Only the end user benefits from decarbonization and “we don't account for the global destruction that we're doing right now to achieve it,” says Stéfane Marion, executive vice-president and chief economist and strategist, financial markets, at National Bank of Canada. Providing an ‘Economic and Financial Outlook’ at Franklin Templeton’s ‘Global Market Overview & International Investing with ETFs’ session, he said some believe “we're in the fourth industrial revolution. However, “have you ever seen an industrial revolution dictated by governments”. Normally governments will foster industrial revolution through policies and by letting the private sector redeploy capital where it should be. This time around government is actually setting deadlines. In Europe, for example, diesel fuel will be eliminated by 2040. Canada is calling for 60 per cent of cars to be electrical by 2030. However, a typical EV vehicle requires 1,000 pounds of material. “In order to get that 1,000 pounds, you have to dig out 500,000 pounds. So basically, if we're comfortable with that, we should be confidently saying that we will create a lunar landscape in Africa and South America, but it will be pleasant to the eye in Canada or the U.S. or European countries,” said Marion. Even within decarbonization efforts there is inconsistency. In Europe, 60 per cent of renewable energy comes from burning wood pellets. Yet, if the wood pellets from come from the Amazon or Malaysia, the smokestack emissions in Europe don’t count. This whole framework needs to be rethought as from a capitalist standpoint, it is a big, big deal, he said.
- PWC