Thursday, December 11, 2008

A post-script: climate change from the left and another plea for investments...

I think it is fairly obvious that nuclear is part of the solution to climate change.  

The impression I get is that some on the right think of climate change as some kind of left-wing conspiracy to get a government controlled economy implemented on basis of scientific fraud.  (I know I shouldn't focus on the wing-nuts - but the wing-nuts are everywhere.)  

But the left has also had to suck it up.  I know a few people who have changed their mind about nuclear - but I have seen very little rational debate about nukes on the left.  

But politics is not the purpose of this blog... investing is...

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The investing idea I had however was that if the governement was going to restrict investment in certain carbon emitting activities those who had protected investments in place would win big-time because they had competition restricted.   Don't invest in the solution - invest in the problem!  (As Charlie Munger says: "invert - always invert.")

The right investment in Europe was not windmills but big nasty polluters.  That may wind up being more general.

And if I did that the right might think I was some kind of "greenhouse believing socialist fruit-loop" and the left might think I was a sell-out.

Hey - if I get it right I make a lot of lucre.  And that is my cynical purpose...

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I have a few unethical investments in my day.  I am a liberal with a large stock holding in News Corp.  You should hear me cheer Fox News.  I have owned tobacco companies in Indonesia.   And those were companies that chopped down rainforest to get timber to smoke-cure their cancer-causing drug of addiction.

If the right investment is a polluter in China whose western competition go away then I am all-too-happy to make the unethical investment.  

I just want ideas guys - not debate on politics.  




John

12 comments:

Anonymous said...

maybe you could blame Sheila Blair for climate change as well?

George said...

John,

I have read nearly every blog post on this site of yours. All are thought provoking and some can be quite sober. But this, this is the funniest thing I have read in some time.

"I have a few unethical investments in my day....I have owned tobacco companies in Indonesia. And those were companies that chopped down rainforest to get timber to smoke-cure their cancer-causing drug of addiction."

Ha! I don't know why. Slap happy from this nice bounce in the market I suppose. But kudos for also making your readers laugh out loud.

Charles Butler said...

The obvious, if the vision is true, is US auto manufacturers - with tons of caveats concerning whether they are genetically disposed to adaptability. Failed product line and business model + public funds and pressure to change.

Will said...

From a European point of view- investing in the polluters with protected investments would have been the call 5 years ago when the EU introduced carbon credits but gave away credits to their existing national utilities for free. Hence it was a windfall for the incumbents because the marginal cost of producing new energy went up by say €20 (and hence the price) but the costs to teh incumbents did not.
The EU have cottoned on to this and will make all polluters have to pay for credits from 2012.
Hence the 'carbon credit price' is likely to go up even more (and the marginal cost of new supply = elec price) but this won't benefit incumbent polluters because they will have to now pay for the right to polute. The beneficiaries will be hydro and nuclear plays, who see increased pricing, without having to buy carbon credits.
I wouldn't expect the US to make the mistakes the EU made.
Also anyone who can get these kind of credits on to some form of exchange and be first to get most of the volume.

Anonymous said...

Coal and railroads. This is not a new investment ideas. Especially the US.

The Coal that the US is sitting on is what no environmentalists want to talk about. In general, it is already owned by someone, and will be burned somewhere.

I have to think of the Utopian future where nukes are everywhere and no one is burning anything in the US anymore.

How do you prevent that coal from being moved to somewhere else to be burned?

In this situation there is a real moral problem with keeping all of that coal underground, especially during a famine or natural disaster.

This is where 'global' warming comes in.

Whatever the US decides to do internally with its energy policy, the coal will be burned. Just a question of how far you have to move it before you do.....

Blank Xavier said...

My feeling is nothing meaningful will happen. It's a tragedy of the commons, like oceanic fishing.

That line of thought suggests encumbents won't face meaningful pressure to change and green energies will receieve cosmetic subsidies which will be unreliable (for if successful, the subsidy will be too expensive and will be withdrawn) and variable (wind one year, solar the next).

I think most Governments like nuclear, but have backed off because of popular pressure. This is probably a useful means for Governments to get nuclear going again.

JJ said...

Long Rail, short (though perhaps not the right word) air, long nukes "here" and polluters "there". Short solar, but I already said that and why. It's a short term thing anyway. You know, all the things others said before me.

But I did remember one more thing: A climate model on how the sun influences our climate. It is usually what "skeptics" refer to (without knowing) when they talk (=recite talking points) about climate. From what I know of it, it does show some merit, without delivering quite as much as its proponents promise. It predicts that the next 10 years should see the global mean temp going down; so there is a chance the temp might level out for a decade or so. It won't do us much good in the long run, but the feeling of urgency might perhaps be lost. That might matter on the political will to make new tough laws on polluters. Again, I don't really know how to cut through all the noise to make anything from this, though. But I will guess there will be a bubble on "climate stocks" (for lack of a better word) in roughly a decade.

rod said...

The European lesson seems to be that polluters not on the margin will get the windfall first, along with Nuclear. Once free permits are removed then only Clean energy and Nuclear outperform.

Risks with this hypothesis - long term demand and energy efficiency, Nuclear costs are fixed and you dont want to be on the wrong side of the curve.

Alternative way to play - transmission, when generation cost / margins move it creates economic advantage to shift power around (e.g. from Nuclear France to Gas powered UK).

Anonymous said...

John,
You appear to be a person who has no moral compass...but then again what did you expect from an typical Aussie. No doubt your hero is no other than that loser former PM Johnboy Howard. BTW, any convict blood in your genes?

John Hempton said...

Sorry if you think I have no moral compass. You are wrong.

Yes I almost certainly have convict blood in my heritage. The Hempton line came from Ireland in 1840 and were free settlers - but they almost certainly married into convict lines - I am just unaware which lines.

I hated John Howard. One of the proud things I did in my retired spell was organise against him in his own seat. I was briefly on the election coverage at Maxine McKew's party when she didn't claim the victory we knew was all of ours.

J

Anonymous said...

Fucking brits...

If there is anyone of Irish or in this case Australian heritage that is not from convict blood, they are probably the real convicts.

I wear it as a badge.

English ooot..

alcohol rehabilitation said...

John,

I am a little bit surprised about this line from your article,”… companies that chopped down rainforest to get timber to smoke-cure their cancer-causing drug of addiction.
If the right investment is a polluter in China whose western competition go away then I am all-too-happy to make the unethical investment."
I think we have similar observation with George.
But in modern society perspective, drug promotion related investment is not good business at all.
That's why some people call such profit derived from the investment as "blood money".

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.