24 Jun 2021
01 Jun 2021 | Mark Lacey, Head of Global Resource Equities
When one of the world’s wealthiest individuals writes a book on avoiding climate disaster – and suggests changes we all need to make to our lifestyles – it is easy to be cynical.
But the high-profile intervention of Microsoft founder Bill Gates in the climate change debate should be welcomed. This is not just a highly intelligent wealth creator, but somebody who, arguably, has unique access to information and insight. Furthermore, his Gates Foundation has achieved impressive results in tackling global health and education issues. He clearly has an appetite for solving the seemingly unsolvable.
His book, How to Avoid a Climate Change Disaster: The Solutions We Have and the Breakthroughs We Need , should be a must read, particularly for those investing in the great energy transition.
He captures the challenge of the century: how do we stop adding of 51 billion tones of greenhouse gases to the atmosphere every year. This needs to be done as fast as possible to avoid climate disaster and in an economic and balanced way.
As a fund manager who lives and breathes this trend, the solutions identified by Gates affirm the decisions being made by me and my team - the technologies we are backing and the innovations we are identifying.
Gates sets out the need to quickly reduce our reliance on fossil fuels over the next 30 years to get to net zero. Net zero does not necessarily mean that we will not be using fossil fuels anymore. In power generation and in ground transportation, that is a strong possibility, but in other areas, such as steel and cement manufacturing, or fertilisers or even lightweight plastics, we will likely still be using some fossil fuels. Carbon, however, will need to be captured rather than released into the atmosphere.
The first part of the book provides some simple messages that cannot be ignored:
The next part of the book is a little more optimistic:
The global energy system, when you combine electricity, transportation and heating/cooling, is effectively responsible for half of the 51 billion tons of green house gases being released into the atmosphere. This change in the energy system to a more sustainable system is what people now refer to as the “energy transition”.
As investors in this trend, we are responsible for investing our clients’ money responsibly in the companies directly involved in the structural shift of the global energy system over the next 30 years.
The book really underlines some of messages that we have been conveying to clients. Here are six of the most important:
Long before he turned his attention to climate change and wrote this book, Gates had already articulated what can help in solving the seemingly unsolvable. And it has resonance for investors.
In 1996, he wrote: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10. Don’t let yourself be lulled into inaction.”
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