Green & Ethical Investment News and Suggestions

QrizB

JKenH said:

This doesn’t mean all wind farm investments are a bad idea but it does show the need to be careful in investing in small companies. My two biggest investment losses have both been in smaller companies where I have seen my entire holding wiped out. 

Just because it is an ethical investment doesn’t guarantee the people running it are ethical. 

I've got a small number of UK WIND shares in my ISA (HL link). They seem relatively large and established, but I agree that investments of this sort are inherently risky. Even FTSE 100 companies go bust!

Exiled_Tyke

An interesting programme on Gravitricity I just discovered: 

https://www.bbc.co.uk/sounds/play/m000z1k0

It addresses a lot of the concerns and scepticism that was raised in our discussion above.

Coastalwatch

I thought we'd seen every option of Tidal and Wave energy generation proposed in recent times but another surfaced last weekend raising funding on Seedrs. Achelous Energy are planning to harness energy simply from the flow of rivers and it seemed plausible enough for me to take an interest. It seems I wasn't the only one as it reached it's target in the first two days and is now over funding. There are 27 days remaining apparently.

Another prospect for investment having already reached it's target is Celtic Renewables who turn waste products from the Whisky industry and beyond into Acetone, Butane and Ethanol. Their first factory is now complete with production underway. They are raising further funding for larger factories to be built elsewhere in the UK and eventually around the world. Butane can be used as a direct replacement for petrol with an 85% reduction in emissions. It is a sustainable, patented and carbon negative process.

No guaranteed returns, just speculation on my part that both will grow, eventually paying a dividend on the sums invested.

QrizB

Coastalwatch said:

Butane can be used as a direct replacement for petrol with an 85% reduction in emissions. It is a sustainable, patented and carbon negative process.

Butanol, produced via the ABE process: https://en.wikipedia.org/wiki/Acetone–butanol–ethanol_fermentation

Coastalwatch

QrizB said:

Coastalwatch said:

Butane can be used as a direct replacement for petrol with an 85% reduction in emissions. It is a sustainable, patented and carbon negative process.

Butanol, produced via the ABE process: https://en.wikipedia.org/wiki/Acetone–butanol–ethanol_fermentation

Hi QB, thanks for seeking that out and posting. Celtic Renewables give a history of the process from the Victorian era through to the 1960's when the Petro Chemical industry was able to offer more cost effective, if less friendly alternatives. Prior to this crops were grown specifically for the fermentation process whereas now of course CR are utilising waste or substandard products. Maybe that's what their patents are aimed at rather than the principle itself.

I thing fermentation is great, it amazes me every time I start a fresh batch of wine off and it bubbles away quite contentedly without any assistance or interference from me. Nature doing it's own thing and us working in harmony with it and reaping a benefit.

Now wouldn't it just be ironic if the FF industry was helped on it's way this century by the very process it destroyed in the last.

Possibly a stretch too far to suggest it as Returning the compliment!

Martyn1981

Sunday evening, that must mean - Carbon Commentary newsletter time.

Industry news

Things I noticed and thought were interesting

Week ending November 14th 2021    
 
1, Synthetic fuels. Researchers in Switzerland and Germany reported results from a two year experiment to make aviation kerosene using only heat from the sun and direct air capture of CO2. The small pilot plant (capturing a maximum of 5 kW) sits on the roof of a university building in Zurich. The scientists confirm the technical feasibility of their method of making the fuel, stating that ‘the technology is now sufficiently mature for use in industrial applications’. They also claim that when a large production plant is developed the cost of aviation fuel will be €1.20-€2.00 per litre. (The bottom end of this range is more than twice today’s wholesale prices for the equivalent fossil fuel and would add perhaps 15% to ticket prices). The researchers recommend that countries introduce quotas for genuinely sustainable aviation fuel in order to encourage the rapid take-up and consequent cost reductions of this technology (see note 3 below).
 
2, Fortescue hydrogen plans. Andrew Forrest’s company Fortescue announced partnerships with Jordan, Argentina and Papua New Guinea. The outline agreement with Argentina suggested that Fortescue might invest over $8bn in renewable electricity and hydrogen production. The media coverage implied that this investment will deliver more than 2 million tonnes of hydrogen a year, or around 3% of current global consumption. That isn’t exactly what was said. The $8bn investment would actually result in just over 200,000 tonnes of hydrogen a year, or around 10% of what was suggested, with an energy value of approximately 7 TWh. 
 
This is still highly significant but the partnership with Jordan, which wasn’t widely reported, may be more important. The kingdom has granted Fortescue rights to examine the solar or wind potential on about 1,500 square kilometres of land with a view to developing electricity generating capacity for hydrogen production. That area, if all devoted to solar, might produce more than 2 million tonnes of hydrogen a year. In another announcement, the company also said it would work with Papua New Guinea to build hydrogen generating capacity using hydro and geothermal electricity. 
 
In addition, Fortescue signed an understanding with the UK’s Bamford family, owners of the JCB construction machinery business. The contract will allow the Bamfords to buy 10% of the Fortescue’s global hydrogen production. If things go to plan, this would mean at least 1.5m tonnes a year by 2030, more than twice today’s total UK demand for hydrogen across all sectors. But we should also remember that even Fortescue, currently valued at around $32bn, will have to raise substantial new capital to grow its hydrogen interests rapidly.
 
3, More on synthetic aviation fuel. Vattenfall and Shell linked up to explore making an ‘electrofuel’ using LanzaTech’s technologies which turn H2 and CO2 into ethanol and then into a hydrocarbon similar to aviation kerosene. Vattenfall will supply the required CO2 from the flue gas from a district heating plant in Uppsala which is fuelled by household and industrial waste (and which will be zero carbon within the decade). The new venture is in its very early stages but is interesting for several reasons. It demonstrates that introducing mandatory quotas for aviation fuel, which Sweden has done, can be extremely helpful in encouraging businesses to begin work on genuinely sustainable manufacturing. And, second, Shell has previously said that it wants 10% of its aviation fuel sales to be sustainable by 2030 and it was looking for partners with the technology to achieve this. Lanzatech, whose technology is now well-established but not necessarily the cheapest, appears to be first provider to formally link with Shell on synthetic fuels. Shell also said it would work with Norsk Hydro to build a hydrogen business and indicated it would switch its Wesseling refinery in Germany, processing 0.3m barrels of oil a day, away from fossil fuels by 2025. Is the speed of change increasing at this oil major?
 
4, Small scale carbon capture and use. Last week’s news that world wine production will fall about 4% this year, largely as a result of climate-related losses in Europe, reminds us of the urgency of the threat to winemakers. Torres, the major Spanish producer, has been at the forefront of carbon reduction efforts over the past decade. It told us that it has successfully pioneered a new method of capturing CO2 from fermenting grapes and then using the gas productively. (Similar technologies are used in some breweries, but the cost is higher). Ballons above the winemaking tanks are inflated by the flow of carbon dioxide. The CO2 is then compressed and stored and used in the sterilisation of other tanks in the winemaking process. This saves the winery the cost of purchasing the CO2 for this purpose. The quantities are small but Miguel A. Torres, the president of the winemaker, said ‘This system is effective and profitable, and we're going to share it with other wineries so that, together, we’ll be able to significantly reduce the use of fossil-origin CO2’.
 
5, The climate impact of air travel. How much climate damage results from a return flight between Europe and New York? Henry Mance in the Financial Times gave us one estimate: one traveller’s share melts 3 square metres of Arctic summer sea ice. Another figure came in a paper published in Nature this summer. The author calculated that if emissions continued on their current path an additional 4,400 tonnes of CO2 will cause one more heat-related death. This is before any consideration of extra mortality from floods, storms and drought, or from food shortages. Thursday 11th November saw 13 flights between London Heathrow and JFK in New York. According to the researcher’s figures, these flights alone, combined with their return trip, will result in 2 incremental deaths just from higher temperatures. If the world does start reducing emissions sharply, the implied deaths fall, but even if net zero is reached by 2050, Thursday’s flights on this one route alone will cause 1 fatality.
 
6, Cost of capital. Goldman Sachs published a report that suggested that the cost of finance for some fossil fuel projects has risen to 20% a year. For renewables, the decline continues and is now 3-5% annually. These differences dramatically affect the levelised cost of energy. Many argue that divestment movements, such as those pushing universities to sell their stakes in oil and gas companies, have little effect. The shares simply pass from one owner to another. And the new owner probably has less interest in pursuing the company to improve its environmental record. I try to make the opposite case: divestment movements are pushing shareholdings into the hands of funds that demand much higher returns. This immediately reduces the attractiveness of fossil fuel projects, helping speed up the transition. Separately, even today’s higher costs of capital do not seem to fully reflect the risks that legal action around the world will oblige large polluters to pay compensation to their victims. About 1000 legal actions against governments and greenhouse gas producers have been launched in the last six years. Almost sixty per cent of those where a judgment has been reached were decided, at least in part, in favour of climate change victims. It might only take one successful action - perhaps Lliuya v. RWE - to affect the finances of the entire fossil fuel industry. This still does not seem to be included in their cost of capital. (Thanks to Thad Curtz).

7, Small nuclear reactors (SMR). The UK’s Rolls Royce announced it had raised £200m/$270m to fund the development of a 470MW SMR. The government said it would match this investment with a grant of a similar amount. The Rolls Royce SMR would enter service in about 2030 at a cost projected at around £1.8bn/$2.45bn for the 5th unit constructed. This implies a capital cost of around $5m per MW, about half the price of the large EPR reactors that are being built in Europe. If achieved, the $5/MW figure would be slightly less than the cost of the world’s largest offshore wind farm now being constructed off the UK coast at Dogger Bank (after adjusting for the projected 50-55% capacity factor for the turbines). But three factors should nevertheless make us cautious. First, Rolls Royce’s projections can only be early estimates. Second, the cost of all forms of renewables is tending to decline sharply. By the time the SMRs are built the cost of electricity from wind and solar is likely to be markedly lower than today. Third, and this point does not appear to have been weighed by the UK government, the projected costs of the most advanced SMR project in the world from NuScale in the US are roughly half what Rolls Royce is suggesting for its own designs. 
 
8, Green methanol shipping. Maersk and its tugboat partner Switzer said they would build a vessel by 2024 that will use methanol fuel cells, combined with power boosts from batteries when needed. The intention is to gain experience of using the fuel prior to the delivery of Maersk’s large order of 8 dual-fuel container vessels with green methanol capability in about 2025.   

Exiled_Tyke

An investment trust opportunity focusing on off-grid PV it seems. Doesn't really appeal to me though - and I'm not sure why

!https://www.hl.co.uk/shares/ipos-and-new-issues/Atrato-Onsite-Energy-plc

Verdigris

I note that they see their largest potential market as supermarkets. I'm pretty sure Sainsburys had a large programme of putting solar on their stores, some years ago, and I think newer Tesco stores had solar incorporated in the build specification. I'm pretty surprised there is a supermarket in the land that doesn't already have solar, as they have lights and refrigeration on all the time, which is a pretty perfect use profile.

Exiled_Tyke

Only just discovered this: 

https://www.proactiveinvestors.co.uk/companies/news/219589/greencoat-uk-wind-on-the-rise-as-institutions-clamour-for-renewables-219589.html

One thing I should have known and didn't is that Greencoat is investing in the Walney offshore farm - which is great news to have more UK owned turbines. (Not that I've got anything against the likes of Orsted). 

And one train of thought leads from the link that we haven't really discussed. Investments in renewables are (obviously) investments in commodities and therefore subject to the way those markets behave.  The discussion on the future demand, supply and price of electricity has been extensive here. And it's no surprise that Greencoat has seen heightened interest as prices have been increasing. What we haven't talked about is the issue that as the share of wind production increases then it becomes a victim of its own success in that when the wind is strong and production is high this will drive prices down and when the wind is poor, prices will increase but producers will not be able to take advantage. Although of course there are many other factors affecting prices: daily cycles and seasonality etc..   

QrizB

Exiled_Tyke said:

Only just discovered this: 
https://www.proactiveinvestors.co.uk/companies/news/219589/greencoat-uk-wind-on-the-rise-as-institutions-clamour-for-renewables-219589.html

I have about £2k worth of UKWIND shares in my SSISA. I bought them instead of putting money into Ripple. It may or may not be a better investment (only time will tell) but I was more comfortable with that approach to investing.

Edit: looking back through the thread I see I mentioned this in September too. sorry for repeating myself!