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| By Jon Markman |
Some really smart people are taking a keen interest in clean energy. Here’s what investors should do now …
Bill Gates made headlines last week when he characterized tree planting as an idiotic response to climate change. These days, the Microsoft (MSFT) founder is all-in on decarbonization.
Elon Musk appeared last year on the Joe Rogan Experience podcast with an important message. The Tesla (TSLA) CEO is passionate about climate change. He also has a long history of creating wealth and shepherding projects that are good for the planet.
Decarbonization — the process of removing carbon from the atmosphere — achieves both.
Musk explained that humans are currently playing a crazy game with the environment. We are extracting large amounts of carbon buried deep underground and putting it into the atmosphere and oceans. Musk characterized this process as the dumbest experiment in human history.
He hopes to undo the effects of this process with XPRIZE Carbon Removal, a $100 million fund to find viable decarbonization projects.
Bill Gates also understands that projects need to stand on their own merit … or perish.
Last week, he told The New York Times that he is working with smaller decarbonization companies to make carbon capture, utilization and storage commercially viable.
CCUS strategies are not currently profitable because converting carbon in the atmosphere to a solid state that can safely be buried underground is energy intensive and costly.
Swiss startup Climeworks AG operates a CCUS facility near Reykjavík, Iceland, named Orca, which is the Icelandic word for “energy.” The facility looks like a giant vacuum. Huge fans suck contaminated sour gas out of the Icelandic sky to be rinsed with geothermal fluids from the Hellisheidi Geothermal Power Plant, according to a report at UNESCO.
When fully functional, Orca will pull 4,000 tonnes of CO2 from the atmosphere. It helps that the plant is operated using inexpensive energy supplied by a nearby geothermal power plant.
The Best Way to Play This
Enter Occidental Petroleum (OXY), whichis best known for its petrochemical and oil and gas expiration businesses.
However, the Houston, Texas-based company got into carbon management 40 years ago, when it became apparent that the oil and gas industry was going to change dramatically as the world became greener.
Click here to see full-sized image.
CCUS is supposed to be the evolution of large oil and gas companies. The companies spent generations extracting carbon from the ground, and they are now in the best position to remove that contaminant from the atmosphere.
Occidental Petroleumhas two massive CCUS projects in the works. A Colorado facility will extract 725,000 tonnes of CO2 when it fully comes online. A West Texas project is slated to recover 700,000 tonnes, according to a report at U.S. News and World Report.
The scale of these projects undoubtedly caught the eye of Warren Buffett, another billionaire investor. Berkshire Hathaway (BRKA), his investment holding company, is the largest Occidental Petroleum shareholder, with 222 million shares, or 24.9% of the company.
What Buffett’s keen investor’s eye may see is the changing appetite for clean energy projects. In fact, Republicans and Democrats in Washington are joining forces to embrace decarbonization.
It's a "when pigs fly" moment that serious investors should understand. These businesses can be made viable by government incentives and credits.
At a share price of $63, Occidental Petroleum trades at 12.5 times forward earnings and 1.9 times sales. Shares could easily trade to $76 over the next 18 months, an advance of 20.8% from current levels.
Wildly, this could be an excellent opportunity to get on board the green energy train … by investing in an oil and gas behemoth.
That’s all for today. I’ll be back with more soon.
All the best,
Jon D. Markman
P.S. Investing in these kinds of massive game-changing technologies is my favorite way to invest for moonshot profits. I recently highlighted another such game-changing tech in my latest presentation. Check it out here.
