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The Case for Macro

Our Dynamic Allocation Strategies team explains why global macro investing offers many potential benefits when included in an investment portfolio. Read More (PDF)

Emerging Markets Outlook for 2017

The past 12 months have been fairly turbulent in emerging markets, but a number of factors support emerging market performance.  Read More (PDF)

Making Coal Great Again?

December 14, 2017 | Global/Emerging Markets


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“The war on coal is over,” declared Environmental Protection Agency (EPA) Administrator Scott Pruitt when announcing that the EPA would seek to repeal the Obama Administration's Clean Power Plan. But is the penetration of renewable power generation vulnerable to such policy changes?

The economics of renewable power generation are clearly established. Improvements in technologies are resulting in cost reductions. As a result, Bloomberg New Energy Finance estimates that 72% of the $10.2 trillion spent on new power generation worldwide by 2040 will be invested in new wind and solar photovoltaic (PV) plants.  And, in November 2017, the U.S. Senate's tax proposal, scheduled to be finalized in January 2018, left production tax credits in place on renewables.

There's no rolling back the economics of renewable power generation.

In my opinion, there's no rolling back the economics of renewable power generation, in part because of politics.

The graphic below shows why. Wind generators are primarily located within the blue bands and coal generators within the black bands, with solar generators on the outskirts. But as you can see, the wind and coal generators are located primarily within red states—those controlled by Republican legislatures after the 2016 elections. They're in Iowa, in Nebraska, in Minnesota, even Texas—and it would be very politically difficult to disrupt the economics of those states.

Additionally, wind and solar employ a substantial number of people in the United States—just north of 475,000, according to the Department of Energy as of Q1 2016. That's significantly more than coal employs at 160,119. Congress is not going to want to put those people out of work.

And that's why, as growth investors, we're looking at investment opportunities in renewable power generation.