Big capital: buy coal, sell solar

March 27, 2010 at 11:03 pm Leave a comment

We hear a lot from mainstream journalists, politicians and even some environmental groups about forming partnerships with the “business community” to fight climate change. Many assume a carbon trading scheme or carbon tax alone will be enough to give business an incentive to shift to clean energy.

The idea that today’s vested interests could lead tomorrow’s energy revolution was always a dubious one. But recent market trends reveal that big business has little interest in forging any real partnership for the planet.

Investment in profitable dirty energy is going through the roof and private investment in renewable energy is floundering.

Big capital is treating global warming the same way it treats everything. Before it invests, it demands just one thing: “show me the money.”

Bloomburg summed up the US investment trend in a March 17 article: “Wall Street’s contribution to the debate on how to curb global warming: Buy coal, sell solar.”

It said the market value of the 38 coal producers that make up the Stowe Global Coal index had risen 3.8% in 2010. Meanwhile, the Bloomburg Global Leaders Solar index had dropped 17%.

In 2009, the International Energy Agency predicted world coal consumption would increase by 49% by 2030. Most financial analysts are recommending investors buy shares in big coal.

Ratings and investment research firm Zacks released its Coal Industry Review and Outlook report for March. “We expect 2010 to be a transformative year for the coal industry”, it said on March 15.

By “transformative”, it meant it expects even more coal to be burned.

Zacks upgraded its outlook for coal, although it acknowledged: “Coal has been viewed as an industry that is faced with the risk of being abandoned due to the alarming issues of climate change, carbon emission concerns and energy sustainability.”

But happily for investors, “political constraints appear to be delaying, if not altogether eliminating, the threat of major environmental regulatory overhaul, a net positive for the coal industry”.

For the filthy rich, the boom in filthy coal means high fives all around. Just forget for a moment that NASA climate scientist James Hansen has said that “the trains carrying coal to power plants are death trains. Coal-fired power plants are factories of death.”

A similar investment trend has occurred in Australia. PricewaterhouseCoopers estimated investment in renewable energy projects fell by 59% in 2009, said the March 18 Sydney Morning Herald.

But capital is flowing into large fossil fuel developments. Australia’s largest ever trade deal was announced on March 24, said the SMH. The China National Offshore Oil Corp signed a $60 billion deal to buy coal-seam gas from Queensland’s Western Downs region.

This follows government approval in September 2009 for the huge Gorgon Liquefied Gas Project on the Western Australian north coast. Project majority-owner Chevron expects to extract 15 million tonnes of gas a year until 2050.

Meanwhile, other big polluters are raking in the cash. The most polluting coal-fired power station in the industrialised world, Victoria’s Hazelwood power plant, announced 2009 profits were up 40%, said the March 16 SMH.

Hazelwood was scheduled to be decommissioned last year, but in 2005 the Victorian ALP government extended its life until 2031.

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Entry filed under: Coal.

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