Great opinion price in the AFR today by Morgan Stanley Investment Management’s chief global strategist.
We've seen higher LNG prices recently based on tighter supplies. IMHO we should expect to see more of this going forward as part of the Greenflation trade.
"The world faces a growing paradox in the campaign to contain climate change. The harder it pushes the transition to a greener economy, the more expensive the campaign becomes, and the less likely it is to achieve the aim of limiting the worst effects of global warming.
New government-directed spending is driving up demand for materials needed to build a cleaner economy. At the same time, tightening regulation is limiting supply by discouraging investment in mines, smelters or any source that belches carbon. The unintended result is “greenflation”: rising prices for metals and minerals such as copper, aluminium and lithium that are essential to solar and wind power, electric cars and other renewable technologies.
Even as oil prices rise, investment by the big hydrocarbon companies and countries continues to fall. Instead, oil powers are reinventing themselves as clean energy powers. One broker recently wrote that of his firm’s 400 institutional clients, only one was still willing to invest in oil and gas. Even in shale oil, a corner of the market dominated by private players, rising prices are triggering an unusually weak increase in supply
In the 2000s, analysts were bullish on commodity prices, owing to demand from China. Now, if they are bullish it is because of increasing demand from green projects. The green economy is the new China.
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