Post #89: Making America great again - Heptagon Capital – Production

That most politicians make promises they don’t keep should hardly be surprising. It is therefore interesting to think back to the US presidential campaign of…

Post #89: Making America great again

That most politicians make promises they don’t keep should hardly be surprising. It is therefore interesting to think back to the US presidential campaign of 2016, particularly with the next election for America’s top role just three weeks away. At the time, Donald Trump, claimed he would “end the war on coal” and “put our miners back to work.” Four years’ on, the figures tell a quite different picture.

145 coal-burning units at 75 power plants have been idled during the first term of one of the most coal-friendly presidents in modern American history. This constitutes the fastest decline in coal-fuel capacity in any single presidential term. The shutdown of these plants is equivalent to an elimination of 15% of the nation’s coal-generated capacity, or enough to power about 30m households. Viewed from a different perspective, an estimated 20% of power generated in the US this year is expected to come from coal, down from 31% in 2017 (all the data can be found here).

Such a reduction has, of course, come at the cost of an estimated 5,500 mining jobs, while the current pandemic has almost certainly exacerbated the problem by reducing overall energy demand. The more interesting point, however, is thatregardless of who wins this November’selection, there is still a lot more to be doneAmerica derives 80% its energy from fossil-based fuels, not just the contribution of coal, but also shale oil and gas. More mines may well shut, while a Democrat administration would almost certainly accelerate the rollout of renewable energy projects. Interestingly, most Americans (77%) believe it’s important for the country to develop alternative energy sources (per Pew Research). 

One other interesting element to throw into the mix is the importance of investment into the renewable energy industry. Consider that in 2009, the US had twice as much wind capacity as China and five times as much solar capacity. A decade on, China had taken the lead and deployed twice as much wind and three times as much solar. Last year, China built 70% of the world’s solar photovoltaics (solar panels and related technologies). Similarly, it holds almost 75% of the world’s manufacturing capacity for lithium-ion battery cells (more details here). Looking forward, factors such as these may truly help to differentiate countries in terms of both reaching their environmental objectives and achieving energy independence.

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The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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