Early reports from the investment world, post the Trump win in the US last week, seem to vindicate the words we plucked from global climate leaders such as Cristiana Christiana Figueres for our editorial Thursday.
Trump will try to stymie the climate agenda and on some issues he will succeed, but on others the climate horse has bolted. He’ll be unable to wrench away the subsidies to red states provided by Biden’s Inflation Reduction Act, and he won’t be able to turn back the tide on the biggest force in history – money.
There’s money in clean energy now – lots of it. And even more impressive is that the capital markets have turned the ugly duckling of the carbon challenge, energy efficiency, into a winner.
It’s looking like a Cinderella moment for that sector that’s generally been unloved for its lack of glamour and pizzaz, compared to the shiny new wind turbines and glittering solar panels that give us all tangible hope.
In the US, stocks like Johnson Controls and Comfort Systems have soared 44 per cent and 120 per cent in the past year.
Munro Partners’ chief investment officer Nick Griffin told The AFR on Monday that his Climate Change Leaders Fund returned nearly 74 per cent in the year to the end of October, thanks in large part to its focus on energy efficiency, which have become some its “best and easiest wins”. And it climbed another 2 per cent after the Trump win.
The fund “added positions in heating, ventilation and airconditioning stocks, which play a crucial role in cooling data centres, but in a way that saves electricity and energy. This includes Comfort Systems and Johnson Controls, which are up 120 per cent and 44 per cent respectively this year, the article said.
“It’ll cost around $50 trillion to $100 trillion to decarbonise the planet over the next 50 years, so that’s a lot of revenue for companies enabling the transition,” Griffin said.
The downside is that the clean energy revolution is now being powered by a monster appetite.
“The biggest companies in the world are trying to build these huge data centres which require massive amounts of power, but these businesses also have the strictest zero carbon targets in the world,” Griffin told the newspaper. “So they have to power these data centres with carbon-free power.”
Griffin’s fund focused on sectors such as sustainable transport, energy efficiency, the circular economy and of course nuclear.
The fund “added positions in heating, ventilation and airconditioning stocks, which play a crucial role in cooling data centres, but in a way that saves electricity and energy. This includes Comfort Systems and Johnson Controls, which are up 120 per cent and 44 per cent respectively this year”
The nuclear push has now reached Australia possibly because of the enormous energy needed to power AI but the proposal is for government to fund the extreme expense. In the US the newest plant, which has been publicly funded, now costs consumers enormous power bills – in one case $618 a month for energy, but similar bills for others.
However, while Trump wants to “dig dig dig”, solar and wind power are already suffering from planning and community opposition and the article points to companies such as First Solar, which is down nearly 35 per cent from its peak in June.
That will change if China is barred from “dumping solar panels in the US” and could become an excellent buy option.
“Trump is very keen to have things built in America, so that will benefit companies in the fund that will build out the electrical grid.”
Munro is also prepared for looser regulation and an easing in restrictions from the Federal Trade Commission, which it expects to result in more mergers and acquisitions.
“That will definitely favour some of the US waste companies we’re invested in,” Griffin says, pointing to holdings in GFL Environmental and Clean Harbors.