan pushed. Change the value of a few parameters and you get nothing or a nuclear summer — and a majority of scientists went along with it. Which simply goes to show that, when you have an axe to grind, scientists are as dumb as the village idiot.
    And all the calculations on global warming are based on models: pick the value of the parameters that will give you the answer you want.

    I will not go into the calculations and modeling, but, from what I have done, it does not make sense that the amount of CO2 that we produce makes ANY difference. It is just too small an amount compared to the daily exchange in the oceans.

    We are a nit on an elephant’s behind. Acid rain: we are the cause (no volcanic eruption in the US in the Rust Belt). Global warming? How many people really understand the difference between causation and correlation?

    Buy whatever company you feel will give a good return. And if it does oil fracking, stay away from the area.

    As Einstein pointed out: “Everything is local.”

  4. Marcial Navarro
    Posted March 9, 2013 at 12:28 am | Permalink

    So far we have mentioned two possible solutions to the problem: use of alternative energy sources or population control.
    Let me add another one: reduce the world’s energy needs by changing the erroneous perception that the more things you consume the happier you will be.
    I don’t think neither of the three will happen.
    I am not completely convinced that global warming is caused by humans, but I am 100% sure that changing the aforementioned erroneous perception can only bring good things to our planet. I also know that even if the whole planet agrees with this idea, people of the world don’t have the will/ability to change their perceptions.
    I agree with population control, but again people don’t have the wisdom/emotional intelligence to get over themselves or their ideas/opinions on such things.
    I personally try to live my life using all three (using alternative energy when possible, not having kids, and practising buddhism to take the wrong perception that generating desires and satisfying them will bring happines and change it with the knowledge that a deeper happines results of not having desires). So I do my part, but I don’t get frustrated when I see that the world is not doing theirs, because I understand why.

    • Georgiiana Shaylor
      Posted March 18, 2013 at 3:23 am | Permalink

      Marcial and I are in the same part of the ballpark: my conclusion is that divesting from polluting companies will have far less effect on global warming than a conversion of values and behaviors at the individual level until a tipping point is reached and green living becomes the way we and our children live. And that will include demanding, perhaps through legislation as well as consumption, that polluting companies pollute no more.

      The important bit is that it is a change of perceptions, especially of self-perceptions, that enables change and makes us feel better, indeed, live better and more contentedly than we do now.

      Selfishness and materialism have had their chance in America, and don’t we all long for the past? Responsibility, service, kindness, enlightenment and reason, egalitarianism. Basing your self worth on your self, not on how much you have and how much more you can get. That is what we are losing, what we have traded for too much stuff and other people’s approval–our morality, our inner foundation of identity. Doesn’t anyone read “If–” anymore?

      Clearly, we also need to change the nation’s perceptions about the New Nuclear. They should hire Jason to do their PR. I’m a total tree-hugger, but he has convinced me. Mo’ nukes!

      Investing is fun and educational, and we can do it at home! Nothing wrong with that in itself. But when we cash in our chips, then what? Investors do good things. We aren’t monsters. But if the warming isn’t halted and turned around, we won’t be able to grow wheat south of Canada.

      You know what works. You know what to do. Change yourself. Change the world.

  5. Posted March 9, 2013 at 8:20 am | Permalink

    Excellent timing, Jason! The other day I ran across a very believable web page from the BBC that explained that high-altitude dust particles have created a global DECREASE in the amount of solar energy that reaches the earth’s surface… from about 5 to 20 or 30% in some areas!

    If we got rid of all that “pollution” by removing particulates and essentially “cleaning the air,” it might get “just that much hotter as a result!” Food for thought.

    But, per your topic, I’ve just added a 55th Law to my collection: “Virtually every Problem you ever hear about today can be traced to one root cause … Too many people.”

    Think about it.

    Now, as to the aspect of INVESTING, if the oceans rise one inch or one foot or 20 meters, one key item of investing would be to avoid insurance companies that focus on shoreline communities and cities. (Ocean coasts, obviously.)

    And another side effect will be whether or not governments decide to spend tons of their citizens’ tax dollars rebuilding or fortifying coastal regions in the absolutely futile hope of “holding back the sea.” THAT will have some immense financial impacts, too.

    The video presentation also wondered why governments (the US’ in particular,) aren’t moving national archives and museums and other treasures to higher ground NOW, rather than waiting until all of D.C. is, once again, swampland.

    I Love Critical Thinking!

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