In this issue:

  • Rip, reap, and burn, baby, burn
  • The Navy’s plan to save the planet
  • The only politically palatable solution to climate change

In October 2021, Nigel and I discussed whether coal might be the best way to profit from the failure of renewable energy. To put it mildly, we were proven right. Coal prices soared to a record high and coal stocks were amongst the most successful punts on the market in 2022 and 2023.

As part of its attempt to go green, miner BHP (LSE:BHP) sold a major coal asset to Glencore (LSE:GLNCY) for peanuts in June of 2021. I mean, who would want to buy coal during the energy transition?

Within a year, the coal price soared threefold. Glencore’s purchase was described by the Financial Times as “one of the most profitable mining deals of all time.”

As the failure of renewables continues to unfold, I’d like to give you several more such opportunities. Including this time-sensitive one you need to check out now, if you’re to position yourself in time.

Just to get it out of the way, our first conclusion comes pre-ordained. If renewables continue to fail, we will all burn and drown because of climate change.

Unless, of course, climate alarmism is as dodgy. In which case, the renewables campaign is going to come to an even more abrupt end than I expected.

So, here’s how to profit from the slow or fast death of renewables…

1. Burn, baby, burn

If renewables fail, fossil fuels have a rather prosperous future ahead of them. Certainly better than investors are anticipating.

This trend has already begun. Climate change-obsessed governments like Germany and the UK are having to announce new gas power plants because of renewable’s intermittency.

Electric vehicle sales are falling dangerously short of projections, implying far more oil use for far longer than anticipated. The oil price is rising as fast as unsold EVs are piling up on wharves.

Countries exporting fossil fuels and countries that use fossil fuels to keep energy prices low are booming. Those who shut down fossil fuel power are stuck with dangerously high electricity prices.

All green energy-sceptical investors need to do is divide the world and its stock markets up into clean and supposedly dirty. And then invest in the supposedly dirty.

So far, so obvious. But what are some more unusual angles?

2. The greatest Useless Box sale in history

If you ever feel stressed, probably about climate change, be sure to look up “Useless Box” on YouTube. A Useless Box is a type of Rube Goldberg Machine.  A device designed to do something very simple in a very complicated way.

In the case of the Useless Box, the machine is designed to do just one thing: turn itself off again.

If you flip the switch on a Useless Box, you might find it triggers a little mechanical finger to pop out of the machine which does absolute nothing but flip the switch back off again.

It’s surprisingly amusing. The idea is to get as creative and complex as possible in your engineering skills. How aesthetically pleasing or unnecessarily complex a contraption can you devise that does nothing but turn itself back off again?

Carbon capture and storage (CCS) is much the same thing. But that doesn’t mean it won’t be the most profitable invention of the 21st century…

The basic idea is simple. In a net zero world, anything we do that emits carbon must be offset. You have to capture and store the carbon you release.

Given the miserable performance of renewables and electrification so far, we may well be emitting a lot of carbon come 2050. And so CCS will become ever more important.

Whoever invents and patents the cheapest form of CCS will become the world’s first trillionaire. Because their device will determine the global standard of living. The more expensive CCS is, the less economic activity still makes sense. The cheaper we can make CCS, the more we can enjoy life.

I suggest you and I keep a close eye on technological developments in this space…

3. A geopolitical standoff over emissions

If the Americans are willing to invade countries and start wars to “make the world safe for democracy” and prevent dictators from securing imaginary weapons of mass destruction, what might they be willing to do to save the planet from carbon dioxide?

No doubt that sounds a bit alarmist. But if governments are willing to hollow out their own economies to prevent carbon emissions, what are they willing to do to other countries that refuse to do the same? Many are already our geopolitical enemies…

As I explained yesterday, net zero only works if all countries and governments play along with it. Which is not happening at all. So, how do we make them?

I’m expecting the EU and US to impose tariffs that tax the carbon emissions of imports. If you want to import a car from China, you’ll be taxed on the carbon emitted in producing it. By which I mean the amount of carbon a bureaucrat estimates was emitted in making it.

This idea is already under development by those who believe we should count carbon emissions based on where goods are consumed rather than where the carbon is actually emitted in making them.

If you like to go on a cruise, your ticket could soon include the cost of offsetting the ship’s emissions, for example.

Once such estimates are in place, taxing the carbon intensity of goods from other countries and their high emissions power sources will be the next step.

Just wait till they find out how emissions intensive renewable energy and EV components are! They’ll definitely need exemptions.

And before you laugh consider that this will be perceived as an act of economic warfare by developing nations. They want to use cheap coal and oil to develop their economies just like the West did. And if we don’t let them, things could get nasty.

Companies in the West, if there are any left at this point, will stand to benefit immensely from such carbon protectionism. Only the West can afford highly expensive low-carbon forms of manufacturing, after all.

Mothballed European steel and car manufacturing could soon be back with a bang. Especially if they use hydrogen fuel…

4. The only politically palatable solution

The obvious fix for a grid destabilised by a lack of baseload power is more baseload power. And only nuclear is able to do that without emitting carbon.

This implies something very simple. Governments will eventually have to turn to nuclear power to plug the renewables gap. The question is how much, when and what kind of nuclear power.

My friend Sam Volkering reckons he has found the answer to those questions.

Whatever happens, I think it’s going to be a very interesting run to 2030. That’s when the first net zero commitments are due. If we fail, politicians will have to admit they were not just trying to save the planet. Which begs the question, what were they up to…?

Until next time,

Nick Hubble
Editor, Fortune & Freedom