Consumers, Investors Poised for a Renewable Future

A recent Bloomberg national poll has shown that Americans are willing to bear the costs of combating climate change, and most are more likely to support a candidate seeking to address the issue.  By an almost two-to-one margin, 62% to 33%, Americans say they would pay more for energy if it would mean a reduction in pollution from carbon emissions. “It is a rare poll where people responding will stand up and say ‘tax me,’” said Ann Selzer, of Selzer & Co., which conducted the June poll.

Carbon markets are another innovation designed to combat climate change.  California began its Cap-and-Trade market in 2011.  The system is a market-based regulation which sets a limit or “cap” on overall greenhouse gas emissions and allows trading of permits or “credits” to release CO2.  The government requires industries to acquire credits sufficient to equal their emissions. Companies that need credits buy them, either from the government or on a commodity market, with the value set by supply and demand. Over time, the government reduces the cap and the number of credits, driving up their value.  The expense of securing credits creates incentives to reduce CO2 levels through investments in clean technologies and better practices.

Another tool in the effort to fight climate change is the growing fossil fuel divestment campaign championed by Bill McKibben’s 350.org.  With echoes back to the South Africa apartheid divestment campaign, this approach is gaining traction as more and more individuals and institutions sell their investments in fossil fuel companies, for reinvestment in clean technologies or the broader market.  The goal is to bring pressure to bear on corporations, politicians, and investors to create greater urgency and action on the climate change issue.

Natural Investments began offering fossil fuel free portfolios in January of 2013.  The portfolios have performed competitively and illustrate the viability of our economy moving away from fossil fuels.  We’re now seeing increasing investment options of this kind becoming available, which is further expanding our diversification in these portfolios.

Legendary investor Warren Buffet, whose Berkshire Hathaway investment company owns significant holdings in alternative energy and related companies, recently stated that he would like to double his investment in the sector.  With attention like this, the alternative energy and clean technology sectors are indeed gathering momentum.  At Natural Investments we’ve been pleased with these developments and looking forward to expansion in these sectors.

This commentary first appeared as part of Scott’s quarterly market recap in the Summer 2014 edition of the Natural Investment News

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Scott Secrest

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