The Global Economy on Stopping Climate Change

The energy sector is alive with talk of the COP21 conference in Paris that took place earlier this month. 196 countries met to discuss and agree upon the best way for the world to cut emissions and halt climate change.

More than anything else, the headlines have been focusing on the meeting’s effects on the coal and renewable energy industries.

We noted last week that almost immediately, European wind and solar hardware companies saw gains, as many countries decided the best course of action was to up renewable investments.

And, as has been the case for years, this trend is killing coal. Arch Coal was the latest to announce monetary problems by asking for a grace period to restructure its balance sheet.

But barring its effects on some of the major commodity markets, the final call to action that came out of COP21 has some pretty encouraging possibilities for the world…

Global Support System?

One of the major points of the COP21 agreement was that developed countries would need to help developing countries progress into cleaner energy.

You see, there’s a reason coal, oil, and natural gas still dominate global energy production: They’re abundant, cheap, and reliable.

Now, of course, they’re also not clean. Coal especially is a major greenhouse gas emitter, thus its falling value, as I mentioned above.

But developing countries will more often than not look to those fossil fuels to power their growing energy demands. Cheap, abundant, reliable… what could make more sense for a country still building itself up?

To combat this mindset, the COP21 agreement states that those defined as developed countries are to pool a total of U.S. $1 billion every year until 2025 to support clean climate policies and actions in still-developing countries.

This includes things like sustaining forests that help clean the air and improving cleaner energy sources that will mitigate the use of dirty fossil fuels.

In theory, this sounds like a fantastic plan! Rich countries help the poor countries stay clean, while also developing their own climate change policies at home.

There’s just one problem with this theory…

Not So Much Support…

You see, there is no real way to enforce this kind of agreement.

Much like the U.S. Clean Power Plan does for states, the COP21 agreement sets out guidelines for countries all over the world and even has long-term deadlines for milestones, but it does not specify a way in which anyone would be punished for not reaching their goals.

Understand, the unity of the participating countries is still built into the agreement. In five years’ time, all 196 countries are expected to have a plan of action to reduce emissions

184 have, in fact, already submitted preliminary climate chance pledges, called Intended Nationally Determined Contributions. And these plans are to be executed and reassessed once every five years at future COP conferences.

But there is no consequence other than shame, perhaps, to a country that doesn’t fulfill its contribution.

The document itself uses language like “decides,” “requests,” “invites,” and “urges,” but it doesn’t mention any kind of enforcement, law, or even binding agreement.

So with all of the excitement, one has to wonder at least a little… was it worth the hype?

Changing the Future

The bottom line is that it probably won’t matter if this agreement doesn’t pin down a concrete plan for cleaning up the climate.

The language of the conference should in no way discourage you from enthusiasm for cleaner energy. Just because there is no legally binding contract for the world to sign doesn’t mean the necessary changes won’t be made regardless.

If you’ve been watching, you’ll have noticed that the market is already moving on its own. Wind and solar power were on the rise long before COP21. Hydropower and nuclear power already account for about 27% of the world’s energy generation, and coal is still slipping downward.

Whether or not global governments actually move to uphold their part of this new climate agreement, the shift is already underway.

Keep in mind that oil and gas still aren’t going anywhere for now — abundance and affordability are still key in most energy markets. 

And so perhaps the most important force in the energy sector isn’t the hype behind this COP21 agreement.

More than likely, it’s individual investors whose support is needed in both the fossil fuel and clean energy markets.

On the side of oil and gas? Invest in carbon capture technologies or companies that are actively working to cut emissions on their own.

This can even include natural gas companies that are reducing flaring or oil sands companies working with less energy-intensive production methods.

Prefer to invest in clean power directly? There are a plethora of clean energy companies that supply wind, solar, and energy storage materials all over the world.

You’ll want to keep an eye on lithium especially, as batteries for storage are taking off pretty quickly.

Still disappointed by the COP21 agreements? Don’t be. The world is already moving toward a cleaner climate situation.

And we’ll keep you informed about the best ways to invest in the most lucrative developments as they happen.

Until next time,

Keith Kohl

Check us out on YouTube!

A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.