Investing in the Green Revolution

As Europe swelters in record-breaking heat there is a temptation to believe the gates of Hell have opened for the coronation of Boris. However, these flippant thoughts should not be perceived as a cynical mind resigned to our planet’s failure to act to save itself from climate catastrophe. On the contrary, there is real evidence of an acceleration of actions and investment to reduce the impact of human activity on our climate.  The integration of renewable energy generation into many countries’ electricity grids is possibly further advanced than you might think, particularly if you reside in Ireland where we sadly lag progress made elsewhere.  Let’s start with the leaders…

Scotland is on track to deliver 100% of its electricity from renewables in 2020. The Scots will join Albania, Congo, Iceland and Paraguay who have already achieved that goal. Ireland has a bit more to do with a commitment to a 40% target by 2020. Elsewhere there are other worthy milestones being achieved. Here’s a few standout statistics…

  • Austria’s largest state(includes Vienna) achieved the 100% renewable electricity target as far back as 2015.
  • Renewable energy in Germany now provides more electricity (almost 50% year to date) than coal and nuclear power combined.
  • Uruguay thanks to a hydropower legacy has reached a 95% electricity target but the striking feature of the past 5 years is windpower rapidly rising from 1% to 33% of total generation.

One of the scientific challenges for the renewable revolution is how to store energy generated and smooth the supply of electricity to national grids. There have been a number of occasions in recent months in Germany where electricity prices went negative! The whole area of battery technology is exploding as automakers race for leadership in the electric vehicle (EV) market. Encouragingly from an Irish perspective the University of Limerick Bernal Institute has been conducting market-leading research on enhanced EV batteries with EU funding. This Western centre of excellence has not gone unnoticed as Jaguar Land Rover have recently established an automotive research centre in Shannon.

Clean energy and non-carbon powered autos will no doubt move the climate change dial but we also must clean up after ourselves. Happily, Ireland might be making better relative progress on waste recycling and innovation.

The recent opening of an innovative plastics recycling plant in Portlaoise by Trifol allows waste plastics to be recycled into waxes and lubricants. Trifol is currently raising funds on Spark Crowdfunding and it is well worth taking a look at the IP and the impressive management line-up. Another Irish owned business, Olleco, has been in business longer(2014) and has built a customer base of 50,000 businesses that supply used cooking oils, fats and waste food for conversion into renewable energy, heat and biodiesel across 16 sites in the UK. The company earlier this year was on a 6 company shortlist for a global environmental award at the World Economic Forum. Impressive stuff. Be under no illusions, the recycling revolution is imminent and it is striking to read this week that Adidas intends to only use recycled plastic in all its products by… 2024! Expect more and more significant announcements like this as we move on from straws and single-cup headlines. A final thought on a potentially vulnerable sector which has experienced Irish leadership in recent decades.

The share price performances of European airlines including Ryanair have effectively stalled since 2015. This has been a period of relatively decent economic growth and airline stocks typically perform pro-cyclically. Apart from super-low funding costs enabling stiff competition and aircraft supply, one does wonder is there a structural story mirroring what currently afflicts the oil production sector?  Is it too unrealistic to expect in the next 5 years corporates being the subject of eco-audits where Airmiles will be a key criterion for responsible corporate citizenship? If this scenario plays out then be assured aircraft leasing models will need serious re-evaluation. Aircraft leasing is still a high flying sector for Ireland as a global leader but this writer is not convinced eco-audits are in leasing risk models just yet.

If this final thought sounds rather Cassandra-esque please recall an earlier article “Food for Thought”  where we cited a leading hedge fund manager describing all investment decisions now factor in climate change. Undoubtedly, the Green revolution is a planet positive but still has the capacity to leave investors red-faced if they fail to see both the structural opportunities and risks which accompany change.

Stay Connected
Latest News