There are plenty of peak oil investment funds, but this is the first peak demand – or post-oil, as they call it – fund that we’ve heard of. The idea behind London-based Beetle Capital is not only everything peaks, but that the world is already in a peak oil phase and will soon enter a phase that is not just post-oil, but post-growth. From a short paper they published today:
“The world is now headed towards economic conditions that will entail not only cyclical but structural change: a damaged financial sector, an overstretched consumer base, rising energy prices, and shortages of food, water and other natural resources so severe that they could heighten global and regional tensions. These factors, combined with new external ones like carbon pricing, all point to one thing: a crisis of confidence in growth.”
The paper goes on to say that we don’t really know what lies over the horizon, etc, etc, but although resource scarcity will have severe effects, it will also herald a period of “creative destruction in which new policies and new entrepreneurs will radically transform the vast complex of energy-related industries”.
This, more specifically, is what they see happening:
So yes, it might sound like Beetle drank the Kool-Aid on every bold new energy idea floating around, from electric vehicles to climate change adaptation, but the fund’s new hire Alex Veys apparently completed an MSc in sustainable energy future, and is also a former fixed income manager at Fidelity International, so he can at least claim to be well-rounded.
Of course it’s not a great leap from the narrative of existing low carbon funds run by the likes of HSBC and boutique outfits such as Climate Change Capital (one of whose founders is launching Beetle): the peak demand case is usually made based on a combination of several factors including diminishing supply/unsustainable cost, increasing CO2 pricing, and energy security fears.
In the same way, it’s not necessarily a big leap from investing in oil industry because you believe in peak oil, to investing in oil alternatives: Simmons Co, the energy investment bank founded by the very peak oil-aware Matt Simmons, also dabbles in marine renewables along with its main focus on the oil sector.
What’s interesting is Beetle weave in ideas of the water-energy relationship (CCS, for example, is highly water-intensive; and we know about shale gas) and a resurgence of protectionism.
Beetle hires sustainable energy expert (FTfm, 11/01/10)
Do oil sands plus peak demand spell doom for oil majors? (FT ES, 27/07/09)