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The Case for Smart Energy Investing

October 15, 2014
Tim Buckley

IEEFA’S TIM BUCKLEY GETS A SUCCINCT AND COMPELLING PITCH published this week in Australia on the business case for getting out of fossil-fuel investments.

“Divestment from the heavily subsidized coal sector is not ultimately about the politics of climate change, it is about managing growing investment risk,” reports TheFifthEstate.com in an article based around an interview with Buckley.

Buckley, IEEFA’s Sydney-based director of energy resource studies, Australasia, concedes the importance of public policy in developing alternative sources of energy, but the article notes that “what really count are returns” and that green bonds and “yield cos,” or yield companies, are a prudent alternative-energy investment.

“The Green Bond market has grown into a $40 billion annualized sector,” Buckley tells the website. “That market has doubled in the last six months, and I am expecting to see $100 billion in new issues next year.”

The article details recent such bond issues of note, including separate ones in excess of $1 billion each by Agence Française de Développement, The Bank of Japan, and KFW, Germany’s development bank.

“Yield cos” as also “exploding,” FifthEstate.com reports: “They provide a predictable income stream, but in renewable energy assets.”

Buckley’s takeaway: “The cost of renewable energy is capital. If you put the Green Bonds and YieldCos together, it’s an absolute game changer. That’s where I’d put my money.”

TheFifthEstate touts itself as “Australia’s leading business newspaper for the sustainable built environment.”

BUCKLEY IS QUOTED ALSO IN THE TRADE PUBLICATION Dredging Today in its coverage of a symposium on the Great Barrier Reef.

Excerpts:

“By opening up the Galilee Basin, you increase the global supply of coal by 27 per cent and the price of coal will go down materially, decreasing profitability.The Queensland and Australian governments are kidding themselves if they think the Galilee is going to open up more thermal coal for the world and not have any adverse impact on existing mining operations.”

“Operations already at zero profit margin will be driven into the red. You will destroy existing mines that are already employing lots of Australian workers. Mine closures, job losses, risking the climate and risking the Reef, for uncommercial projects -from a financial analyst perspective the projects don’t make any economic sense.”

— Karl Cates
[email protected]
Twitter @ieefa_institute

Tim Buckley

Former Director Energy Finance Studies, Australasia, Tim Buckley has 25 years of financial markets experience, specializing in equity valuation, including as a top-rated analyst and as co-founder and managing director of Arkx Investment Management.

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