The Positive Economy

franco@financialconsultantsguide.com — Fri, 07 Nov 2008 20:48:47 GMT

Positive vs. Negative Economy

A traditional electric company exploiting a fuel based central, although supposed to produce energy, actually depletes our planet Earth resources, has a low efficiency (about 70% goes on wasted heat) and contributes to accumulate CO₂ in the environment. By considering our planet as a whole system or capital this kind of “production” has a negative budget on the domains of the energy, climate, resources, health and biodiversity.

The same is for our cars (down to 1% overall efficiency if we consider the weight of the car!), our houses, travels, vacations, for the agriculture and the industry in general.

The world has finally realized that the challenge is to find solutions which have a neutral or positive impact on those domains while being attractive from the financial point of view. Governments and institutions are pushing to increase taxes and create regulations to help the transition at local and global levels.

The creation of eco-labels, for instance, is a strong incentive; take the A-F labels used for house appliances: the attraction of energy savings of the best products are slowly but surely pushing out of the market the other ones, thus rewarding those companies investing on R&D for “positive” products.

These trends are having an impact on the financial industry: investors should and will reward those companies which provide solutions towards the positive economy and products. Why not building houses that produce (positively, of course, from solar panels, for instance) a surplus of energy that can be injected in the electric grid and receive a return? Why not having green roofs hosting plants that accumulate carbon?

Many examples exist and perhaps the most amazing and concrete are:

The compressed air car that is expected to enter mass production in India during 2008 according to the agreement with Tata Industries
The high-density “bio-fuel” from the Jatropha Curcas plant at advanced test stage, several times more efficient than bio-ethanol.
Conversion of CO₂ from industrial plants exhaust pipes into transportable biofuel by means of algae.

The Financial Impact and where to Invest

The point is: this is an irreversible trend (who thought possible that the world could organise itself in the 70s and reduce the CFC impact on the ozone hole? Now Australia only allows low consumption electric bulbs, for instance) and the wise investor needs to re-balance his/her portfolio to include a higher share of “green” companies. The question might be towards which sector or technology to invest, as a lot of money has been burned already on hydrogen based solutions which are yet to be truly commercialised. Well, our advise is to sustain a portfolio of solutions because not one will be king, but the world will go through a diversified approach which will depend on countries and situations with different needs and assets. Brazil, for instance, may be able to expand its ethanol industry, but other structures will exploit their deserts or inefficient¹ lands to produce fuel from the specially adapted plants; others will exploit the energy of the ocean waves. Solar and wind based solutions will keep growing as those in the end are the primary sources of energy for all the beings on Earth. Another sector that looks promising is the wood industry which is learning how to manage and grow their primary resource, the forest. Besides, the new agriculture will be able to exploit the biogas and is learning how to rebuild their low productivity and poisoned lands and turn them into positive generators of healthy products, thus being financially competitive against the traditional depletion based ways of production. Water treatment and recycling technologies are to be watched as well.
Every aspect of the value chain, which tends to become more complex, and the companies operating in them have to be assessed in order to establish their positive or negative impact along those criteria mentioned above.

We believe that the fundamentals are solid because the solutions that are being and will be provided are genuinely needed whilst from macroeconomic, strategic and regulatory perspectives there is no escape and the oil economy is doomed, as painful as this scenario might be.

[Source: M. Rouer, A. Gouyon, Réparer la planète, la révolution de l’économie positive, éditions Jean-Claude Lattès, 2007]

Non-competing for food production.

Finance topics

The Positive Economy

Positive vs. Negative Economy

The Financial Impact and where to Invest