By now you have probably heard the big news.
196 nations voted to adopt the agreement crafted at the latest climate meeting Saturday. The entire world is on board with this global climate deal.
This is big, and the mainstream news sources are all over it.
The focus they are putting on it only has two dimensions, though. There is the political aspect, and the specific targets involved.
What is not being discussed is how this is going to profoundly alter the nature of electrical generation as we know it. In several decades, the energy sector as we know it will be gone.
Regardless of your views on the source of climate change, this agreement is going forward. Once 55 nations ratify, it is active.
All of the big players are on board, including China and India. In fact, China has become a strong supporter since it just about single-handedly shut down the last talks in 2009.
If you’ve seen the pictures coming out of Beijing recently, you know why.
Let’s take a look at what was agreed upon, and how it presents an unprecedented investment opportunity for us.
The Deal
The most notable aspect of the deal is the 2 degree Celcius (~3.6 degrees Fahrenheit) target, and how close we already are to it.
Right now, the world has risen 1 degree Celcius compared to pre-industrial data. We’ve blown through half of our budget — so to speak — already.
As the agreement stands, countries need to start acting by 2020 and submit long-term plans that cover decades to come.
By 2050, the world is supposed to hit the point where there are zero net emissions of greenhouse gases.
Then there is the talk of moving the target to 1.5 degrees in coming years.
Carbon dioxide and other greenhouse gases do not have an immediate effect. What is coming out of the ground and going into the air today will take years to factor into the equation.
To even come close to that figure, the world would have to have net zero emissions right now, plus negative net emissions down the road.
To help developing countries switch from fossil fuels to greener sources of energy and adapt to the effects of climate change, the developed world will provide $100 billion a year.
That figure is a floor, and the agreement recognizes that more will be needed down the road.
UN Secretary-General Ban Ki-moon said: “With these elements in place, markets now have the clear signal they need to unleash the full force of human ingenuity and scale up investments that will generate low-emissions, resilient growth,” adding that “what was once unthinkable has now become unstoppable.”
He is certainly right, and it is going to kick off one hell of a bull market for non-carbon energy sources.
Wind, Solar, and What?
The two obvious winners here are wind and solar. While there are some pretty impressive renewable energy generation techniques out there, they will remain on the fringe.
For example, geothermal is impractical unless there is abundant heat right under the surface, and using tides to turn turbines is limited to coastlines.
Solar in particular stands out from the rest. A lot of investors were burned when the economy tanked and China flooded the solar cell market.
Once bitten twice shy only makes sense when nothing has changed. The solar industry today is a leaner, meaner version of its old self.
Cost is down across the board, from materials, to production, and straight through to installation.
Since the setback, the price of a solar cell per watt is a mere fraction of what it was:
Wind power has seen similar price improvements, though the cost figures are a bit more contentious because generation is even less predictable.
Factoring in the baseline electrical generation needed boosts costs overall, due to idled power plants, wasted fuel, etc.
That baseline is an even bigger problem than that, though. Remember, the temperature target is awfully tight as is, and could be moved down.
The effective cost of using coal, or even cleaner-burning natural gas, is going to jump dramatically because of the need to offset any and all pollution caused by using them as a constant back-up to renewables.
Effectively, that leaves only one alternative that can adequately fulfill the entire planet’s baseline needs in the next couple decades.
Nuclear power is going to be a major beneficiary of this agreement as these new restrictions and rules are imposed.
Many countries don’t even need to change course to adopt it, either.
Sixty-five nuclear power plants are under construction, and 165 are planned.
India plans on going from 5,000 megawatts of nuclear energy now to 63,000 megawatts by 2030, with 30 nuclear plants in the works. That will require $182 billion.
Russia aims to boost the share of electricity it gets from nuclear power to 25% by 2030, up from 16% now.
Meanwhile, Russia-based Rosatom has signed a $3 billion deal with Argentina, an $83 billion deal with South Africa, and is in talks with Nigeria for a $20 billion deal.
Then there is China, which blows everyone else out of the water with 100 planned nuclear power plants, and 28 under construction.
A total of $2.4 trillion will be spent to increase nuclear power generation in China by 6,600%.
This is Kind of A Big Deal…
The forces driving rapid expansion of nuclear, solar, and wind power have been in play for years, but make no mistake about it. This climate deal is huge for all three. It virtually codifies their rapid expansion over the next several decades as trillions of dollars are diverted from fossil fuels.
We’ve been talking about nuclear power expansion and the strongest solar plays in the market for some time.
Nick in particular has found an unprecedented nuclear play that is sitting on 16.77 times the electrical generation potential of the entire Bakken oil field.
Plus he has a solar stock in his Early Advantage portfolio that gives rapidly expanding solar cell manufacturers a competitive edge, with a return on investment of under one year.
You’ll be hearing a lot more about these, and many more opportunities for years to come. It won’t just be from us. It’ll be from every investment, business, or energy news source out there.
Stay tuned, and we’ll make sure you hear about them before everyone else.
