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Identifying the Problem Before Pursuing a Solution: Greenhouse Gasses  

11032019_Greenhouse gasses

Identifying the Problem Before Pursuing a Solution: Greenhouse Gasses  

“According to multiple studies published in peer-reviewed scientific journals, 97 per cent or more of actively publishing climate scientists agree, climate-warming trends over the past century are extremely likely due to human activities”. This is considered a “scientific consensus” according to NASA.

With the problem now identified (climate change / greenhouse gasses), it is logical to consider what the source of these greenhouse gasses are before leaping into a solution. Unfortunately, however many of our politicians, media institutions and fellow investors have completely focused on electricity generation as the culprit with renewables (wind, solar, hydro, etc.) the answer. While renewable energy will go a long way to helping find the answer, the truth is, it only addresses a quarter of all the greenhouse gases emitted around the world. Hence if the using renewables as the solution, only a quarter of the problem will be addressed and the issue will never be solved.

Core to the emissions problem (and global warming) likely comes from urban population growth across the world. Specifically, the world is expected to double the amount of construction currently on earth by 2060. This is the equivalent of creating a another New York City every month between now and then! That’s an enormous amount of cement and steel which release a huge amount of carbon as a by-product when produced. In fact, manufacturing (21 per cent), transportation (14 per cent), building (6 per cent) make up 41 per cent of all greenhouse gasses combined, with another 24 per cent from agriculture, that’s 65 per cent of the problem that barely gets any attention.

Obviously, we can’t just stop using fertilizer, flying airplanes, building highways, office towers etc. Nor is it fair to demand developing countries (i.e. source of the increasing global population) impair their growth and stunt standards of living for the sake of the developed world. What is required however is investment in innovation across all five sources of emissions. While solar panels, battery storage, and electric vehicles are helpful, we should really be hearing about transformational programs in these other areas too. As Bill Gates noted, “the world needs breakthrough inventions in each of the grand challenges”.

The team at Montaka Global is well aware of this area and what will likely emerge as a “mega trend” over the coming decades, and look forward to finding appropriately priced opportunities to capture this huge value opportunity for our investors.

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Amit joined MGIM in April 2018 as a Senior Research Analyst after spending seven years as a credit analyst at Credit Agricole and Citigroup, based in New York. Prior to this, Amit was an investment banker with Citigroup for five years in New York and Sydney, focusing on Media and Telecoms; Metals and Mining; and Consumer Products.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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