Recession is the environment's worst enemy

First of all, I appreciate the feedback and the comments that you've provided. As I have mentioned, I am no expert and I welcome different opinions. Therefore, in the future I will try and revisit some of my older posts and discuss some of the issues that you've brought to my attention. On that note, please feel free to continue to email me comments, feedback and any posts that you believe will have an interest to the readers of my blog. I will post them without censoring given that they are in the context of this blog.

I realize that I have not talked much about politics so far in my blog: The US has recently had an historic election of their new president, there was a terrorist attack in Mumbai and the leader of the Russian orthodox church passed away yesterday. In other words, there should be plenty of material to discuss politics and economics. Firstly, as with most of the things I discuss, brighter people than myself have already discussed the consequences of these political events. Secondly, I believe we all get bored from hearing about the same thing over and over again.

In any event, I'll now make an exception and discuss something that's been on the agenda on a government level for quite some time now: the environment. We all know it will collapse eventually and ensure new breeds of illnesses and diseases, that may lead to our extinction (this is a fact in my mind, the discussion is around whether we're causing it or not). I guess our passive response is a result of one of the two hypotheses: by the time it collapses (1) we'll be living on Mars or (2) our offspring will have found the solution. In fact a third reason may be that we're tired of hearing about the problem. If that's the case, then you should probably stop reading.

Just like street lighting, a good environment is a positive externality. A positive externality is something that we all benefit from incrementally, but are unwilling to pay for individually. For instance, you are satisfied with the street being lit on a late afternoon when you walk home from work. You benefit from it. But you wouldn't pay for it out of your own pocket. That's why the government must take the bill. The same goes for cleaning up the environment. True, companies pay donations to organizations that try to remedy these problems. But just like AIDS, this is done either out of a marketing perspective, having a bad conscience or like a few cases, a genuine belief that the donation will make a difference. So what happens to these "marketing gimmicks" when the companies' budgets are being tightened? What happends to personal donations when you lose your job, as is the case for many people today? That's right. You cut down on luxury expenditure and aid donations.

The LVMH group (Louis Vuitton Moët-Hennesy, a group that sells luxury goods) is probably making organizational changes as we speak: firing (staff) and hiring (consultants). The same goes for auction houses. My guess is that there won't be any new records for an orginal Monet in the next few years. And what about donations and environment-focus from governments, companies and households? Just like the Road runner does to the Coyote - bip bip - and it's gone.

This is a good time to stop. Why? Because as with everything else in the world, solutions have to be capitalized before they can become successes. As of today, most environmentally-friendly solutions don't have the legs to carry it in the fierce, free-market. For instance, if a company could sell plenty of houses profitably that used its own emsissions and turned it into clean energy or lit the lights in the rooms, that company would become a success. So when contributions from rich philanthropers, governments and agencies become marginalized, those companies at the receiving end, vanish like the dot.com firms.

I'll propose one solution though. And please if you're an environmentalist and don't want nuclear energy, I'll welcome any valid arguments on why my next suggestion is a poor one. I've mentioned it once in a previous blog and I'll mention it again: Thorium.

I recommend you read up on Thorium (Thorium's name in The Periodic Table is Th), speak to teachers, scientists and politicians to get the full picture. Thorium is the energy for the future. Let me give you an example to portray the importance of Thorium. If Africa is the next India or China, where will it's energy come from? As all countries almost without exception, experience a perfect correlation between growth in energy consumption and growth in GDP (in percentage terms) how will that be possible without leaving a giant, gaping hole in the ozone layer? Thorium. You may or may not now this, but China has, on average, built five new coal power plants a week since 2007! It's not because they don't care about the environment, but because they have no where else to get their energy from cheaply. After all, China is the largest producer of coal in the world.

So what's the highlight: most clean energy solutions, don't solve the real problem of the world. They're expensive and can't really replace heating oil or natural gas. Wind and solar energy? They might help you and me reduce our energy expenses. But save the world? No chance. Thorium at least has a great chance: It's found in abundance in stable economies, its energy output is huge, the initial research costs are far outweighted by the savings in energy costs and finally, believe it or not, it's a friend of the environment with zero emissions.

Why did I say that I wanted to discuss politics when I discuss energy? You may have guessed it already. Thorium is as good as I claim. Unfortunately, Thorium is all about politics. Take my simple association test to prove my point. Imagine you're the head of an energy-hungry country and one of your top researchers presents a new case that will solve most of your energy issues. Nuclear energy using Thorium. What pops into your mind?

Exactly.

The Tchernobyl-disaster (God knows how that's spelt), Sellafield wasteland, terrorism, melt-downs, people turning fluorescent etc.

Those same associations are leading to irrational behaviour as disucssed in a previous post ("Murderous, money management"). Forgetting the facts and adding too much weight on emotions can be equally wrong in politics as in money management. There are of course other important issues. Such as why would Norway (which benefits so immensely from being an oil exporting country) want to invest in Thorium plants that may compete against oil? And the US, which has a debt 4-5 times the size of the GDP, worry about the environment when there are far more pressing issues at hand that need to be addressed?

That's why it's up to us to set the agenda in the political world and press for changes. One great pitch about the need for Thorium to a local politician is worth far more than the contribution of USD 1 mill or that voluntary work one's entire life. Still, those contributions do have their value. That's why a recession is the environment's worst enemy.

---
This blog is intended for the interest of the readers only and the blogger bears no liability as a result of investments undertaken from advice given in this blog. I have used citations that are accurate to the best of my knowledge, information that is correct and I apologize in advance for any spelling errors.