[Today’s Fortune & Freedom is a flashback to February 2020, when Fortune & Freedom was but a sparkle in Nigel Farage’s eye. I published a piece in our sister publication Southbank Investment Daily about the next stage of greenification. You see, they’re not just coming our energy this time, but everything else…]

Yesterday’s commute featured an epiphany. I suppose that’s what happens after two weeks’ paternity leave.

After getting on the train, I spotted a lady wearing bright green glasses.

I’m not talking about the frame. I’m talking about the lenses. Literally everything she sees is green.

It was especially noticeable because she was the sort of person who both needs a seat and needs to be the first person to get off the train at the station too. The two don’t work out well in overcrowded carriages. Especially if you’re seeing green to begin with.

The result was a very grumpy set of commuters getting elbowed in the sternum and headbutted in the elbow as everyone had to make way, before following her on to the platform anyway.

Before I explain what all this really means for the value of your stocks, let’s review the recent news to get some context. And there has been plenty of news. All of it shows how extraordinarily quickly things change.

[…]

So there’s plenty going on. What does it have in common? Seemingly not much. But what if you can only see the world through green glasses? Then, suddenly, it’s all about just one thing – climate change.

What has me worried today is that policy-makers all around the world are very much like the lady on the train. They’ve got the green glasses on and are on a mission which makes them and their careers more important than the rest of us. The result will be a series of painful blows to you and me.

If the EU gets its way on the Green Deal, all of its legislation and policies will be reviewed and re-examined under a green lens in coming months. Any of its own initiatives that don’t stack up to climate change goals will have to be changed.

Which sounds good – at least they’re not hypocrites, right? But it’s the citizens of the EU who are bound by those rules, not just the politicians who make them. And the Gilets Jaunes protests in France have shown where such changes lead.

Brexiteers who think they’ve escaped this clampdown should note that any countries which don’t do their bit to cut emissions as much as the EU will be carbon taxed at the EU border… If you want to compete with the EU, you have to be just as inefficient.

I believe the rest of the world will soon follow suit regardless. Every decision you and your investment entities make will be viewed through the prism of climate change. And influenced by what you see through those green glasses. [Emphasis added.] More on what that means for how you should invest soon.

The surprising news is that the green energy furore seems to be working… in a sense. 2019’s emissions from energy production specifically did not grow from 2018 levels. (Despite scientific studies predicting an increase…)

While emissions in growing economies boomed thanks to coal (not that the two are related, of course…), total emissions from advanced economies’ power sectors fell to levels “last seen in the late 1980s”, the International Energy Agency said.

Not bad. But not as good as the 1970s, when oil and coal shortages brought emissions down even further. Those were the good old days for emissions, when we worried about cooling instead of warming, in more ways than one.

Enter the caveats to the recent data…

Who exactly do we have to thank for this extraordinary progress? Greta Thunberg’s decision to take a sailboat to Chile and back? The Davos crowd’s decision-making skills? Central bankers’ newfound focus on climate change? Brexit being delayed till 2020?

The Financial Times explains who gets the credit:

The US saw the largest single decline in emissions of any country, unleashed by the cheap natural gas prices offered by the domestic shale boom. This led to a rapid switch away from coal in the power sector, helping lower emissions by 140m tonnes or almost 3 per cent.

 The shift has come despite the Trump administration’s withdrawal from the Paris deal and its strong support for the coal industry,

Yes, you read that correctly. President Donald Trump and shale gas are saving the planet. Although, over in the EU, it’s the Russians who are doing their bit. Gas produced more power in the EU than coal for the first time, also cutting emissions.

Now I’m not sure what climate change warriors think about gas being their saviour. As far as I know, it’s the one form of power they never mention. Then there’s that other one which we’re not allowed to talk about…

In Japan, it was the decision to turn nuclear reactors back on that helped cut emissions slightly. Although the New York Times claims, “Japan now plans to build as many as 22 new coal-burning power plants — one of the dirtiest sources of electricity — at 17 different sites in the next five years”. And “Together the 22 power plants would emit almost as much carbon dioxide annually as all the passenger cars sold each year in the United States.”

Many years ago, the shale boom in the United States and Australia was one of our favourite topics. But today’s news from the IEA is not the green bubble which my colleagues here at Southbank Investment Research were expecting more recently. Although their favoured green energy really does seem to be taking off, alongside the stocks that supply it.

For now, nobody is pointing out that the correlation and causation arguments may be a little muddled in all this. Perhaps developing economies are booming thanks to their decision to invest in cheap reliable power while stagnating economies subsidise inefficient and unreliable electricity. Perhaps cheap energy makes economic growth more viable. And more expensive energy makes it less viable. Italy and Germany are famous for their high cost of power…

Emissions from energy production actually fell globally in 2009. Let’s do that again then. After all, it’s what matters, right?

[The environmental, social and goverance (ESG) movement has been busy over the past two years, since my article was published. At least when it comes to the environmental part of ESG, anyway. These days, even monetary policy is viewed through the prism of climate change! If my colleagues James Allen and Kit Winder are right, the next phase of the green movement has already begun, just as I predicted it would back in 2020. First, they came for our energy. Next, they’ll come for the rest of our economy. Find out how, and how to profit from it, from those with a track record of exceptional gains from the green energy phase, here.]

Nick Hubble
Editor, Fortune & Freedom