There are certain trends that savvy investors could latch on to.

1. The energy transition

The move away from fossil fuels will have enormous social, political and financial implications. The indices of the UK and US exchanges are heavily influenced by the fortunes of oil and gas majors, who tend to have enormous clout as a result of their size and influence.

The new wave for investors to ride will be the inevitable march away from the oil and gas and coal industries as consumers and nations wake up to the tide of renewable energy projects.

The current valuations of oil majors are predicated on the assumption that they will be able to unlock further value through burning through enormous reserves of oil and gas and coal. A second assumption is that a move towards renewable energy and battery technology will not harm world oil prices.

If developing countries are able to manage a transition towards fully electric consumer fleets and at the same time integrate their electricity provision into renewable energy sources the utility of petroleum will begin to decline significantly. Investors should ride the winds of change if they wish to profit from such developments.

     2. The battery revolution

At the same time that the renewable energy revolution is taking place, the next big transition will be in enabling the storage of solar and wind to help mitigate the “baseload” problem. Hence battery storage is going to continue to be an area that will see billions in funding as humanity races to help deal with the difficulties in  managing to provide electricity at times of limited energy generation.

    3. Further turbulence in the Middle East and southern latitudes

Given the current difficulties in the Middle East and North Africa, it is hard to see how extreme heatwaves and water shortages will do anything other than trigger further conflict in the area. Indeed, one key problem will be that large swathes of the Middle East will become uninhabitable to humans.

This is likely to have enormous social and political ramifications, but in particular it means that the relative influence of Middle Eastern nations is likely to decline if their populations are in transit. Oil supplies will come under pressure and investors will assets in the Gulf should consider their long term viability given the bleak outlook for the region under current forecasts of rising temperatures.

On the other hand, it is possible that the region may produce the sort of technology needed to save humanity. Giant air conditioned domes are presently in the realm of science fiction but if there is one region with the capital to attempt such a project, it is the oil and resource rich Gulf.

     4. A tilt north

Coinciding with the declining fortunes of nations hit hardest by climate change is going to be a rebalancing of the world’s power towards the colder nations of the north that are best equipped to survive a world of rising temperatures. Canada, the British Isles, Scandinavia and Russia will be targets of emigration for not only the world’s poorest but also some of the richest people on earth.

The value of property in Northern Latitudes will skyrocket as the world’s elite seek a bolthole for themselves and their families. The relatively sparsely populated towns of Sweden and Finland could become one of the world’s most valuable targets for real estate investors.

    5. No growth

With billions of people unable to survive, mass migrations of humanity northwards and the resulting economic and political chaos, it will be a major challenge for global corporations to increase their earnings by targeting emerging markets. Consumer markets may become focused on the northern latitudes.

As a result corporate earnings will suffer enormous declines and the assumption of limitless growth on a finite planet will prove a substantial challenge.

    6. Anti globalisation

As the planet sees further conflict over resources and as migration from hotter climes reaches levels that are currently unthinkable, there will be a return to nationalism. There will be a push to limit what are going to be unmanageable flows of people from the southern climates and as a result the focus will be on localism over global networks of trade and commerce.

 

While many investors are already rebalancing their portfolios to take account of the changing realities, some are still  trapped by paradigms of an older world.