TARIFFS: Solar Panel Flare-ups

China is the world’s largest producer of solar cells and lithium batteries.

The big unpublicized truth about clean technology (solar and batteries) is that it doesn’t have a hope in hell of being competitive with the status quo (natural gas and oil) unless China’s involved in the supply chain. China is the world’s largest producer of solar cells (70% of global market share) and lithium batteries (55% global market share).

Trina Solar – Solar Rooftop Array

On January 22nd Le Donald slapped a 30% duty on solar equipment made outside of the US. Bloomberg estimates it will result in an increase in the cost of large solar farms by approximately 10%, a meaningful step back for competitiveness. In the Department of Energy’s (DOE) annual energy outlook for 2022, they forecast that electricity from the most efficient natural gas plant ($57/MWh) will still be 32% cheaper than the lowest cost solar photovoltaic plant ($85/MWh). Tariffs just add to the already wide spread.

In a rather interesting plot twist, it was Al Gore that came to Trump’s defence, stating “the large subsidies from China for exporting solar panels has put some other companies in the world at a disadvantage”. That’s the rub about subsidies, the money doesn’t always achieve the government intended outcomes. In this particular case, the significant tax incentives from the US for solar were simply passed through to incentivize manufacturing capacity in China.

Grizzle continues to view natural gas as the only source of power that offers the holy trifecta: low absolute cost (subsidy free), low emissions (1/2 CO2 of coal), and abundance of supply (US shale).

 

AI DEEPFAKES: Fake News, Fake Porn

Zuckerberg isn’t the only one worried shitless about ‘fake-everything’. Celebrities now have to contend against deepfakes, the artificial intelligence (AI) hobby of digitally imposing the face of a celeb on a porn star’s body (in motion video). ‘Creepy as fuck’ doesn’t fully describe how messed up this is.

The auteurs of this craft take thousands of pictures of their desired celeb and feed them into a self-training AI algorithm that keeps running through script until the video is just right. A PG example below melds Hitlers face onto Argentina’s president Mario Macri.

We’re now entering the swamp of blurred reality. Nothing can be trusted at face value — everything is deeply suspect until proven otherwise. The silver lining is that the onus now rests on us to decipher fake from real. Mainstream media is firmly divided into two camps for every flashpoint. Truth will need to be researched, not spoon-fed to us. The brilliant chart below (highlighted by a colleague) sums it up quite nicely.

On the topic of sussing out media bullshit (left and right leaning) absolutely no one has dished it out better than Caitlin Johnstone. Her takedown of Rachel Maddow and Russiagate was nothing short of masterful.

 

LAST DROPS: Cape Town Water Crisis

At current levels of water consumption the over 4 million residents of Cape Town (2nd largest city in South Africa) will lose access to piped water by April 12th. It would be the first major global city to lose water supply.

This is particularly devastating for developing countries with high industrial activity where GDP growth is invariably linked to water withdrawal.

The graph below highlights the linkage for the US economy. There was a high correlation until the 70s (manufacturing driven). The relationship decoupled in the following decades as the economy became more efficient with its use of water and, more importantly, transitioned to the service and technology sectors.

US GDP vs. US Water Withdrawals

US GDP vs. US Water Withdrawals (Source: Pacific Institute)

The Nature Conservancy (along with Stanford, University of Kassel, NYU and McGill) undertook one of the most in-depth urban water stress studies in 2014, highlighting the largest cities in the world at risk. We present the 10 largest below.  The emerging economies (India and China in particular) are at significant disproportionate risk relative to developed economies.

World’s Largest Cities Under Water Stress (Source: Nature Conservancy)

Companies focused on water efficiency (wastewater recycling and desalination) should offer long-term structural growth upside to this global water-stress theme. The $6 billion Pictet Water Fund is one of the best investment vehicles to get broad exposure to the theme. Returns have been solid as well, outperforming MSCI World (global benchmark) since inception (2006): +245% Pictet Water Fund vs. +83% MSCI World.

Pictet Water Fund (EUR) vs. MSCI World

 

HIPSTER MEDIA FAIRY DUST WEARING OFF: VICE

There was a time in the not-too-distant past when Boomer media execs were tripping over themselves throwing money at Vice Media, in the hope of luring millennials back to cable television. In 2014, Guy Laurence, CEO of Rogers Communication, donned a leather jacket and held a press conference to kick-off their 2-year $100 million partnership with Vice — Shane Smith (Vice co-founder) strutted the stage.

Fast forward to 2018, viewership for Viceland has been abysmal and revenues non-existent ($5.4 million CAD in revenue 2016, operating at a loss after expenses), Guy Laurence was turfed last year and the partnership has been severed. The bloom has come off the rose; Vice as a ‘media concept’ works incredibly well when Shane is on the offensive, selling his chubby tattooed hipster bonafides to dopey corporate types. However, defensive is the current posture, having been caught ‘balls deep’ in the #METOO era, issuing a mea culpa for their sexual harassment prone boy’s club culture.

The irony is thick, pussy hat wearing resisters caught with their pants down and junk out.