Perfect is the Enemy of Good

According to Wikipedia, this is an aphorism which means insistence on perfection often prevents the implementation of good improvements.  It might seem that the administration’s pause on approvals of new LNG exporting projects, if not eventually withdrawn, may prove to be a good example of this.

The pause, implemented under pressure from the climate lobby, may well result in an increase in carbon dioxide equivalent emissions. Much of America’s recent success in reducing carbon emissions has come from substituting natural gas for coal in domestic power generation.

If reducing carbon emissions is the objective, one potentially important way would be making it more attractive for coal-dependent countries to switch to natural gas.  While increased reliance on renewables may be the ultimate goal, the best case is that significant progress is going to take a long time.

According to the International Energy Agency, global coal production is estimated to have increased 1.8% in 2023 to reach a record 8.7 billion metric tons.  China and India accounted for two-thirds of global coal consumption in 2021 and continue to increase their use of coal for power generation.

Investors will have to sort out how the administration’s apparently contradictory strategy will play out.  Maybe some degree of rationality will surface after the November election.

All comments and suggestions are welcome.

Walter J. Kirchberger CFA