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Man-Made Climate Change: The Investment Case For Decarbonization

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Summary

Man-made climate change is real, and CO2 emissions are a big problem. In this article, I will explain the basics of it, using some high school-level science.

Decarbonization has a plethora of challenges, and I will briefly discuss the main ones.

The world is slowly waking up to the realization that problems caused by continuing large greenhouse gas emissions could be larger than the challenges arising from decarbonization.

As a result, I expect that the degree to which (energy) companies will be successful with decarbonization efforts to be linked to future valuations, with lower P/E ratios for more risky, carbon-intensive stocks.

Francesco Scatena/iStock via Getty Images Introduction Man-made climate change has been a heavily debated issue on Seeking Alpha lately. I recently wrote an article about why I think that investments in fossil fuel companies have become more high-risk since the COP26 meeting. This article received a decent response from Seeking Alpha readers and led to some interesting discussions in the comment section.I even had the honor to receive a rebuttal in which fellow Seeking Alpha contributor Fluidsdoc mainly argued that because of a relative lack of new fossil fuel investments, price increases and outperformance of the fossil […]

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