John Kerry, the U.S. special envoy on climate change, recently said, “We’re in trouble, I hope everyone understands that.” He went on to say, “The world is not on a good track to meet a global goal to avoid the worst impacts of climate change”.
Actually, we may be going in the wrong direction. Both the world and the U.S. are burning more and more coal to meet increasing electric energy demand.
There are many reasons for this. The primary reason is that world leaders make a lot of bold pledges to curb greenhouse-gas emissions at climate conferences that, in the face of political and economic reality, they can’t keep. Note our blog, “Non-binding, Feel Good Agreements”, posted 18 Jun 2021.
The choices are clear, shrink your economy, that is use less electricity, or find a clean way to generate more electricity. The first is politically unacceptable and the later requires new technologies, such as nuclear, that are at least years away, and perhaps decades. Adding millions of electric vehicles (EVs) to an overloaded grid may not prove to be part of the solution.
There may be a third way, placing more emphasis on learning to adapt. This does not seem to be part of the current discussion and would probably require a recognition that Mother Nature is a powerful force.
Investors appear to be currently focused on EVs and new technologies. However, there might be investment opportunities in finding ways to offset some of the more dire potential consequences of limited success in combating climate change, by considering adapting.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA