ICET Portfolio - Information, Communication, Energy, Transport
by IndraNet Technologies Ltd

Global Economy: the global financial sector debacle that begun in 2006, peaked in 2008 and precipitated a deep global recession, has caused significant troubles to many investors. In response to those events many advisors now urge caution highlighting that the rationales and grounds for investing in traditional investment instruments such as traded stock and bonds have been deeply altered, in particular concerning consumption trends – some have even stressed that the ultimate consumer, the “US consumer is dead.”. They advocate focusing on new and significantly safer forms of investments.

Energy: the peaking of fossil fuel supplies that begun in 2006 with conventional oil, is taking place now for all forms of oil and gas and, including coal, is expected to be completed around 2020. This is precipitating a high degree of volatility not only concerning energy markets but all commodities, including food production, and affecting all industrial sectors. We can expect very substantial oil price swings over the next five years, including major supply disruptions. Insulating against these and gaining independence from fossil fuels is a key and urgent priority.

Global Ecology: The current in-country and international negotiations concerning measures and policies to combat Climate Change highlight the profound uncertainties affecting all avenues of business. World leaders and captains of industry are belatedly becoming aware of the urgency of the situation and that the “Climate Change” label is very much a misnomer. Instead the world faces a rapid deterioration of both energy supplies and all facets of the ecology of humankind on Earth, including minerals, metals, fresh water, solid, liquid, and gaseous waste streams, oceans, soils, climates, biodiversity and mass species extinction. Many analysts doubt very much that any form of governmental measures aimed at reducing GHG emissions will achieve anything in time to avert the worst impacts of ecological degradation and advocate instead proactive, market driven investment and business initiatives. For example, Bjørn Lomborg, Director of the Copenhagen Consensus Centre, and outspoken critique of Climate-Change policies, stresses the necessity of focusing efforts on “making non-polluting energy sources cheaper than fossil fuels.”

Changed fundamentals and priorities: the above energy and ecological situations radically alter investment fundamentals. Safe investments are those that are most unlikely to be affected by the above challenges, i.e. they concern exclusively new sectors of business activity that are superficially being designed to be resilient to the changes – all other sectors can be expected to be drastically affected by the changes. As stressed by the IEA report quoted earlier the world has now entered an energy and ecological revolution. This revolution is unprecedented since the advent of farming at the end of the last Ice Age, some 10,000 years ago. It ensues that the most attractive investments are those that provide robust avenues to address those challenges and that provide an insurance policy for the future both at the individual and societal levels, i.e. they concern developments that provide sound bases for sustainability. Many people want to retrieve the power to control and run their own lives.

“Green wash” versus real sustainability: investors are beginning to sharply differentiate between real sustainability opportunities and what has been called “green wash”, that is investments that had been promoted with the aura of “sustainable development” but achieved very little or resulted in failures (such as a number of failed “green buildings” or biofuels projects costing more fossil fuel energy than what they were meant to replace). Real sustainability opportunities are those that are based on sound science and engineering, and that can compete on their own against fossil fuel based businesses.

Large markets, accelerated market diffusion and large cash flows: many analysts stress that time is of the essence. The IEA and all large international bodies focusing on the above challenges are adamant. A radical turn around must be successfully accomplished by 2030, that is, over only two decades. This is less than half the time historically taken to diffuse technology innovations globally (railways, cars, planes, telecoms, TV, power grids, gas reticulation, water reticulation, etc., all took over 50 years to achieve global prominence – the Internet, initiated in the 1970s is still in its prime growth phase). Past track records show that, in such situations, only aggressive business and investment initiatives based on viral marketing methods can succeed. The focus is on opportunities focusing on large global markets, accelerated market diffusion and able to generate large cash flows very rapidly.

Real sources of wealth: recent events have highlighted the volatility and fragility of most investment avenues that are not grounded in the real economy (versus what has been called “Planet Finance”) and that are not based on tangible sources of wealth.  Energy is progressively becoming recognised as being the only tangible peg for the value of money (gold being only a proxy), simply because it is the only resources that cannot be replaced by anything else. It is also becoming abundantly clear that without appropriate technologies to convert them into usable forms, coal, oil or gas in the ground, or sunshine falling on Earth are not inherently sources of wealth. Instead the fundamental new drivers of wealth are new energy technologies able to compete with fossil based ones without recourse to major government assistance of one kind or another or heavy handed government interventions.