RE:RE:Is everybody tired of E.S.G. companies yet?The first published reports that Russia was moving tanks and artillery to the Ukraine border came out around mid-October last year. Satellite images and other intelligence probably indicated movements even earlier.
Anyone who has taken economics 101 would not be surprised to see that since then there has been rise the price of stocks in oil companies, agro companies and weapons manufacturers. Since those first reports Cenovous is UP 115%, Nutrien is UP 44% and Lockheed is UP 41%. Times have been so good that Imperial Oil is raising its dividend by 30% and buying back $1.5 Billion of stock. Exxon has posted all-time record profits. All is good. To add to all that, Alberta oil sands producers will soon be the recipient of a $17 billion subsidy when the TMX is written down.
In the meantime, and over period since mid-October last year, GRN is DOWN 63%. As well, XBC is DOWN 82%, de-listed and on the verge of bankruptcy.
Investment has flowed out of renewables, particularly small caps like GRN and XBC. Besides the high costs of developing a new market, they have been saddled with costly supply chain disruptions. Additionally, the GHG tax is still far too low for the RNG producers to make a healthy enough profit to support higher equipment costs. (The cost of emitting CO2 will probably stay at zero if the US if the Republicans control congress. It could go back to zero in Canada if the Conservatives are elected)
It is now clear that investors and markets are not concerned about the link between fossil fuel burning and a global warming crisis. So the question is: How can companies like GRN and XBC even exist in a world that clearly continues to favor fossil fuels? Where will the RNG industry get the capital investment it needs? How will producers and equipment suppliers make sufficient profits to become viable?