Investor: Carbon dioxide regulation will mean more coal

Vilified by many environmentalist, coal power plants stand to get trillions in investment for upgrades.

After two years of studying the economic impact of climate change, asset management firm AllianceBernstein has come to a seemingly paradoxical conclusion: one of the dirtiest fuels around--coal--has a bright future.

Its findings, released Friday, are one of several reports issued by investment firms over the past two years which explore how industries can benefit or be harmed by climate change.

Apart from growing consumer demand for clean energy and green products, one of the most significant economic drivers is regulation over greenhouse gases.

Like many people following regulatory activity, AllianceBernstein analysts figure mandatory limits on emissions will happen--it's just a question of when and in what form.

Assuming strict limits, the firm estimates that about $5 trillion would be spent by 2030 to reduce emissions of carbon dioxide, a common greenhouse gas.

This is why companies with ties to coal can be good investments.

"New 'clean' coal plants will be built as emerging technologies become more cost efficient. By 2030, only about 30 percent of coal plants globally will release CO2 into the atmosphere at a rate similar to today's facilities. We forecast global capital investment on coal power will rise from about $90 billion a year today to $190 billion before 2025, with the big surge between 2015 and 2025," according to a report summary.

Its model also assumes that use of coal, which is considered abundant, and nuclear energy will go up in order to meet rising energy demands.

Capturing and sequestering carbon dioxide underground also stands to receive in influx of investment. AllianceBernstein forecasts that by 2030 the amount of carbon dioxide underground will nearly double the amount of natural gas that moves through pipelines worldwide daily today. Carbon dioxide has been used to improve oil and gas exploration and extraction.

Other technology areas that stand to get more attention include renewable energy like solar and wind, energy efficiency, and hybrid vehicles.

 

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