| Dear Reader, Decarbonising the world is an admirable goal. We’re not going to get there, though. At least not by 2050. There is infrastructure inertia: Our energy, transportation, building, and industrial systems have been designed and built up around fossil fuel usage. Replacing or retrofitting all of this massive infrastructure requires tremendous effort, coordination, and investment capital over just a few decades. Doing so may be physically possible but lacks historical precedent. There is technology readiness: Multiple new low-carbon technologies need to rapidly scale up globally to hit net zero — things like advanced batteries, carbon capture, hydrogen, biofuels, etc. However, many of these are not yet mature, economically viable options ready to displace incumbent technologies without major policy support. Pushing adoption too aggressively risks unintended consequences. There is consumer adoption and social change: Shifting human behaviours and social norms related to things like diet, transportation choices, flying, and more, would likely need to accompany technological transitions. However, consumer preferences are stubborn and such widespread lifestyle changes historically take long periods of time. And then there are global coordination issues: The technical actions and policies required — across energy, land use, industry, trade, finance, and more — would need unprecedented global alignment between hundreds of public and private actors across both developed and developing nations. This poses an extreme organisational challenge. In summary: Getting to net zero emissions globally in just a few decades is an extremely tall task. If you believe that’s the case… …how do you place your investments in line with this reality? Click here for our ‘Fat Tail’ suggestions. Regards, James Woodburn,
Publisher, Fat Tail Investment Research | 