The Climate Pivot.

The Climate Pivot.

January 22 2021

Shortly after we published the first of 32 issues of the CAPM 2.0 memo in January 2020, the virus hit. The world shut down and the stock market reeled in an attempt to revalue the damaged economy. Meanwhile, the climate impacts predicted decades ago, actually happened in 2020: massive forest fires burned vast sections of Australia and the American West while hurricanes lined up to pummel the Southeast. CO2 in the atmosphere rose to nearly 417 parts per million, ever closer to the 450 ppm “danger zone.”


The rise from 300 ppm to over 400 pm is a seemingly modest change but every natural ecosystem on the planet was built during the past 10,000 years around the 300 ppm level. To limit the rise in global temperatures to 1.5-2.0° C, experts say we need to move to net zero emissions as soon as possible. Indeed, a reduction in current emissions will only slow the rate at which the CO2 concentration in the atmosphere rises. To actually lower the CO2 concentration, we have to cut fossil fuel consumption by 90% or more. That is 30+ years away but we have to aggressively start now.


Corporations, governments and big investors around the world recognized the reality of the science and the future impacts. Large money managers like Blackrock broke from the short-term profits mantra to focus their investing on the long-term sustainability of corporate business models. After April, the stock market began to recover. There were big gains from tech focused stay-at-home beneficiaries like Google, Apple, Microsoft, Amazon and Facebook, which also pledged to spend billions on renewable energy and other measures to achieve net zero. But the largest stock price gains were by the pure clean energy transition companies. Tesla’s stock was up 600% in 2020 and the solar stock ETF TAN gained 250%. Other clean energy companies in solar power, wind turbines, battery storage, EVs, and hydrogen also generated stock price returns that were multiples of the 16% S&P return. Clean energy SPACs attracted attention and investor dollars as their valuations soared. Meanwhile, the XLE fossil fuel energy ETF was down 25% in 2020. Green investors had a banner year while the oil & gas set crumbled.


Biden’s win in November, coupled with the Congressional Blue Wave, means the US will rejoin the Paris Climate Accord and the EPA will reverse the dangerous Trump environmental rollbacks. Biden’s climate plan calls for trillions to be spent on a clean energy economy and a move away from fossil fuel consumption. Strong federal and state measures will be directed to develop utility scale clean electricity generation, storage and transmission, electric vehicle adoption, mandates limiting building and industry emissions, incentives to make and use clean energy, and carbon taxes on emissions. Estimates vary but trillions will be spent each year over the coming decades on an $80 trillion global GDP economy. Our work at CAPM 2.0 suggests that upwards of $4 trillion per year may be close to the mark. These trillions will directly translate to revenues for the companies that provide the solutions.


Four years of climate denial policy has put our planet at increased risk. Most of the largest clean energy companies are now in China and Europe. Nevertheless, with a little help from shareholders, public advocates, the government and the profit incentive, US companies and consumers are stepping up. CAPM 2.0 spent 2020 introducing you to many of these companies and the challenges they are taking on. We are excited to continue the ride with you in 2021.

August 10 2021

Several recent developments in the political and industrial arenas have made the case for investment in batteries very alluring. This week we explore what is happening and suggest some things to consider.

September 1 2021

Today we delve into a Barron’s interview with Gary Black, the well-regarded Wall Street pro, and reveal why his target price of $1,100 per share for Tesla is not as aggressive as it may first appear.

April 20 2021

For many people, the true value of owning an electric vehicle remains a mystery. So, this week we lay out a straight comparison between life with an EV and a comparable gas driven car.