Investment implications of Climate Change

[basilio]

Nonetheless,. Flood, fire, COVID or mice plague - Love will always find a way..

 

[basilio]

Many parts of Australia have experienced 4 major disasters in a bit over a year. Each of these has impacted on infrastructure, employment and community resilience. CC has been a contributing element to the severity of at least some of these events.

This story details the range of disasters and the cumulative impact on Local Government Areas (LGA's) around Australia.

For some areas hit by NSW flood crisis, it's the fourth disaster in a year

Two dozen declared disaster areas also flooded last year. Many also experienced bushfires and drought

www.theguardian.com

 

[Dona Ferentes]

bringing the thread back on its original purpose .... which when Investment Implications of Climate Change merges with Aussie Stock Forums tends to point towards talking about ASX stocks that are positioned for adaption, whether it be emerging technologies or whatever,...

Stockhead came up with an an article on recycling; apart from the big boys CWY and BIN, there were 4 interesting small caps that are in this space:

As the 'waste export ban' looms, these four ASX small caps are rewriting the recycling rulebook - Stockhead

ASX green waste tech and recycling is a burgeoning industry. Waste management is also part of the new ESG global economy.

stockhead.com.au

SciDev (ASX:SDV)

SciDev is developing the chemistry and process control for solids-liquid separation. It brings in technology and manufacturing capabilities to solve environmental issues for the mining, construction, and water treatment markets. The company is specifically focused on fine particle separation chemistry (colloid chemistry), which is reported to be a US$11 billion sector within the broader US$100 billion global commodity chemistry market. Recent significant contract wins include Shell, Melbourne Metro, and a field validation work for BHP at Olympic Dam copper mine.

Its latest financials show a 23 per cent increase in 1H FY21 gross profit, and its share price has shot up almost 150 per cent over the past year.

Papyrus Australia (ASX: PPY)​

Papyrus develops technology that converts the waste trunk of the banana palm into products used in the packaging, furniture, and construction industries. The company says its products have qualities not found in existing wood-based products, due to the ability to preserve the inherent natural qualities of the banana tree trunk.

The focus of the company in the past year has been to expand its Papyrus Egypt business, and apply its know-how in a developing country where bananas are grown. The company has also had success in Japan, exporting its veneer products to the Yamaha musical instruments manufacturers, as well as a recent licensing agreement in China for its technology.

The latest half year of FY21 shows $0.18 million profit before tax. Its share price has surged by 360 per cent over the past 12 months.

Range International (ASX:RAN)​

RAN is a manufacturer of recycled plastic pallets. Its thermo-fusion technology allows it to make plastic pallets from 100% recycled mixed waste plastic, at a price that is competitive with wood pallets. It currently has four production lines operating in Indonesia, and sells its pallets under the brand Re>Pal.

he company says its pallets are a sustainable alternative to timber, which subsequently reduces deforestation. Deforestation is especially a major problem in Indonesia, and the government there has banned logging of primary forest to supply wood for pallets. RAN aims to take advantage of these developments.

The company delivered a net loss for the full FY20 of $3 mlllion, which was a substantial improvement from its $9.2 million loss in 2019. Its share price has surged by 130 per cent over the past year.

Pearl Global (ASX: PG1)​

Pearl focuses on the environmental technology for the waste tyre industry. It applies thermal desorption technology to convert end-of-life tyres into valuable secondary products such as fuel oil, steel, carbon char and energy. It’s the first Australian company licensed to thermally treat tyres, after the government banned the export of waste tyres.

The company says it’s serving a large addressable market, with 1.6 billion tyres discarded globally every year, of which Australia makes up 56 million. Pearl says it has processed over 1 million tyres to date at its Stapylton facility.

Revenues for the FY21 half show a 40 per cent increase to $1.5 million, for a net loss of $4.1 million. It share price has risen by 6 per cent in the past year.

I am well familiar with SDV, but the other three are less so. These sorts of promotional articles are only useful to inform us of opportunities but usually a bit more checking needs to be done. The backstory of each can be ascertained from Company records and Reports, as do the Financials, and ASF performs a great service with the narratives there, selective yes but informative, to understand what has come before.

Some companies, even with great ideas, never get to be successful. Is there a moat, are other companies, perhaps overseas, involved in similar, is the Board and Management united in pursuing growth? And is there value; with the proliferation of 'motherhood' (ESG) investing, are too many (especially minnow) companies overbought just because demand is skewed?

 

[basilio]

bringing the thread back on its original purpose .... which when Investment Implications of Climate Change merges with Aussie Stock Forums tends to point towards talking about ASX stocks that are positioned for adaption, whether it be emerging technologies or whatever,...

Fair point.
However I think it would be unrealistic to ignore the impact of CC on Insurance Companies and the consequences of uninsurable properties on banks and the community.

Fire and flood: 'Whole areas of Australia will be uninsurable'

Extreme weather events caused by the climate emergency are an existential threat to homeowners and industry alike

www.theguardian.com

 

[basilio]

Came across the story of liquid metal batteries. Compelling case of a technology that will be the critical element to ensuring cost effective back up for renewable energy.

News - Ambri

ambri.com

 

[basilio]

The downside of Global Heating will be the effect it has on all economic and social activity. From an investment POV this translates into understanding how enterprises will be impacted by a warming climate.

In Australia APRA is now stress testing banks on the impact of 3C increase in global temperatures. This prospect is still currently quite likely given the rate of movement on reducing GG emissions.

Be interesting to see the outcome of their stress tests. Will also be interesting to see the impact of their findings on stock market investments.

More than 3 degrees: Regulator preparing for climate change doomsday scenario

A key financial regulator is testing what would happen to Australia's economy if climate change creates a 'hot house world' with temperatures 3-degrees higher than the Earth's current average.

www.abc.net.au

Key points:​

• APRA will commission research to illustrate the financial risks of unchecked climate change
• The scenario maps more than 3 degrees of warming, but also the impact of 'tipping points' that may be triggered if the world surpasses 2 degrees
• Such situations could create what some experts call "runaway temperature scenarios"

These are the current scenarios. Note that even rigorous actions to reduce GG emissions still sees a 50% probability of 3 C plus warming.

Climate change scenario - Wikipedia

en.wikipedia.org

 

[basilio]

Back to the impact of Global Heating on businesses and people requiring insurance in Australia. The Age has a sobering story on the refusal of insurance companies to offer any realistic or indeed any insurance on many rural properties.

The forced closure of hundreds of regional holiday destinations will undermine much of rural Australia. People won't visit the regions. Associated industries will also fail. Be interested to see what the National Party response will be.

‘I didn’t think it was possible’: Why bush holidays could become a thing of the past​

By Carrie Fellner​

May 30, 2021 — 12.00am


View all comments

Popular tourist destinations in the most captivating corners of Australia have become no-go zones for insurers following the Black Summer bushfires, forcing pandemic-battered businesses to close or risk everything operating uninsured.
One luxury bushland retreat in Victoria was knocked back by 38 insurers before receiving an “insulting” quote of $6.5 million in premiums for a business worth $3.5 million.

Owner Julie Pennefather (right) has been unable to obtain insurance on her property, Woodbine Park Eco Cabins near Merimbula, for the first time in 35 years.Credit:Angi High

But even though scores of businesses have been quietly pleading their case with the government, their plight has gone largely unpublicised because operators fear it will damage resale values if it emerges they have become uninsurable.

The owner of the Victorian retreat, who requested anonymity due to those concerns, said he was on the brink of closure even though his property had never been affected by bushfire.

“Never in my life have I come across this,” he said. “I didn’t think it was possible.”

The Sun-Herald and The Sunday Age have spoken to three businesses on the NSW South Coast and two in Victoria that have not been able to insure their properties this year for the first time.

They warn the escalating problem is threatening to derail the economic recovery across regional Australia, where operators have been battered by worsening natural disasters due to climate change, border closures and pandemic lockdowns.

Australia also stands to lose the unique bushland experiences that prove a major international tourist drawcard, they say.

Last year hundreds of businesses contacted Australia’s Small Business Ombudsman’s office warning they would have to close if insurance did not become available to them.
Ombudsman Bruce Billson said he was aware of instances where that had now come to pass.

“We’ve had pubs that have been operating for a century in a vicinity of a national park being told that’s not something people want to insure any more,” he said.

Why bush holidays could become a thing of the past

Popular tourist destinations across the country are in a battle for their survival as insurers flee the industry en masse.

www.theage.com.au

 

[basilio]

One of the ways we can address CC issues is reducing our use of GG emitting processes and substantially increasing the use of trees /wood products to sequester CO2 . It will also be invaluable to use timber for construction purposes.

I came across a couple of processes that would make timber far more effective and versatile as building product as well as in manufacturing.

Stronger than aluminum, a heavily altered wood cools passively​

By

John Timmer
Ars Technica
5 min
View Original






A look at the lignin-free compressed wood.

Most of our building practices aren't especially sustainable. Concrete production is a major source of carbon emissions, and steel production is very resource intensive. Once completed, heating and cooling buildings becomes a major energy sink. There are various ideas on how to handle each of these issues, like variations on concrete's chemical formula or passive cooling schemes.

But now, a large team of US researchers has found a single solution that appears to manage everything using a sustainable material that both reflects sunlight and radiates away excess heat. The miracle material? Wood. Or a form of wood that has been treated to remove one of its two main components.

https://getpocket.com/read/2602834238

 

[basilio]

Another simple process that can make wood a super product.

Stronger Than Steel, Able to Stop a Speeding Bullet—It’s Super Wood!​

By

Sid Perkins
Pocket
4 min
View Original

Simple processes can make wood tough, impact-resistant—or even transparent.​

https://getpocket.com/read/2810760847

 

[basilio]

This story seems very important. Exxon has has 3 new members as a result of shareholder pressure to recognise the opportunities and need to go to carbon free energy. In theory it was just a very small Hedge fund that proposed the changes but it's argument and the quality of the proposed new Board members swayed much larger shareholders to vote with them on the proposal.

...unlike the campaigns which last week forced Chevron and Shell to cut their carbon emissions, Engine No 1 puts profits first.

James said that environmental impact is just one consideration his firm uses to allocate its time and capital, and that ultimately the aim is to create wealth.

“We strongly believe that climate risk is business risk,” he says. “Fossil fuels have big negative impacts. We take a long-term view to value creation, which means taking these externalities into account. There’s an intrinsic link.”

James’s strategy is to find companies that are falling short of their potential, and then press for changes to increase their market value. The fund has just 22 employees and $240m (£170m) of funds under management.

Exxon was the first target, and the fund set out to replace four board members with directors who have “experience in successful and profitable energy industry transformations” which can help to turn the challenge of the climate crisis “into a long-term business plan, not talking point”.

‘This isn’t ideological’: reluctant ‘green hero’ behind Exxon coup

Tiny hedge fund Engine No 1 says a strong climate strategy simply makes good business sense

www.theguardian.com

Final point..

Industry commentators believe their success proves that the world’s biggest investors are finally aligned with climate campaigners in accepting that sustainability is not only essential for the survival of the planet, but for the future of major companies too.

 

[basilio]

More analysis on the change to the Exxon Board.

How did a green, newbie hedge fund out-play Exxon so comprehensively? | Nils Pratley

The day Big Oil discovered that the makeup of its board could be changed against its will

www.theguardian.com

 

[basilio]

The issue of Global Heating and the effect on insurance , the housing market and general societal impacts should be the core of corners about our economy. Consider yet another analysis of these compounding issues.

Let's be clear. If a property is uninsurable you can't sell it. It loses all external economic value. (You can still live in it of course. and I reckon the rates and land taxes will still be on the table .)

No matter how much you pay for your home or car insurance, if your property is damaged by mouse plague, nuclear radiation, war or rising sea levels you are almost certainly on your own.

If you’re lucky, your insurance might cover you against storms but maybe not against floods (you know the difference, right?). Likewise, your insurance almost certainly doesn’t cover you against storm surges or a dam bursting.

Australians spend more than $10bn for non-life insurance products each year, even though there’s only a one in 500 chance your house will catch fire.

That’s why there’s so much profit to be made in insurance. If a forecaster says something’s likely to happen, then it’s highly unlikely you’ll be able to get insurance against it.

...While insurance companies make their profit out of our fear of an individual catastrophe, they would lose their entire business if they insured against society-wide catastrophe. We take it for granted that insurance companies will pay out if an accident hits our car or house but most people rarely think about what will happen if catastrophe hits us all at once. Which is why the small print on insurance premiums is so small.

Mice, floods and the climate crisis: why your insurance won’t cover society-wide catastrophes | Richard Denniss

The best way to keep premiums down is to prevent climate change and the disasters it causes

www.theguardian.com

Fire and flood: 'Whole areas of Australia will be uninsurable'

Extreme weather events caused by the climate emergency are an existential threat to homeowners and industry alike

www.theguardian.com

 

[basilio]

Came across this video while surfing. Piqued my interest. INV well worth checking out.
Then looked for the company that is behind the idea and trying to become the big wheel in carbon capture and recycling.

Home | Carbotura

www.carbotura.com

Gravitas Infinitum | Sustainability

Gravitas Infinitum a Sustainable Impact Holding Company investing in a great future.

www.gravitasinfinitum.com

 

[basilio]

Global warming is costing us plenty. Sky rocketing fire, flood and storm damage. Long term flooding of coastal areas.

So who is responsible ? Who will be paying.
The Insurance Industry is centerpoint of this conversation. This presentation offers an insight into the risks that need to be managed.

Costly climate change confronts planet

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by Resolve Editor, Kate Tilley

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Climate change will result in more financial losses globally than anything else, short of a major war.

That’s the dire warning from Davey Salmon, an Auckland-based barrister and former founding partner of Lee Salmon Long.

He told an environmental liability breakout session at the NZILA conference that data from the Intergovernmental Panel on Climate Change (IPCC) was “overwhelmingly clear once you read it. It’s not hyperbole, there’s consensus”.

IPCC, a United Nations unit, prepares comprehensive assessment reports on the state of scientific, technical and socio-economic knowledge on climate change, its impacts and future risks, and options for reducing the rate at which climate change is taking place.

Mr Salmon said people were slow to react because of uncertainty and parliaments could delay action into the next election cycle, but the data was real and courts could look at the actual science and act on it.

Mr Salmon said three NZ Supreme Court judges, Justices Helen Winkelmann, Susan Glazebrook and Ellen France, delivered a significant paper on climate change and climate change litigation at the Asia Pacific Judicial Colloquium. Click here to read the paper.

Lee Salmon Long solicitor Harriet Bush told NZILA delegates the paper was important research that identified where the judges considered courses of action lay and stressed denial was unlikely to be a successful defence.

The paper reviewed significant global climate litigation, including landmark cases such as Thomson v Minister for Climate Change Issues [2017] NZHC 733, [2018] 2 NZLR 160 and West Coast ENT Inc v Buller Coal Ltd [2013] NZSC 87, [2014] 1 NZLR 32.

Ms Bush said the judges warned that, from a corporate governance perspective, directors could be liable because addressing climate change was not just an ethical but a financial issue.

However the judges identified two competing themes. “If the courts don’t deal with climate change, it challenges their legitimacy, but judges can’t overstep their judicial role,” she said.

Mr Salmon agreed directors would increasingly be held to account. Other “easy areas” for action were professional negligence cases against engineers, planners and architects who approved buildings in inappropriate areas or with insufficient foundations.

The threat of climate change had moved beyond a debate about foreseeability of loss or harm. On proximity, he said: “In one view it’s remote but, on another, the connection is obvious to climate scientists.

“We’re now in a different world to the snail in the ginger beer bottle. The harm is monstrous and knowingly caused ... for profit.”

While judges had focused on damages, there was a need to examine injunctive relief in apportioning loss for knowingly causing harm.
Mr Salmon said local authorities would bear “a lot of the brunt” and the exposure. He warned they should “think twice about letting anyone build on low-lying land”.

“The science is clear, the law is not, yet.”

Resolve - December 2019

 

[basilio]

The collapse of the Champlain Tower on the Florida beach front has accelerated concern about the impact of sea level rise on all the waterfront towers.

Very good overview of the implications raised in terms of investor losses, building policy changes and insurance cover.

SEA-LEVEL RISE: Condo collapse could stoke Miami climate fear in homebuyers

The deadly collapse of a South Florida condominium last week likely will add more uncertainty to a local real estate market already riven by climate change, experts said.

www.eenews.net

 

[Smurf1976]

Very good overview of the implications raised in terms of investor losses, building policy changes and insurance cover.

Political debate and so on aside, it's a practical reality that pretty much everything built by humans was built with the climate as an influence.

It's why even within Australia there are differences in building designs between states and so on. All comes down to two things really - local availability of materials and the climate.

If the climate changes well then all sorts of problems arise that might not be obvious.

Sea level impacts on buildings is one.

Maximum rainfall intensity impact on things like roofs, drainage systems, dam spillways etc is another.

Then there's things like roads. The exact formulation of the seal is influenced by the climate and what it needs to withstand and that's very local, eg there are differences between Australian states in how that's done. What works best to withstand cold weather and not crack has the downside that it'll melt if it gets too hot. What's best to withstand the heat isn't good in the cold. etc.

Pretty much everything built by humans has a conscious or unconscious climate input into it, it was built to suit what those who designed and built it considered it needed to withstand.

 

[wayneL]

I thought coal stocks were way oversold due to the China panic and the AGW narrative.

Averaged in a spread of stocks in the sector... I reckon a few might even be keepers as the narrative self destructs over time, have reserved a space in the bottom drawer for some of them.

 

[Smurf1976]

I thought coal stocks were way oversold

There's certainly been a good trading opportunity with some of them, no question there.

 

[qldfrog]

There's certainly been a good trading opportunity with some of them, no question there.

I am thinking exactly the same, even if CC is real, sooner or later, the reality will have to take over the narrative, so our government will have slowed down new oil explorations, coal mines etc while the demand will continue unabated..perfect conditions for an increase of price.
Coal and oil, in area where they are not subject to punitive ideological laws.
Whole countries benefiting from self inflicted West destruction: China, Russia, India and associates

 

[qldfrog]

Be aware of the actual locations of the headquarters: long term, an aussie based coal miner might have to close down its business even if the mine is in png or indonesia. See how BHP has no choice but to leave the field to O/S companies, losing billions on opportunity costs