The Chinese choose jobs. The West chooses the environment.

News from the Green Bubble – Grubble – is coming in thick and fast now. But I’m not quite sure what to make of it.

The Extinction Rebellion protestors reportedly dressed up as bees and glued themselves to the Liberal Democrats’ electric campaign bus.

The auto industry is shedding 80,000 jobs worldwide as the turn to electric cars takes its toll.

Overall electric car sales are declining. Even in the US – down 20% compared to the same quarter last year. And with a sales market share of 2.3%, things never exactly boomed…

According to the Spectator, the increased popularity of SUVs will outweigh the benefits of electric cars: “The International Energy Agency projects that SUVs by 2040 will be canceling out the fossil-fuel savings from 150 million electric cars. This is despite all the enforced use of electrics, subsidies and grid disruption.”

“China Is Still Building an Insane Number of New Coal Plants” reports Wired.

“While the rest of the world turns away from the fossil fuel, China is investing big in coal-powered electricity.”

In fact, there’s so much investment in the coal sector that some of it might never be connected to the electricity grid…

Today, I want to examine the politics at play in the Grubble. Because it looks like the pollies will soon have to make a choice. And it’s a very tough one: your job or the environment?

What if there is a trade-off between going green and providing jobs? What will voters and politicians choose?

According to the Guardian, the European Environment Agency is demanding we “Don’t pursue economic growth at expense of environment” any longer. But what about considering that backwards? Should we pursue a better environment at the expense of the economy?

The Chinese are obviously making their bed and breathing it in. Their coal investment is all about jobs in politically volatile regions. They don’t want what Margaret Thatcher had on her hands…

In Germany, where job losses in the car industry are concentrated so far, the push for green everything is going to lead to a serious backlash eventually. It already has from animal rights activists who complain it’s raining eagles near windmills. Automotive workers will be next.

The higher cost of renewable power is also an issue for industry generally. Especially in Australia, which has frightening power costs.

If the environment is presented as a trade-off with the economy, or is perceived as one, I think people are likely to choose their job over the environment. If they haven’t already…

This chart from Populus shows how Green Party voters tend to be people whose jobs are not threatened by green policies in the UK. They’re upper-middle class office workers and students.

Source: Populus

Click to enlarge

My point is that the green vote and the jobs vote are going to clash in coming years. As environmental policy starts taking its toll, people will recognise that toll. And vote differently.

I’m going to call this trend the Watermelon Rift. Because the green and red political movements used to be very similar under their skin. Hence calling green activists “watermelons”. Green on the outside, red underneath.

But as the trade-off I keep mentioning rears its ugly head, the greens will have to go green all the way through as red voters focus on issues like job security instead.

It reminds me of this video, which I’ve often used to explain complex financial phenomenon. It involves launching a green policy, which promptly explodes in the launcher’s face.

If I’m right and the Watermelon Rift separates the green and the red movement, that could be a stark political change. Especially in Europe where those two issues are covered by the EU’s powers. Red and green parties are historical coalition partners in Germany, too.

What would the Watermelon Rift mean for the Grubble?

I’m not sure, but I’m not expecting any green boom to get very far just yet. Which means I’d steer clear with your money.

I wonder if Eoin Treacy would agree. To put on a trade, he looks for three specific things. Do you think the Grubble meets Eoin’s criteria?

As I’ve said before, I think the biggest environmental gains are available in energy efficiency – something that would benefit the economy too. And those gains are about to become possible thanks to the rollout of this extraordinary technology.

Eoin Treacy hasn’t just uncovered the potential of that technology. He’s also found the small company that makes the key to bringing it to your mobile phone.

If you want to find out how to profit from the revolution in your pocket, click here.

Until next time,

Nick Hubble
Editor, Southbank Investment Research

Category: Energy

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