Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Monday, September 22, 2014

Global CO2 emissions could be peaking

An excellent article from RenewEconomy.

For the past decade, the two biggest reasons for despair for those who favour strong action to stop climate change, and the top two excuses for those who don’t, have been the rapid increase in coal-burning in China and inaction in the US.
But in the past few years, to the surprise of many, both these countries have taken major steps away from coal. Their move opens up a crucial window of opportunity to achieve what many thought was a lost cause – a peak in global emissions of heat-trapping gases well before 2020.

In essence, China is the world's largest emitter of CO2, but recent changes in policy may mean that Chinese demand for coal and therefor also CO2 emissions may have stabilised.  And in the second largest emitter, the US, emissions are already falling, and the likelihood is that this will accelerate.

Key table:

Emissions between 2010–2013
  • Fossil fuel use growth from non-OECD countries: +2.4%-points
  • Emissions reductions in the EU and the US: -0.5%-points
  • Emissions growth in rest of the OECD: +0.2%-points
Declining emissions from tropical deforestation: -0.2%
How emissions could stabilise peak and decline before 2020
  • Maintain current emission reduction rates in EU and US: See above
  • Zero growth of coal use in China: -1.1%-points
  • Stop emissions growth in rest of the OECD: -0.2%-points
  • Zero tropical deforestation by 2020: -1.0%-points
(Read more here)
Source: RenewEconomy

Of course, this is nowhere near enough.  But as the article says, just a short while ago, even this seemed out of reach.

Sunday, September 21, 2014


The Greenland ice cap is melting 5 times faster than it was just 15 years ago, and the West Antarctic ice cap 3 times faster.  This will increase the rise in sea level  to 4 inches per decade compared with 7 inches for the whole of the 20th century.  In fact, in the past, rapid meltwater pulses have raised sea levels 14 feet in a single century.

Time to DO something.

Saturday, September 20, 2014

Beaut solar graphic

It's nicely informative.  Hat tip to CleanTechnica.  And I like their logo too.  Clever:

The 4% club

It seems a Sisyphean (or do I mean Herculean?) task, to cut emissions to zero.  But actually, it isn't.  Small annual declines will over time build to massive cuts.  For example, a cut of 3% per year, cumulated year after year, will equate to a cut of  50% over 20 years, 2/3rds in 36 years (i.e., by 2050) and 93% in 86 years (i.e, by 2100).

Now this is an absolute cut, not a cut relative to growth in the economy.   The use of carbon per unit of real GDP is called the carbon intensity, and that has actually been falling, just not fast enough.  The chart below (source) shows how we need to cut the carbon intensity by 6.2% per year.

What that means is that if real GDP rises 3% per annum, but emissions fall by 3% per annum, then the carbon intensity will fall by 6% per annum.  Growth in developed countries is likely to run at 2-2.5% over the next 10 years.  So if they cut total emissions by 3% a year, their carbon intensity is only falling by 5-5.5% per year, not quite fast enough, but far better than what we have managed to achieve up to now.

The problem is developing economies.  A developing economy goes through a growth cycle as it transitions from emerging through to developed, and that typically involves very rapid growth followed by a steadily diminishing growth trend as it uses up its own resources (labour) while encountering diminishing returns on new investment.    Eventually, even rapidly growing emerging economies reach the trend growth rate set by technological advance and social factors, which seems to be around 2.5%.

So even though China/India/Brazil etc are now growing at 7% per annum, they will eventually grow more slowly than that.  But eventually is too far away.  The BRIC (Brazil, Russia, India,. China) countries are 25% plus of the world economy, and even if they cut their carbon intensity by 6% per year, their emissions in absolute terms will still keep on rising.  The good news is that China, the world's largest emitter, and also, not coincidentally, the world's largest consumer of coal,  had a de-carbonisation rate of 4% in 2013 and looks as if it will do even better this year, since real GDP growth is 7-ish, while carbon imports are declining.  

To achieve a global cut in emissions of 3% per annum, the developed countries need to cut by 4% to allow emerging countries to rise by 1%.   And yet, a cut of that magnitude seems entirely feasible.  With renewables and batteries declining so fast in price, the economic cost of switching is negligible, and in fact new technology may bring new jobs and new growth, just as it has always done in the past.  Once you get past a certain percentage of renewables in total electricity generation, quite modest increases in the total from renewables will produce your 3% decline in total emissions.  Let's say renewables are 20% of total electricity (in fact 22%, but that includes hydro).  A rise of  5% a year every year in the percentage of renewables (i.e., from 20% to 25%, then 25% to 30%, etc.)  will cut total emissions in absolute terms by roughly 5% a year in the early years, accelerating to 10% a year by year 10 (assumes electricity demand growth of 1.5% per annum), and will halve emissions within  9 years.

Philly Fed & Empire State

These are two of the earliest available indicators of the state of the US economy for the previous month, i.e., August at this point.  They're full of random fluctuations, so it's best to look at a 3 month moving average of their average (each one's random fluctuations offsets the other's), which is what's shown in the chart below.

The US economy continues to strengthen.

Hottest August Ever

NOAA's data.  The hottest August ever recorded.  It was the hottest May, the hottest June, the 4th hottest July, and now the hottest August (double click to get bigger chart; source here).

And the hottest 12 months ever.

And the equal hottest 60 months ever.

But of course, The Cane Toad has told us that "Climate Change is Crap".

Friday, September 19, 2014

Sunday, September 14, 2014

Monday, September 1, 2014

Renewable Energy

In Oz, our esteemed prime minister wants to abolish the RET (= renewable energy target).  (Via @cathywilcox1)