As the world’s population and energy demand increase, water and energy are increasingly coming into conflict as resources become strained. Click on the image below to visit the interactive “Where Water Meets Watts” graph by IEEE Spectrum magazine:
Deforestation is a worldwide problem which contributes mightily to global greenhouse emissions. It is estimated that one-fifth of all carbon dioxide emissions result from chopping down forestland, especially in tropical zones.
Land preservationists and climate change advocates want to end this environmentally harmful practice, saying doing so will benefit not only the atmosphere, but the U.S. farming economy.
A recent study by the National Farmers Union and Avoided Deforestation Partners estimates if global deforestation were stopped, the U.S. agricultural sector could boost its revenues from $190 billion to $270 billion through 2030.
U.S. crops have long been undercut by unfairly cheap commodities harvested on “slash-and-burn” cleared land. Stemming this practice would slow the spread of these artificially cheap commodities into the global marketplace. The report says U.S. timber, soybean, oilseed and beef industries stand to enjoy particular gains.
Global Fund Exchange is pleased to present you with our May 2010 newsletter – “Investing in the Future of Energy.”
This month’s newsletter takes a close look at the oil spill disaster in the Gulf of Mexico, recent solar investments in Asia and the Middle East, the U.S. climate bill as well as the worsening global water crisis.
Please click on the image to open our latest newsletter.
The combined global land and ocean average surface temperatures in April were the third warmest since record-keeping began in 1880. If this pattern continues, the National Oceanic and Atmospheric Administration (NOAA) says 2010 is on track to be the hottest year on record.
Warmer than usual conditions were noted in many parts of Canada, Alaska, eastern U.S., Australia, South Asia and northern Africa, whereas China has experienced its coolest April since 1961, but its wettest since 1974.
NOAA believes the emerging El Nino weather pattern may be contributing to the warm temperatures. Scientists attribute 2009 being the fifth warmest year on record in part to the presence of an El Nino system.
The wind energy industry is on the up-swing around the world, providing a multitude of opportunities for companies all along the supply chain, from turbine manufacturing to installation and operation.
A recent article from Power-Technology.com tracked some of the world’s most active players in the wind sector and compiled a “Top 10 List”. Their selections include such well known names as German giant Enercon, Spanish manufacturer and operator Gamesa, and US comglomerate GE Energy. Yet other top picks include Renewable Energy Systems (RES), Nordex AG, Iberdrola and Vestas.
Energy consumption from the developing world is to overtake that of the developed economies by 2015 – some countries are addressing it, some are still in denial. The article below is just a taste of things to come and illustrates how even the oil producing UAE is aware of these issues.
The UAE signed a deal in December 2009 with a Korean consortium to build four nuclear power reactors in the UAE, with the first scheduled to be operational in 2017.
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Electricity demand is likely to triple in the UAE by 2020 and nuclear energy will play a key role in meeting future needs, a top official has said.
UAE Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan said the country’s interest in developing nuclear energy was “motivated by the need to develop additional sources of electricity to meet future demand projections and to ensure the continued rapid development of its economy”.
“Analysis conducted by official UAE entities has concluded that national annual peak demand for electricity is likely to triple by 2020, reflecting a cumulative annual growth rate of roughly 9 percent,” he said in comments published by news agency WAM.
He added: “In evaluating different options to meet this demand, nuclear energy emerged as a proven, environmentally promising and commercially competitive option which could make a significant contribution to the UAE’s economy and future energy security.”
Sustainable investments in Switzerland rebound strongly to hit new peak
Sustainable investments run by Swiss fund managers rebounded after the financial crisis to reach a new high of CHF34.1bn (€23bn) during 2009 – with investment inflows outstripping the market average – according to a report from Zurich-based consulting firm onValues. The rise in sustainable assets managed by fund managers at the end of last year represented a 63% increase over the figure at the end of December 2008. The figures comprise assets in investment funds, segregated mandates and structured products.
In a 12-page report surveying 19 asset managers, onValues said the net asset flow into sustainable funds was approximately 22.9%, during 2009 compared to 4.5% seen by the average Swiss fund provider over the same period. The report said the sustainability asset inflows were “particularly marked” for thematic equity funds and new funds in the real estate and emerging market equities.
In a breakdown of Swiss sustainable assets, onValues said funds accounted for approximately 55% of the total, segregated mandates for 40% and structured products 5%. Institutions account for 45% of the sustainable assets market, with the balance invested by retail/private banking investors. However, the report said fund manager respondents believe institutional investors will drive the main growth in the sector in the next three years. OnValues said it set out to assess the market for specialist sustainable investment products and not the degree to which ESG factors are being used in mainstream investment portfolios. It said this means there are probably more total assets in Switzerland run via broader sustainability criteria.
The survey was backed by Bank Sarasin, Bank Vontobel, Ethos, Forum Nachhaltige Geldanlagen, INrate, Kaiser Ritter Partner, SAM, Swisscanto, UBS and Zürcher Kantonalbank.
Global Fund Exchange is pleased to present you with our March 2010 newsletter – “Investing in the Future of Energy.”
This month’s newsletter takes a close look at President Obama’s show of support for the U.S. nuclear energy industry, China’s growing energy demands and increased investment in smart grid technologies, as well as other headlines from the global energy sector.
Please click on the image to open our latest newsletter, or visit our Resources page.
Opalesque Exclusive: Highlight on energy (5) – Earth Wind and Fire Fund aims for uncorrelated portfolios in volatile sectors
From Kirsten Bischoff, Opalesque New York:
The philosophy behind investing in energy and resources is a simple one for Anric Blatt and Lauralouise Duffy, founders of Global Fund Exchange, the growing number of people around the globe is putting stress on the resources of our planet; smart investing in energy, clean energy and natural resources can drive positive environmental change and positive profits.
There are many factors placing stress on our resources, two of the biggest are population increases and development as the global economy reaches undeveloped nations.
- With the population growing by approximately 79 million every year, energy consumption in the developing world will overtake the amount consumed by the developed world in 2015. That’s a mere five years from now.
- As nations and economies develop over the next 25 years, global energy demand is estimated to increase by almost 60%.
Industry in transition
“We are in a bridge period,” Blatt says, regarding global efforts to change energy consumption habits. With traditional energy usage pegged at 96% and alternative energy hovering at only 4% (not to mention the slow pace of environmental regulation in many countries), change is going to be gradual.
“So we’ve come to this bridge period where traditional energy starts to become cleaner or more energy efficient, and where alternative energy becomes more cost efficient,” he says. “For those with a vision, these are really exciting times. This global energy transition offers the most significant investment opportunities my generation has ever seen. We’ve pioneered the concept of ‘Investing in the Bridge’ to take advantage of these profitable themes.”
Where is the money flow?
Deciding that the energy and natural resources space would provide opportunity to both invest in a positive future for the world and a profit, Blatt next determined on a strategy. Venture capitalism is high risk, and the firms with access to cash flows are not the small, emerging firms, but listed, public companies with access to stimulus money and targeted government-driven investments in the environment. Private equity difficulties include liquidity mismatches.
Tracking capital expenditures around the world is something the team does very carefully. Denmark, for example, has focused on wind technology, Germany and Spain on solar, Italy on solar and geo thermal, and South Korea has spent immense amounts of money on smart grid technology. China has recently surpassed the U.S. in allocations to smart grid technology.
“At the end of the day, all that funding goes into public markets,” he says. “So we made a conscious choice to find the best niche managers around the globe and run with them what is an energy hybrid portfolio.”
Targeting opportunity
New York-based Global Fund Exchange manages The Earth Wind & Fire Fund Ltd. with a mandate to utilize a diversified global macro, multi manager investment approach to investing in the world’s premiere specialists in all areas of the new energy revolution.
The fund focuses on clean energy, traditional energy, water, natural resources, carbon and agriculture, and then adds a hedging strategy to all of these to reduce both volatility and market-related risk. The focus of the fund crosses so many areas of energy because as Blatt points out, everything is interconnected.
“In order to produce energy you need water and in order to produce water you need energy. To convert commodities into a usable, commercial format you need energy. To convert energy into a usable format you need natural resources. Everything is interconnected and all of these things have climate implications.”
Building an uncorrelated portfolio in a volatile sector
Investing in any single area of the “Energy” space has two distinct risks: market exposures, especially during the financial crisis, have created additional volatility; and the risk of investing in a single sector where everything is correlated. To manage these risks one of the main focuses for the team is in calculating, tracking, and building a non-correlated portfolio.
Perhaps the best way to break down the portfolio is in terms of the three major working parts that it is comprised of. Investments have been identified as sensitive to equity markets (clean energy, water, and agriculture investments) and sensitive to commodity markets (energy, carbon, and natural resources). A third group of strategies, those that work to take the volatility out of the prior two groups are the trending and alpha strategies (systematic trading, a hedge portfolio, and a cash portfolio).
This focus on non-correlation within the sub-portfolio has seen the overall portfolio make solid gains during the three years since its January 2007 inception (annualized gains are +14.22%, with only three down months).
Private money is taking stakes in the future of the planet
While government spending in many countries has started to focus on alternative energy, there is additionally a shadow network of private money that has started to heavily invest in the space. Both environmental philanthropists and large businesses are positioning themselves with large stakes in this still-burgeoning industry.
“It has been a wonderful experience to focus not only on the profit aspect of business, but also on the impact of our actions on the planet and its people. Hence our philosophy – People, Planet, Profit.
Part Six: next Friday.
Part one (Tiburon: Wind and solar won’t save the world, hence the renaissance of nuclear) can be found here,
Part Two (ARP: Now we can all hedge power exposure intelligently) here,
On Saturday morning, Warren Buffett published his latest letter to Berkshire Hathaway shareholders.
Here are a few examples of how we apply Charlie’s thinking at Berkshire:
• Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be. In the past, it required no brilliance for people to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930) and television sets (in 1950). But the future then also included competitive dynamics that would decimate almost all of the companies entering those industries. Even the survivors tended to come away bleeding.
Reuters, 10 February 2010 – Nasdaq and an arm of Deutsche Bank launched a global alternative energy and clean technology stock index on Wednesday that attempts to provide a pure signal of how the business is performing.
DB Climate Change Advisors, the climate change investment and research branch of Deutsche Bank’s asset management business, and Nasdaq OMX Group, Inc said the DB NASDAQ OMX Clean Tech Index is comprised of 119 companies.
Mark Fulton, Deutsche’s global head of climate change investment research, said companies in the index derive at least a third of their revenues from clean technology. And 106 of the companies have more than half their revenues in the space.
“These are companies that have very definitely declared a large stake in the clean tech sectors,” Fulton told Reuters. “We tried to produce an index that sends a purer, concentrated set of signals.”
The index, the first between a global bank and a global exchange company, lists 30 companies in solar energy and 13 in wind power. It also includes companies in energy efficiency, transport, waste management and water companies.
The index is equal-weighted to offer greater exposure to smaller-cap companies. In addition to a price return index, it also calculates a total return version.
Deutsche Bank Asset Management had about $6 billion under management as of September 2009 in climate related investments.
(Reporting by Timothy Gardner; Editing by David Gregorio)
ABOUT THE INDEX – A QUICK SUMMARY FROM ANRIC BLATT
The index is comprised of 119 companies identified by DBCCA from a global universe of 4,000. Each stock must have at least one third of revenues derived from clean technology within investable geographies and exchanges identified by NASDAQ OMX. Of these companies, 106 have over 50% in clean tech revenues, using only demonstrated revenue from filed financial statements. Constituent companies must have a market capitalization of $250 million and over $1 million average daily dollar trading volume. The index is equal-weighted to offer greater exposure to smaller-cap companies
NOTE: Two subsidiaries of Deutsche Bank act as the custodian and administrator of some of the funds managed by Global Fund Exchange.
Global Fund Exchange founders, Lauralouise Duffy and Anric Blatt first met WBCSD President
Björn Stigson in Sharjah, UAE at the Sharjah Chamber of Commerce in 2009 and have been keen supporters of his organization since. The World Council for Sustainable Development produces some excellent reports like the one below and we would like to encourage you to visit their website at http://www.wbcsd.org/
Land-use activities are a major source and sink of global greenhouse gas (GHG) emissions. Curbing deforestation and applying sustainable land-use management practices can reduce GHG emissions, while planting trees and managing forests can help remove GHGs (mainly CO2) from the atmosphere by sequestering them in plants and vegetation.
Examples of cases in the report include: developing new crop varieties that have less environmental impacts and can adapt to climate change, or products that help reduce emissions; using techniques like direct seeding and drip irrigation to reduce water use in dry regions, or keeping soils healthy so they store more carbon; and developing models and tools to find practical ways to reduce impact and prepare for the future.
The various cases demonstrate that t here is no single, globally applicable sustainable management solution for land use. Business is only part of the solution and must work with governments, civil society and others to develop a range of land-use approaches that tackle climate change.
New Delhi, 4 February 2010 – The World Business Council for Sustainable Development (WBCSD) today launched the Vision 2050 report ( 2.6 MB), a study that lays out a pathway leading to a global population of some 9 billion people living well, within the resource limits of the planet by 2050. The report, released at the World CEO Forum in New Delhi, India, was compiled by 29 leading global companies representing 14 industries.
This work results from an 18-month combined effort with CEOs and experts, and dialogues with over 200 companies and external stakeholders in some 20 countries.
The report presents new opportunities for business in a broad range of business segments with the foresight to lead their societies on a sustainable business development agenda. Entitled Vision 2050: The new agenda for business, the report “lays out the challenges, pathway and options that business can use to create an opportunity-rich strategy, both regionally and globally, that will lead to a sustainable world,” said Dr. Mohammad A. Zaidi, Executive Vice President and Chief Technology Officer of Alcoa, who led the project as one of four co-chairs.
“The world already has the knowledge, science, technologies, skills and financial resources needed to achieve Vision 2050. However, concerted global action in the next decade will be required to bring these capabilities and resources together, putting the world on the path to sustainability,” explained WBCSD President Bjorn Stigson.
The publication outlines a future in which 9 billion people live well, enjoying health, food, shelter, energy, mobility, education and other basics of life. Syngenta CEO, Michael Mack added that “humanity has largely had an exploitative relationship with our planet; we can, and should, aim to make this a symbiotic one.” In the Vision 2050scenario, global society attains this standard of living at a sustainable rate, without further harm to biodiversity, climate and ecosystem services.
The report states that the world already has the resources to achieve Vision 2050,but there is a catch: “The radical changes highlighted in Vision 2050 demand a different perspective from business leaders, requiring them to rethink how they operate to stay on-track for a sustainable future,” added Samuel A. DiPiazza Jr., former CEO and Chairman of PricewaterhouseCoopers. This includes a radical transformation of global markets, governance and infrastructure, and a re-thinking of our ideas of growth and progress.
Vision 2050 spells out the “must haves” – the things that must happen over the coming decade to make a sustainable planetary society possible. These include incorporating the costs of externalities, starting with carbon, ecosystem services and water, into the structure of the marketplace; doubling agricultural output without increasing the amount of land or water used; halting deforestation and increasing yields from planted forests: halving carbon emissions worldwide (based on 2005 levels) by 2050 through a shift to low-carbon energy systems and improved demand-side energy efficiency, and providing universal access to low-carbon mobility.
As part of this transformation, Vision 2050 calls for a new agenda for business: to work with government and society worldwide to transform markets and competition. “Sustainability will become a key driver for all our investment decisions,” added Idar Kreutzer, CEO of Storebrand and another project co-chair. New rules for markets will reframe environmental challenges as economic challenges, driving innovation and competition in the direction of sustainability and away from resource- and energy-intensive production. Rationalizing prices to include such externalities as climate and biodiversity impacts will make corporate environmental efficiency a true competitive advantage across all industries and regions.
Business will lead market change by doing what business does best: forming partnerships, creating efficiencies and competitive advantage, seizing opportunities and meeting customer needs. At the same time, a shift toward sustainability will trigger trillions of dollars in new investments in infrastructure, technology and human services, creating new opportunities for business to thrive and grow. A recent study commissioned for this project with PricewaterhouseCoopers and released today indicates that this investment could reach US$ 3-10 trillion per annum in 2050.
Vision 2050, with its best-case scenario for sustainability and pathways for reaching it, is a tool for thought leadership, a platform for beginning the dialogue that must take place to navigate the challenging years to come. “It is hoped that the Vision 2050 work will be used for many years to come. It is designed to be a platform for companies when deliberating strategies and for dialogue with governments and society about how to realize the sustainable future,” concluded Per Sandberg, Project Director for Vision 2050.
China, the world’s largest emitter of greenhouse gases, is often blamed for its role in world pollution, but the giant nation has a strong appetite for alternative energy. Click thumbnail below to view short video
The wind energy industry is on the up-swing around the world, providing a multitude of opportunities for companies all along the supply chain, from turbine manufacturing to installation and operation.
Sustainable investments in Switzerland rebound strongly to hit new peak
Reuters, 10 February 2010 – Nasdaq and an arm of Deutsche Bank launched a global alternative energy and clean technology stock index on Wednesday that attempts to provide a pure signal of how the business is performing.
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