This article has been written by Alex Turnbull, a Singapore-based fund manager and the son of former Australian Prime Minister Malcolm Turnbull (who we interviewed in 2020). And he offers a more positive view on the current energy crisis and the longer-term transition to renewables than many other market commentators.
It has been hard to escape the pessimism from climate activists this year. After Russia invaded Ukraine and Russian oil and gas was taken out of global supply (at least for Western Europe and many Western nations), energy prices have skyrocketed. And it has led to record profits for oil and coal companies. Nations that were getting out of fossil fuels have refocused on them. Germany, for example, had scheduled the closure of all coal-fired power plants by the end of 2022. Instead, they have reopened previously closed coal plants this year.
And there is an overall view that energy price inflation will be a part of life, especially in Europe, going forward. Turnbull disagrees.
“Overwhelmingly people seem to have confused a shock with a change in trend at this time despite zero evidence that is the case aside from prices having gone up.”
He believes that energy prices may have peaked and that longer term, technology will continue to drive prices down for key renewable energy technologies. If you’re finding it hard to be positive in a world where petrostates like Russia and Saudi Arabia seem to be wielding disproportionate power – then there is a case for energy optimism. Let’s hope Turnbull is right.
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