Transitioning from our fossil fuel addicted global economy is going to be extraordinarily difficult. It could happen over time, but challenges remain to wean off fossil fuels meaningfully in a short time frame.
The reality is that fossil fuels drive immense portions of our global economy and are so interwoven into our system that many do not give it thought when buying groceries or clothes or even making an investment in a company through a passive mutual fund.
The reasonable ease of use, and highly enviable energy density qualities have made coal oil and gas extremely difficult to replace at scale globally. Roughly 64% of the world’s electricity production is fossil fuel based.
According to a February 2021 article in the World Economic Forum by Noel Nevshehir, Director, International Business Services and Global Strategic Partnerships, ”In our quest to protect the planet by reducing our carbon footprint, it is important to note that our world currently depends on fossil fuels for 84% of it’s energy needs. Getting to the Holy Grail of net-zero emissions will be a heavy lift, particularly from a technological and cost-benefit standpoint.”
This same article points out that China holds 60% of all rare earth materials while Russia has roughly 22%. That is politically daunting as we continue to ramp up Electric Vehicle Production and have a need for a massive EV Charging Station Infrastructure buildout.
How do we get there when a lot of products are designed and created with petroleum? According to the Energy Information Agency (EIA), examples of petroleum based products include floor wax, footballs, ballpoint pens, skis, dishes and detergent. It is worth checking out for a few minutes to grasp how interwoven the fossil fuel industry is into our consumer goods.
While we should all strive to source eco-friendly products for our daily living, a significant responsibility falls on the institutions with scalable clout to truly move industry and company policy globally.
The investment industry needs adhere to strict criteria when vetting companies for your portfolio. The evaluation of water efficiency, carbon savings and product material sourcing are worth it as this sector holds trillions.
My December Nature’s Beacon will encourage us all for 2022 and beyond.