It's Not The End Of The World, But You Can See It From Here
How Climate Change Will Impact Humanity Within Our Lifetime And Some Related Investing Ideas
Fair warning, this post is going to be difficult to read, terrifying even. If you don’t want to or cannot confront the psychological anguish of the climate crisis while you’re trying to live through a global pandemic I one hundred percent understand. Life is difficult and scary right now so please protect your mental health fiercely and stop reading if it's what's best for you.
For those of you sticking around, you will probably find this upsetting. And I get it. I’m honestly anxious about publishing this. Talking about the impending extinction of humanity has got to be one of the quickest ways to lose friends. And yet, to not talk about it only serves to further seal our fate. Perhaps this is why the reality of how climate change will spiral within our lifetime is almost never conveyed in simple terms by the mainstream media and why every single televised news broadcast isn’t constantly sounding the alarm. As the New York Intelligencer writes…
…our uncertainty about uncertainty, which the climate writer Naomi Oreskes in particular has suggested stops us from preparing as though anything worse than a median outcome were even possible; the way we assume climate change will hit hardest elsewhere, not everywhere; the smallness (two degrees) and largeness (1.8 trillion tons) and abstractness (400 parts per million) of the numbers; the discomfort of considering a problem that is very difficult, if not impossible, to solve; the altogether incomprehensible scale of that problem, which amounts to the prospect of our own annihilation; simple fear.
One of my favourite video game franchises is called Mass Effect. It’s a science fiction space opera about a ragtag bunch of humans and aliens that put their differences aside to stop a life-ending threat known as The Reapers. The Reapers are an advanced machine race that returns to the galaxy every 50,000 years to harvest all sentient life in a repeating cycle of purges. Each time evolution and civilization rebuilds over thousands of years they find the evidence of the previously purged civilizations and carry on expanding until they too are wiped out and the cycle begins anew.
I can’t help but draw comparisons with our own situation...
The Earth has experienced five mass extinctions before the one we are living through now, each so complete a slate-wiping of the evolutionary record it functioned as a resetting of the planetary clock, and many climate scientists will tell you they are the best analog for the ecological future we are diving headlong into. Unless you are a teenager, you probably read in your high-school textbooks that these extinctions were the result of asteroids. In fact, all but the one that killed the dinosaurs were caused by climate change produced by greenhouse gas.(i)
In other words, climate change has already wiped out life on earth four times and now it’s happening again, only this time drastically sped up. Consider that 85 percent of the carbon humans have expelled into the world in our entire history has been since the end of World War II. It took us just a single generation of accelerating global warming to bring us to the brink of planetary catastrophe (i).
By 2100, in just 80 years, climate scientists are forecasting four degrees of warming. Large parts of the earth will become close to uninhabitable or outright inhospitable (i). On our current trajectory by 2080 (less than 60 years from now), southern Europe will be in permanent extreme drought (worse than the American dustbowl has ever been) as will most of the Middle East, the most densely populated parts of Australia, Africa, South America and the breadbasket regions of China. These places are essential to the world’s food supplies(i).
Climates differ and plants vary, but the basic rule for staple cereal crops grown at optimal temperature is that for every degree of warming, crop yields decline by 10 percent. Some estimates run as high as 15 or even 17 percent. Which means that if the planet is five degrees warmer at the end of the century, we may have as many as 50 percent more people to feed and 50 percent less grain to give them. (i)
So what else happens at four degrees warming? Sea levels will rise by at least two meters as we head towards an ice-free world. We will lose major coastal cities, Miami for instance, will be gone within ten years (ii). That’s $15-23 billion of Miami property underwater as soon as 2030. Looking globally, a third of the world’s major cities are on the coast as well as our power plants, ports, navy bases, farmlands, fisheries, river deltas and on it goes. Expressed another way; one in fifty humans on Earth live on land that may be submerged within 30 years (iii). Overall, Asia will be the worst affected triggering the worst refugee crisis in history.
What will humanity do when faced with failing food supplies and hundreds of millions of migrants displaced by their own collapsing eco-systems?
For every half-degree of warming, scientists say, societies will see between a 10 and 20 percent increase in the likelihood of armed conflict. In climate science, nothing is simple, but the arithmetic is harrowing: A planet five degrees warmer would have at least 50% more wars as we do today. Overall, social conflict could more than double this century (i).
If nothing changes we are going to leave this earth watching our children and their children fight for the last ebbs of the planet’s resources and inhabitable real estate. Is all hope lost? Of course not. We are capable of great things (for example the Covid vaccines that went from an idea to saving lives in little more than a year), but as things stand it doesn't look good. If our children’s children are going to have a world to live on we need to vote in political leaders that will make preserving the climate their first priority.
Well done for getting this far. I appreciate you most likely read Lootbox for investing ideas and that was all a bit much, so here are some stock picks for investors that want to play the climate crisis theme over the next few decades…
ITM Power - A market-leading pure-play on hydrogen energy technology based in the UK
NextEra - The largest renewable energy producer
Carrier - Air conditioning systems
Plug Power - Produces hydrogen-powered batteries to be used in electric vehicles
Lowes - Home improvement stores (benefits from rebuilding when natural disasters sweep through populated areas)
Home Depot - World’s largest home improvement retailer (as above)
Northrop Grumman - Produces defence systems for governments
Lockheed Martin - Builds fighter jets, rockets and nuclear plants
Full disclosure I currently have positions in ITM Power, NextEra, Carrier and Plug Power.
Like this post? Hit that subscribe button and get my posts directly in your inbox each week…
Not an investor yet but interested to try investing in stocks? Check out my beginner’s guide. I recommend using the FreeTrade app which is free, lets you get started with just a couple of pounds and is perfect for newcomers with an easy to use interface. Use this Loot Box Investing referral link and we both get a free random stock when you sign up.
Agree or disagree with any of the above? Love or hate this? Let me know on Twitter - @LootBoxInvest.
Sources:
(i) https://nymag.com/intelligencer/2017/07/climate-change-earth-too-hot-for-humans.html
(ii) https://www.thenation.com/article/environment/florida-flooding-miami/
(iii) https://www.salon.com/2019/10/30/these-are-the-cities-that-will-drown-first-as-the-seas-rise/