In a recent article in The Wall Street Journal titled, “The Clean Energy Revolution is Unstoppable”, the authors suggest that clean energy costs will decline and performance will improve in a manner similar to the evolution of semiconductors and similar technologies. They also contend that large segments of fossil fuel demand will disappear as the expected cost and technology advantages of clean energy will become compelling. Investors should note that the authors anticipate that the expected gains for clean energy are likely to become apparent over the next two decades. Under this thesis, the authors contend that clean energy will become attractive on an economic basis in addition to its appeal to environmentalists.
Investors are going to have to reflect on the fact that two decades is a long time to earn a return. In real time, China and India are continuing to increase their investment in coal fired plants. These projects represent significant capital costs and are inherently long-term in nature, which suggests that those countries continue to believe that coal is the cheapest way to meet their growing, long term electrical energy requirements.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
