Proposing an emerging “energy mosaic”

Here’s a note from Bob Eccles:

RealClearEnergy just published a piece, “Climate Change, Misguided Activism, and a Roadmap for Institutional Investors,” by my good buddy John D. Skjervem, CFA, the Libertarian CIO of Utah Retirement Systems, and Democrat yours truly. Our thanks to Jude Clemente for publishing this piece. Referencing back to my piece on five climate change narratives with Melita Leousi, Ph.D. I posted yesterday, this one is ground in Scientific with a heavy helping of Opportunity, laced with Skeptical for some current approaches, and with a dash of Moral and Doomsday.

Trigger warning. Some of our views are contrary to elements of the dominant current narrative about how best to address the challenge of climate change. We oppose divestment (it accomplishes nothing and can even make things worse) and believe in engagement. We also accept the reality that we will need fossil fuels until and beyond 2050, as noted by the latest (sixth) IPCC report.

We propose an emerging “energy mosaic,” and note the importance of investing in new technologies such as hydrogen, fission (e.g., small modular nuclear reactions), and fusion (the Holy Grail), along with traditional renewable sources (e.g., hydro, solar, and wind). At the same time, we propose that reducing methane emissions, which are 85 times more carbon intensive than CO2, should be a top priority.

We point out the risk to America’s energy security of relying on National Oil Companies who control 65% of the world’s oil and gas reserves. Most of them are located in hostile and/or unpalatable despite regimes. This poses a huge risk to America’s energy security from a geopolitical perspective. Cleaner and safer fossil fuel energy, with an emphasis on gas, should be produced by domestic and other Western oil majors whose environmental and safety records are strong.

We also point out the challenge from activists opposing the permitting needed to create the transmission lines needed to get renewable energy into the grid. Another challenge is that the rare earths needed for battery technology come from inhospitable places like China, the Democratic Republic of Congo (sic), and Russia. Activists opposing the domestic mining of these rare earths are failing to take account of the broader geopolitical perspective.

We conclude with a suggested roadmap for how institutional investors, such as pension funds, can best support the much needed Just Transition. It is an urgent one. It is also a complex one involving many tradeoffs which need to be acknowledged and addressed, rather than ignored—whatever one’s ideological disposition.