As my colleague Nick Hubble wrote earlier this week, there is a “nuclear revival” in the works in Europe. Elsewhere in the world, the building out of nuclear energy infrastructure hasn’t missed a beat. But here in Europe, it missed a couple of decades.

The reason is, of course, Europe’s massive investment into “green”, “renewable” power, which has failed to produce economical or even reliable base power. I place green and renewable in quotes for a reason, as it is not always self-evident that “green” is actually green, or that “renewable” is actually renewable.

There is also pervasive, so-called “greenwashing” in which energy-generating (or sometimes actually net-energy consuming) activities are labelled as green but, even with the full knowledge of their proponents, are anything but.

That there has recently been much pushback on such deceptive practices is an understatement. Last year, HSBC’s head of sustainable investing was forced out of the bank after giving a presentation detailing just how impossible it had become to implement environmental, social and governance (ESG) guidelines, as nebulous and nonsensical as they are.

Somehow his comments were interpreted as anti-ESG, when really they were just anti-bull****. But hey, in the present age of “woke” investing, this is how things roll. Or don’t.

After all, things don’t roll without energy. And if things stop rolling, we’re three days from revolution.

OK, I admit that’s a rather bold statement. Please allow me to explain.

Although there can be other causes, there is no more consistent source of social unrest than hunger. If people aren’t getting enough to eat, they stop obeying laws and social custom, and they start rebelling.

They might know who to blame. They might not. It doesn’t really matter. Like a mama bear protecting her cubs, they will lash out and anything and everything that is seen as a threat or impediment to their food supply.

This might be the government. Sometimes it is the wealthy or large corporations. In 1789 and 1917, it was the specific members of royal families.

History hasn’t been particularly kind to those in power when food supplies began to run short. Why should the next time round be any different?

As it stands today, in most developed countries, food is grown and processed far away from where it is eventually consumed. This has been true of all somewhat urbanised societies for some time. But today, following decades of agricultural globalisation, the distances involved can be far greater than was the case for the urban societies of the past.

Naturally, if food is grown and/or processed far away, it is going to need to travel a rather long way to be consumed. And this is where things get tricky for net zero.

You see, when it comes to “food miles”, nearly all of the energy involved in transport is not net zero compatible. Far from it. As far as you can get, in fact. Most foodstuffs, at various stages of processing and distribution, move around via some combination of ship, rail and lorry.

Only high-value fresh food moves by air. Air transport is powered by kerosene. Kerosene may emit carbon, but as fossil fuels go, it’s relatively clean.

The same cannot be said for the low-octane bunker oil that powers ships. The diesel fuel that powers lorries is similar to kerosene, cleaner but hardly carbon neutral.

As for rail, well, this depends on where in the world you are. Only in Europe, Japan and in various urban centres elsewhere is rail normally electrified. Otherwise, as with trucking, it’s also normally diesel-powered. In some relatively underdeveloped countries, coal still plays a role.

While few might see it this way, in my opinion food production, processing and transport might be the single largest obstruction on the road to net zero. It is hugely carbon dependent. And I see no evidence whatsoever that this is going to change on any meaningful investment horizon.

Trendy politicians flouting their supposedly “green” credentials might tell you that the road to net zero, paved with technology, will be smooth. Others might tell you that it could be a little bumpy, but we’ll get there regardless.

In reality, the road to net zero isn’t paved with technology at all, at least no technology that currently exists. Rather, it is paved with the same stuff as the Road to Hell: good intentions.

I have no doubt that politicians will keep on pushing their trendy net zero agenda. They’ll keep throwing other people’s money at it. But they’ll reconsider if it becomes apparent their policies are beginning to imperil the affordability and availability of food for their electorates.

In the meantime, investors should play both sides of the net zero barbell. Investing in trendy, subsidised, supposedly green technologies, and the materials on which they depend, can be lucrative, as long as the subsidies keep coming. But fossil fuels are, in a very real way, a play on the deep human desire to put food on the table. That’s probably as close to a “sure thing” as exists in the often fickle world of investment trends.

And if you’re looking for a pointer on how to play one side of the barbell, my colleague James Allen has prepared a special presentation for you, where he details two oil and gas stocks that he believes could be about to move sharply higher. Don’t miss out on his presentation, right here.

Until next time,

John Butler
Investment Director, Fortune & Freedom