In today’s Exponential Investor

  • What is the real significance of Russia’s invasion of Ukraine?
  • $4 trillion has been invested so far: how much more money could follow?
  • Where do you find out about the best investment opportunities?

Things are coming to a head.

Finally, the world is working out that fossil fuels do not just hurt the planet, they also hurt the people on it.

Earlier this week the world’s top scientists released a report that said the breakneck speed of global warming exceeds the pace of efforts to protect billions of vulnerable people.

According to the latest UN Intergovernmental Panel on Climate Change (IPCC) report, it is now past time to take on the “arsonists” of the fossil fuel industry that refuse to manage their own decline.

The (fossil fuel) energy divorce

Of course, the report was released amid the spectre of war in Ukraine financed by President Vladimir Putin with fossil fuels.

Although Russia’s invasion of Ukraine is not specifically about hydrocarbons, it has many implications for their use. Moscow has long used its gas supply for leverage over its major customers.

The solution to Moscow’s recklessness is as clear as it ever was: we need to reduce our reliance on gas both as a matter of energy security and to stave off planetary destruction.

Already we’ve started to witness an energy divorce between Europe and Russia, unravelling a relationship that goes back 60+ years. Germany has already said it won’t be permitting the Nord Stream 2 gas pipeline. It now aims to fulfil all its electricity needs with supplies from renewable sources by 2035.

Although the authors of the IPCC report offered a bleak assessment of the impacts of climate change now and in the future, they remain convinced that the worst impacts can be averted – if we act in time.

In fact, the IPCC says this opportunity for action will only last for the rest of this decade, as the final sentence in the new report underlines.

“Any further delay in concerted global action will miss a brief and rapidly closing window to secure a liveable future”

Where the unicorns are/ will be

Luckily, this brief window offers an enormous opportunity for in-the-know investors. In fact, it’s not only the biggest investment opportunity out there today, it’s perhaps the biggest opportunity perhaps ever… anytime, anywhere.

The opportunity is climate change or so-called “climate tech”, the technologies going into tackling and hopefully reversing the damaging effects of climate change and to help us reach our over-arching decarbonisation targets.

An unparalleled wave of innovation is emerging to help solve the most pressing problems associated with decarbonising the world’s economy. The demand for zero-carbon everything – energy, products, foods and goods ­– will expediate these new technologies’ market adoption, helping to drive colossal financial outcomes for the most successful.

According to BlackRock CEO Larry Fink, the next 1,000 unicorns – start-ups valued at $1 billion or more – won’t be search engines or social media companies, they’ll be sustainable, scalable innovators that help the world decarbonise.

“Engineers and scientists are now working around the clock on how to decarbonise every sector of the economy: cement, steel, and plastics; shipping, trucking, and aviation; agriculture, energy, and construction,” Fink wrote in his annual letter to CEOs – considered something of a bellwether for future investing trends because of BlackRock’s massive size and influence.

“It’s clear that decarbonising the global economy is going to create the greatest investment opportunity of our lifetime.”

What’s more, there has never been a better time to invest. The world realises it has got work to do to reach our pressing climate targets. There has never been so much money flowing into solving climate change than right now.

Already more than $4 trillion has been invested in sustainable technology, but trillions more are on the way.

The sums being put to work – from governments, venture capital and private equity – at tackling the most pressing issue of our times are truly remarkable.

Of course, the challenge with truly tackling climate change is, conversely, the most alluring thing about it: the fact that carbon dioxide (CO2)  emissions have permeated so thoroughly throughout the entire global economy.

Almost all human activity produces CO2 emissions, meaning the process of eliminating carbon-emitting fuels requires a huge overhaul of many if not all of the largest sectors in the world. 

You see, we’ve already made great progress in decarbonising the energy sector. There’s still a way to go, of course, but now, armed with low-cost and plentiful zero-carbon electricity, it is now increasingly possible to start tackling the heaviest emitting industries.

Quite simply, there’s huge upside and potential rewards in identifying the companies at the forefront of change in these rapidly changing parts of the economy. 

The size of the opportunity is mind-boggling and proportional to the reward: companies that successfully contribute toward significant climate change mitigation will build enormous businesses in the process.

The $160 trillion opportunity

If we consider that so far 1.6 trillion metric tonens of carbon dioxide have been released into the atmosphere, valuing each tonne at a realistic $100, that’s a potential $160 trillion market to reverse climate change.

So, what is the best way for you to take advantage of all this?

Well, over the next few days we’ve got some of the best analysts and minds on the topic to explain exactly what’s going on.

In our Climate Tech Fortunes Summit, you’ll hear exactly where investors should look for the most potentially profitable opportunities, be it food and agriculture, steel, cement, chemicals and aluminium.

You’ll also hear a lot about what’s happening in the climate tech sector as a whole and about the importance of sustainability and impact investing – and, yes, including from an environmental point of view.

Of course, the upshot is a healthier environment, cleaner skies and seas, a renewable grid and sustainable agriculture. But for the hardnosed investor looking for the single biggest megatrend of our age, this is it.

As Fink emphasised, we focus on sustainability not because we’re environmentalists, but because we are capitalists and investors. It’s not mutually exclusive.

This is a once-in-history migration of wealth. A long-term play that allows you to think beyond the immediate ups and downs of the market. This is the biggest financial story in the world, bar none. It’s one that we’ve not seen before and surely won’t ever be repeated again.

So my advice is clear: sign up to what should be an exciting few days and take in as much as you can. I don’t think you’ll regret it.

As events in Ukraine show, the world is finally moving on from the fossil fuel age.

I hope that you enjoy the summit.

James Allen
Editor, Exponential Energy Fortunes