What is somewhat less understood is the causal relationship: the increase in carbon dioxide levels causes in increasing average temperatures around the globe. However, sufficient evidence says this causal relationship is also a fact.

While the properties of carbon dioxide is vital in making sure our planet stays warm enough for water to remain in liquid form, the recent increase in carbon dioxide levels has risen at rates never before seen. Carbon dioxide released from those reactions went into the atmosphere. After two centuries of industrialization, it is now estimated that humans are currently pumping 40 billion tons of carbon dioxide into the atmosphere per year, significantly altering its composition, and as a result, the atmosphere’s ability to absorb heat.

THE ABSORPTION OF THIS 40B TONS OF CARBON DIOXIDE (AND MORE) IS NOW A MAJOR INVESTMENT OPPORTUNITY, IRRELEVANT OF WHETHER YOU BELIEVE IN GLOBAL WARMING OR NOT!!

TURNING SCIENCE INTO POLITICS

The vast majority of scientists agree that the burning of fossil fuels in parallel with global deforestation has led to an increase in carbon dioxide levels in the earth’s atmosphere. There is overwhelming proof this in turn has has led to the very gradual warming of the Earth since ~1880.

The earth is on course for an average temperature increase of 3–4°C by 2100 unless CO₂ emissions are reduced.

The major disagreements come from how the climate will change with slightly rising temperatures and to what extent those changes will take place.

The political Climate Change narrative is being positioned to believe that the world’s current greenhouse gas emissions trajectory will continue to result in dangerous and costly climate change impacts, both societal and economically resulting in:

• Substantial human migration,
• Regional conflicts over increasingly scarce resources, and
• Extreme weather events, causing devastating physical damages and economic costs.

A MINOR PROBLEM – EXTRAPOLATED INTO A MAJOR REACTION – TO BECOME A BIG INVESTMENT OPPORTUNITY!

Does anyone actually trust that politicians around the globe really believe Climate Change is the most pressing problem of the world? It is a great emotional talking point, since fear is the catalyst that always turns the public into a force demanding political action.

I learned in my very first Political Science course as a college freshman that politics is about the redistribution of wealth. That redistribution consensus comes from the will of the people. When the consensus becomes alarmed and fearful, the politicians’ jog is to appease it. Politically what comes first is what are you trying to achieve, then how do you create the public consensus to make it happen?

To answer what is trying to be achieved within the political realm you must always follow the money & power.

These are the life blood of the art of politics.

THIS IS POTENTIALLY A MAJOR NEW UNDER-VALUED INVESTMENT OPPORTUNITY??

CLIMATE CHANGE: MONEY

A CONSENSUS SOLUTION TO THE GLOBAL DEBT CRISIS

What Is This Really All About?

WHY IS THIS REQUIRED: The Global Economy and Central Banks are trapped in a Credit & Liquidity Crisis that requires the growth of Debt. It is significantly larger than global economic growth of credit is capable of generating.

CONSEQUENCES: The current financial system is so massively over leveraged through 100s of Trillions of dollars of derivatives, futures contracts, options and balance sheet gearing, that if credit and debt are not increased, the system will implode under its own unfundable weight.

SOLUTION: A Global campaign for Climate Change through an accelerated movement towards Green Energy provides the optimum vehicle for the creation of a stream of taxpayer and debt-funded “investments” which in turn will need a just as constant degree of debt monetization by central banks.

WHAT ARE WE TALKING HERE:

We are talking about a plan to spend $150 trillion over 30 years globally. This will average $5 trillion in annual investments – amounting to twice current global GDP!

CLIMATE CHANGE: POWER

GEO-POLITICAL WEAPON

Expect Climate Change programs to become a Geo-Political weapon against two adversaries;

ECONOMIC ADVERSARIES

• CHINA, RUSSIA, IRAN,

• • As we clearly witnessed at COP26, many countries are siding with China in playing ‘political lip service’ to Climate Change Initiatives.
  • This political divide is likely to only grow and be used as a political weapon.

• OPEC+

• • OPEC+ as the global Fossil Fuel Cartel will become the obvious big loser in any success of a Climate “De-Carbonization” strategy.

QE, MONETIZATION & GREEN BONDS

Money & Power comes together in the form of

• • Monetization of Green Bonds through the Monetary Policy,
  • Carbon Trading through Regulatory Compliance and Security Regulation.

Green Bonds

• • A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects. These bonds are typically asset-linked and backed by the issuing entity’s balance sheet. So they usually carry the same credit rating as their issuers’ other debt obligations.​
  • Green Bond purchasers are typically institutional investors, often with either an ESG (environment, social and governance) mandate or an environmental focus. Other buyers include investment managers, governments and corporate investors.
  • In addition, there are often tax benefits for investing in green bonds.
  • According to the Climate Bonds Initiative, the issuance of green bonds reached $269.5 billion in 2020. The United States was the largest player, with $50 billion in new issuance. The same analysis found that the cumulative issuance of green bonds had reached over $1 trillion.

IT IS HIGHLY LIKELY THAT FUTURE QE INITIATIVES WILL MAKE GREEN BONDS A CENTRAL FOCUS.

TURNING CARBON INTO AN ASSET CLASS & FINANCIAL SECURITY

CARBON PRICING

• • Carbon Pricing is an essential tool that works within a market economy to change behavior and reduce emissions at scale in order to avoid the worst damages of climate change.
  • Carbon pricing is a policy that aims to reduce carbon emissions by requiring emitters to internalize the societal costs of emissions.
  • Placing a price on externalities, such as carbon emissions, is the most widely accepted means to efficiently correct for this type of “market failure.”
  • Pricing emissions provides a direct economic incentive to reduce emissions or seek low-carbon alternatives.

The two main carbon pricing policy instruments are carbon taxes and ETSs (cap-and-trade programs, also called compliance carbon markets).

1- A CARBON TAX

• • A carbon tax places a fee on the carbon emissions content of fossil fuels, and the market then determines the resulting quantity of emissions reductions.

2- EMISSIONS TRADING SYSTEM (ETS)

• • An ETS places a cap on the total quantity of emissions and allows the market to determine the price for tradable emissions allowances.
  • ETSs are in reality a policy tool for mitigating emissions and also highlighting carbon as a potentially attractive asset class for investors.
  • For investors, carbon traded in these markets can be viewed as an attractive asset class with well-understood risk premium drivers
  • Emissions Trading Systems (ETSs) are a climate policy instrument designed to provide effective carbon pricing. Carbon traded in these markets can be viewed as an attractive asset class with well-understood risk premium drivers.
  • Achieving Paris Agreement climate targets will require the widespread use of carbon pricing to steer the world onto a low-carbon pathway. ETSs cap and reduce emissions through tradable emissions allowances that induce emissions reductions at the lowest total cost to society.
  • All long-established ETSs have exchange-listed futures markets to enhance liquidity and price discovery, facilitating greater market efficiency and increasing demand within the market.
  • Compliance entities can also hedge their exposure to future price increases.
  • A listed and liquid market allows investors to actively participate in these markets. In 2019, the traded value of three major programs—the EU ETS, the Regional Greenhouse Gas Initiative (RGGI), and the Western Climate Initiative (WCI)—exceeded $250 billion.

CARBON CREDITS & ALLOWANCES

• • In an ETS, polluting entities covered by the instrument must submit an emissions allowance for each ton of greenhouse gas (GHG) they emit.
  • Compliance is mandatory for eligible entities, and their emissions are tightly monitored and audited, with penalties for non-compliance.
  • Entities either purchase allowances through government auctions or, in the case of industries exposed to international competition, receive a portion of allowances through free allocation.
  • A total cap on emissions’ allowances guarantees that emissions reduction targets will be met, whereas the trading of emissions allowances ensures that the reductions will occur at the lowest total cost to society.
  • Emissions trading incentivizes firms with lower abatement costs to maximize their emissions reductions and sell allowances to firms that can only reduce emissions more expensively.

THREE CURRENT TYPES OF EXCHANGE MARKETS

CARBON STREAMING

• • “Streaming” has become a standard financing arrangement in the mining industry over the last two decades.
  • Carbon Streaming has become a growing way of investing in carbon credits without taking on the operating and financial risks of the actual production efforts.

INTERNATIONAL CARBON SWAPS

• • COP26 was successful in further moving global carbon credit standards forward.
  • Derivatives can be expected to play an increasingly essential role in global carbon markets.

CONCLUSION

CARBON INVESTING IS AN EXPLODING ASSET CLASS

Carbon has quickly become a liquid and investable asset class that now trades approximately US$1 billion per day across physical carbon, futures and options.

Carbon has exhibited attractive historical returns and a low correlation with other asset classes, making it potentially attractive within a diversified portfolio.

The wide spread Corporate ESG adoption of Climate Change support initiatives is powerfully beginning to drive the global volunteer carbon markets.