Breakthrough That Could Reverse Climate Change with Scaling Investments

 This past September ClimeWorks launched the world’s largest “carbon sucking” plant known as Orca designed to reverse global warming. It utilizes geothermal power from the Hengell volcano in Iceland to propel giant fans that suck air out of the atmosphere and pass it through a filter. The filter is then released of the CO2 that is subsequently converted into a carbonate and buried permanently beneath the rock layer. It is estimated that this plant prototype is capable of removing CO2 from the atmosphere that is the equivalent of 870 cars.

 

The beauty of operating these energy intensive direct air capture plants in Iceland is that there is virtually unlimited sustainable geothermal power in the country due to the volcanic landscape. It is estimated that the new full scale direct air capture plant that is currently under development could do the work equivalent to 40 million trees. In order to bring the planet to NetZero carbon emissions it is estimated that the scale of the investment necessary will be of a magnitude well into the trillions. Naturally the mammoth scale of the problem for governments will create a significant opportunity for investors putting their capital into the solutions. The last transformation of the economy at this scale resulted in the development of the internet giants.

 

When David Miller and Rob Gough portfolio managers of the new Strategy Shares Halt Climate Change ETF (Nasdaq NZRO) heard of the Orca launch they recognized the opportunity to be a part of the solution to financing the end of global warming. Unlike many “green ETF” issuers Strategy Shares has made a commitment to actually invest their own money in reversing climate change by contracting with ClimeWorks to remove CO2 from the atmosphere on their behalf.

Traditionally equity investors have bought into the concept that environmental investing mandates come with a significant cost relative to performance. However, David and Rob are well aware that the opposite has been true. If you had instead eliminated the worst polluters including oil companies, airlines, automakers, and coal power plants from the S&P 500 over the past decade you would have achieved superior results. Divesting from these fossil fuel companies in the S&P and investing in their green counterparts would have been a win for both investors and the planet.

In fact, the biggest winners historically have been those that capitalized on technological innovation to create solutions that delight customers in a way that is both ecologically and financially sustainable. There is certainly no question that Elon Musk has proven that Tesla can blow away internal combustion cars on a 0–60 and create the best performing automaker in the world. Google has been on a tear with 24% annualized growth over the past decade while running on exclusively renewable power the past 4 years. Enphase Energy has been almost a 50x for investors since their IPO while bringing the down the cost of solar power to homeowners by over 82%.

Mainstream media and the movies have spread the perception that it is all doom and gloom with an inevitable crash course leading to climate disaster. However, David counters that we have the technology today already in place to bring climate change to an end if we all join forces to invest in scaling the solutions that already exist.

Sceptics argue that we can’t do anything about climate change because countries like India, China, and Russia will continue to build more coal power plants. While it is certainly true that developing countries continue to add more coal to the mix, that doesn’t mean that those new plants will inevitably be a problem if we scale technological solutions. The Boundary Dam Power Station in Saskatchewan Canada has already begun scaling a process that is known as carbon capture and sequestration or CCS. SaskPower the owner of the plant installed a CCS attachment designed to capture carbon dioxide emissions right from the source, thereby preventing them from entering the atmosphere. This new CCS attachment to the coal plant that has existed since 1959 is now capable of capturing up to a million tons of CO2 annually.

The duo leading the Strategy Shares Halt Climate Change ETF (Nasdaq NZRO) are convinced that solving for climate change can be both a great investment and the right thing to do. It is exciting to move past the fear surrounding climate change and move on to the solutions.