Ferg's Finds
This is a short weekly email that covers a few things I’ve found interesting during the week.
Article(s)
Dutch Climate Goals at Risk After Success of Far-Right Party
“While Wilders’ pledges particularly appealed to voters seeking to limit migrant numbers, his party’s manifesto includes proposals to stop reducing carbon-dioxide emissions and put key climate agreements “through the shredder.”
Fears of populist climate policy backlash loom over Germany’s two southern state elections
“The populists have benefitted from voter fears over high prices and rising migration into the EU, readily exploiting grievances regarding energy policy decisions and Germany’s anti-Russia policies after the invasion of Ukraine. This strategy has proven particularly successful in the former communist eastern states, where the right-wing party now leads the polls, at around 30 percent. Resolutely railing against any decarbonisation efforts, the AfD is expected to make substantial gains in three eastern state elections (in Thuringia, Brandenburg and Saxony) next year.”
Reading Kopernik Global Investors 3Q 2023 it stuck me democracies' road to ruin is constant easy choices that have long term consequences, i.e. "free handouts", education, healthcare, housing, etc.
Politicians pushed by voters go for the quick sugar hit, ignoring longer-term consequences.
The thing is, green/decarbonisation plans aren't "easy choices". They inflict pain on voters. Astute politicians will capitalise on this pain quickly, as we see above.
There is also the observation that renewables are highly sensitive to the very conditions they help create, i.e. rising energy costs and inflation. The more the Government prints/taxes to subsidise these projects, the worse their economics become.
Podcast/Video
Michael Kao - The Intersecting Economics of Fossil Fuels & Geopolitics
This led me to read this piece, which was well worth everyone's time.
Re: Oil-Deep Dive & The Supply/Demand Singularity Revisited.
Quote
“Basically, when you get to my age, you’ll really measure your success in life by how many of the people you want to have love you actually do love you. I know people who have a lot of money, and they get testimonial dinners and they get hospital wings named after them. But the truth is that nobody in the world loves them. If you get to my age in life and nobody thinks well of you, I don’t care how big your bank account is, your life is a disaster.”
– Warren Buffett
Tweet
I'm happy to see this grift biting the dust. The idea that harvesting forests in the US, turning them into wood pellets, and shipping them to the EU to burn in the name of zero emissions is an assault on the intelligence of a 1st level thinker.
Study after study has found burning trees for biomass is dirtier than coal yet is subsidised, and the emissions aren't counted.
Charts
I'd seen similar charts to this, but usually with total CAPEX not broken down by sectors. What jumped out at me is how much of recent energy CAPEX is just LNG infrastructure (mostly liquefaction and LNG carriers to a lesser extent), which does nothing to fix the supply/demand issues.
Something I'm Pondering
I'm pondering what percentage of EU voters still swallow this bullshit (the grammar is also lacking).
Key delusions:
The new production helped the EU hit a milestone earlier this summer when monthly solar power surpassed electricity generation from coal for the first time.
Picking a point in summer when solar produces is asinine. Show me what solar produces at the coldest point in winter when demand is the highest.
With the solar build-out set to break records every year for the rest of the decade as panel prices plunge, the only way to address negative pricing is to make power consumption smarter.
Consumption smarter? The Smarter option would be to match generation to demand (the duck curve).
The lurking threat to solar power’s growth
Simply put: the more solar you add to the grid, the less valuable it becomes.
The problem is that solar panels generate lots of electricity in the middle of sunny days, frequently more than what’s required, driving down prices—sometimes even into negative territory.
Negative prices aren't something to be celebrated. They are the market signalling the electricity is worthless at that point, and solar has reached its maximum percentage of the grid (until storage becomes economic and allows the shift to generation to periods of demand).
Hope you’re all having a great week.
Cheers,
Ferg
P.S. Ever since reading Jim Rogers books, I've loved the idea of hunting out great companies in exotic markets all over the world. This is why it was a pleasure to have on Michael McGaughy, the Portfolio Manager of Research Alpha, a specialist fund that invests in the equity of unloved and out-of-favour quality companies in some of the world's least expensive stock markets.
If you’re interested in my story and why I started this Substack, you can read the story here.
