Green Companies vs Global Warming

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Green technologies posed the investment opportunity of our lifetime, according to Kevin Parker, Deutsche Bank’s global head of asset management, in a study published on Thursday 14 January 2010.

“The shift to a low-carbon economy to mitigate global warming will require the creation of new technologies, industries and jobs on a massive scale.  The absolute imperative to prevent climate change is therefore also, I believe, the economic and investment opportunity of our lifetime.  Climate change is not merely an investment sector that may hold future promise; it is a sector that has already delivered and is continuing to deliver,” said Parker.  “That is why we believe institutional investors should be shifting their asset allocation towards climate change.”

Dear oh dear, we are emerging from a credit crisis and we see this example of the kind of advice given to investors by  a leading bank.  Deutsche Asset Management had USD 695 billion in assets under management as of September 2009.  I guess that makes Deutsche a leading bank.  Seems they have learned nothing!

The reason for the strong performance of “Green” business is the same as the reason for the previous strong but short-lived performance of dot coms, and before them, ostrich farming.  For those ventures, the bubbles burst, leaving investors all wet and cold.

It’s flavour-of-the-month.  Fashion.  Whatever is strongly promoted to the public.  Whatever they believe in at the time.  The stronger the hype, the more publicity they are given, the more valuable their shares are perceived to be.  Until they go out of fashion, or the abysmal or non-existent dividends lead to panic selling, and the share values collapse.

And these ventures are due to collapse in a spectacular fashion.  We are in for up to thirty years of global cooling – even the IPCC (belatedly) admits that!  Long before then, voter dissatisfaction with the expensive climate control policies of their governments will lead to a reversal of support and removal of subsidies from “green” companies.

Good investment?  Unless a really good energy storage system is developed, these companies will be good investments only in the very short term.

Not that I am happy about it. We really do need to develop good systems to generate energy from renewable resources – after all, oil and coal are finite.  But the kind of nonsense arising from the global warming hype is leading to premature investment in technologies of limited value.  Instead of pouring funds into cap-and-trade nonsense, and subsidising inefficient power generation without continuity of supply, we should be funding efforts to develop realistic renewable power sources. Without risking the life savings of small investors hoodwinked by hype and carefully cultivated fear.

Seems I have revealed myself somewhat.  Yes folks, the Grumpy Old Man is an environmentalist and a conservationist.  But he also has a built-in baloney detector, and AGW is five-star, ocean-going baloney.  Sadly for investors, so is Deutsche bank’s advice.

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