Season 4, Post 29: What, no global warming?
As your author sits penning this piece, the temperature in London is approaching 30 degrees Celsius. Later today, it might reach 40 degrees. This would constitute a record. It’s currently warmer here than in parts of the Sahara and the Caribbean. Around Europe, there have been deadly wildfires in exposed regions of France, Portugal and Spain. Readers in the US will be unfortunately familiar with droughts and wildfires across large parts of the country, particularly California. Sure, seasonally abnormal weather patterns can always occur, but have no doubt, there is growing evidence of climate change.
‘Code red for humanity’ was the emotive expression used by the United Nations Secretary General, Antonio Guterres, last August to describe the potential threat posed by such change. His assertion was, that without dramatic cuts to pollution, the world would see its temperature rise by 1.5 degrees over the next 20 years. Many countries have recognised this imperative for some time, with the share of world electricity generated by renewable sources having risen fivefold in the last decade, albeit from a low base.
Given current momentum, renewables may account for 50% of the world’s energy mix by 2050 (per Bloomberg New Energy Foundation). Some might argue that Vladimir Putin has perhaps done more to accelerate the clean energy transition than anyone in history. Since Russia’s invasion of Ukraine, 19 European governments have now accelerated their decarbonisation plans. Under the latest national commitments, EU countries are aiming for 63% of renewables in electricity generation by 2030, up from 55% targeted at the start of the year (data from Ember Analytics).
It was, however, highly disappointing to read last Friday – even as much of the world was already sweltering – that US Senator Joe Manchin, Chair of the Senate Energy and Natural Resources Committee, announced he would not be supporting President Biden’s economic package of increased funding for climate change provisions. Listed renewable energy stocks duly fell. Under the proposed plan, there would have been increased provisions for clean energy and climate change initiatives as well as a tax credit for producers of clean energy. Sure, it seems likely that politics played a role in this decision – both Democrats and Republicans are concerned that accelerated expenditure of this nature could be inflationary at a time of existing economic difficulties for many – but it’s hard not to view this news with dismay. Progress is being made in many regions of the world to tackle climate change, but the clue is in the name: global warming is a worldwide phenomenon. Every country needs to play its part. One can only hope for a potential reversal of current thinking in the US.
19 July 2022
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
Alex Gunz, Fund Manager
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