Hurricane Gore Arrives Onshore

October 30, 2013

Multiple Pages
Hurricane Gore Arrives Onshore

Board up the TV screen and plug your ears with seaweed, boys!

Hurricane Gore is about to come ashore with another gale-force climate sermon. Interviews that the former next president has been giving suggest 24 Hours of Reality is calculated to make markets crash. The question is: Which ones?

Al Gore has already told fellow communitarian climate maven Joe Romm that public and private investment must be bent to the view that fossil fuels are best left in the ground:

There are $7 trillion worth carbon assets on the books of multinational energy companies….The valuation of those companies and their assets is now based on the assumption that all of those carbon assets are going to be sold and burned. And they are not. The global scientific community has just reaffirmed that No [sic] more than one-third can ever possibly be burned without destroying the future.

Invoking the subprime mortgage crisis, he added:

This carbon bubble is going to burst….People can make short-term profits by playing the psychology of the markets. But if you’re a long-term investor and you do not take into account the stranded-assets potential for carbon-based equities and debt instruments, in my view you’re making a mistake.

Romm concludes that divesting endowments from fossil-fuel companies is “not just the morally right thing to do for a university, foundation, or pension fund—it was a financially smart move for any such long-term investor.” The markets appear to differ, perhaps because analysts have run some inconvenient numbers.

“America has, wonder of wonders, become the world’s largest energy producer.”

Legitimate as concern over oil imports and climate change may be, domestic fossil-fuel production has been ramping up, and America has, wonder of wonders, become the world’s largest energy producer.

This may be bad news for posterity, for however slow, manmade climate forcing remains as pernicious as inflation; but in terms of letting the present generation live long lives, there is a case for civilization continuing to indulge in the use of fire. Americans generate over 20 tons of carbon dioxide annually, Kazakhstanis over 13, Israelis over 10. Even though sorely handicapped by their nuclear electric system, the French manage a respectable six tons per capita.

Still, there are laggards, nations so backward that they are not pulling their weight in the race to outdo nature as a source of climate change. Despite India’s burgeoning economy, its billion citizens added a feeble two parts per million of CO2 to their share of the world’s air each year, while Pakistanis barely manage one.

Burning under three pounds of fuel a day for all purposes from cooking and heating to transport may seem austere to some, but Deep Greens deem even the carbon footprint of a Cuban campesino shockingly profligate. Seeking to reverse increases in gases that warm the planet, they applaud Al Gore’s demand for a 90% cut in US CO2 emissions by 2050. This means America must undercut the fuel economy of sunny Iraq at ~3 tons per capita of CO2, or Cuba at 2, and emulate the few, the proud nations that have become avatars of Earth Day by emitting less than a ton of CO2 per capita annually.

Which one to aim for is for democracy to determine, so before you vote Green or emigrate this Election Day consider this list of ten low-cal nations whose cool energy example America can follow into a central-heating-free future:

The winners are:

Paraguay 742 78.0
Angola 505 38.6
Sudan 287 50.3
Zambia 204 38.5
Ethiopia 103 50.4
Rwanda 63 50.1
Cambodia 39 63.4
Afghanistan 29 43.9
Chad 13 48.3
Somalia 3 50.7

It might broaden the horizons of foundation execs that favor the soft-energy path to drop in on the above list in descending order. But what about their portfolios? Militant greens are already Mau-Mauing universities nationwide to divest endowments and pension funds of energy stocks.

There are billions of dollars of alternative-energy assets on the books of the multinational venture funds Al Gore has advised. Many of these are bets against fossil energy companies. The valuation of the alternative-energy portfolios is now based on the assumption that eco-politicians such as Al can veto the sale of most of those carbon assets to support the artificially high prices needed to save alternative energy from bankruptcy.

But carbon prohibition is not going to happen, however much policy makers try to paint the scientific tape. Energy prices have inflated far faster than climate has changed.

The real object of “absurd overvaluation” is Gore’s apocalyptic climate rhetoric. Though he declared a “climate crisis” a quarter-century ago, rising seas have yet to flood his penny loafers. In reality, global temperatures have risen only a few tenths of a degree in all that time.

There is instead a clear and present danger that the “alternative energy” bubble Gore helped inflate is about to burst as shale gas and tar-sand oil flood the market and further float the prices of energy and fossil-fuel equities and bonds. In contrast, the solar selloff and Europe’s wind-power-driven fiscal woes put alternative-energy touts in the same pickle as the Morgan bankers peddling subprime mortgages before the economic crash.

While green entrepreneurs such as Gore have made short-term profits by playing the psychology of the markets, few technologies are more volatile than alt-energy plays predicated on celebrity or intellectual fashion. Prudent fiduciaries and long-term investors must consider the stranded-asset downside of solar and wind-based equities and debt instruments if reality-based climate projections prevail over green rhetoric in determining investment strategy.


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