Thursday, 21 October 2021

COP 26 - What's It All About?

It's just over a week of the most important global gatherings of world leaders and climate scientists will commence which could have huge implications for the future of our world.

The COP gatherings (Conference of the Parties) are held every year. They provide an opportunity for the world to focus on our warming planet and finding ways to tackle the problems caused by our addiction to fossil fuels such as coal, oil and gas. The first one took place in Berlin in 1995. Unfortunately we have not made much progress over the past 25 years as the warming effect from greenhouse gases continues to increase every year...currently we are 1.2C above pre-industrial levels.

The most significant COP was held in Paris in 2015 when the world leaders finally agreed to limit global warming to well below 2.0C and preferably a lower target of 1.5C. Each country has promised to reduce carbon emissions and to align their economy with this globally agreed target and these are reviewed every five years to see which countries are on track and which are lagging behind.

These targets and pledges are voluntary, there are no sanctions if countries fail to meet their targets or even if they fail to take any action to reduce emissions.

Why Is This COP Important?

This should have been held in 2020 but was postponed due to the global pandemic. At Glasgow, each country is required to submit their first 5 year progress report since the Paris agreement - these are called NDCs (Nationally Determined Contributions). Unfortunately we have not made much progress over the past 6 years and the Intergovernmental Panel on Climate Change (IPCC) recently declared 'Code Red for Humanity'. Rather than the 1.5C or even 'well below' 2.0C target, we are currently on track for warming of 2.9C by the end of this century.

COP26 President Alok Sharma said "The world will soon face catastrophe from climate breakdown if urgent action is not taken".

What More is Needed?

Everyone knows what steps are required to reduce carbon emissions to a sustainable level

quickly phase out coal

phase out oil and gas

more investment in renewables plus energy storage

more help for developing countries with $100bn each year for climate

protect and improve biodiversity

reduce meat consumption and increase plant-based options

Whilst everyone knows what is needed, no one is actually prepared to do it. Queen Elizabeth recently commented It’s really irritating when they talk, but they don’t do"

In May, the International Energy Agency released its roadmap to net zero which called for an immediate end to all new coal, oil and gas and instead  make a massive investment in clean energy.

How is the UK Doing?

Compared to most other developed countries, not too bad...we have legislated for net zero emissions by 2050 and the government have recently pledged to make our energy grid carbon neutral by 2035 by which time we should have reduced emissions by almost 80% compared to 1990 benchmark. Currently we are just over 40% reduction based on 1990 levels.

Earlier this week the government released its strategy for net zero and also a strategy to decarbonise heat and homes with the aim to phase out gas boilers by 2035 and push ahead with heat pumps. Both have received a mixed response from the climate experts and media. Unfortunately the chancellor refuses to borrow the required funds to meet the challenges which seems to confirm that the government does not regard climate warming as a crisis.

Therefore in absolute terms, it currently looks like we are not likely to hit our net zero target by 2050 and we are certainly not aligned with the IPCC's 1.5C target. According to the CCC, we are failing to meet carbon reduction targets for the period 2023 to 2028 and whilst we have made progress on energy, we have failed to tackle transport and home heating.

We are responsible for less than 2% of global emissions compared to China 28% and USA 15%. However on a per capita basis, the average Brit emits twice as much as the average person in China whilst the average American holds the record and emits 2x the average Brit and 4x the average person in China.

Also, we run a mainly service-based economy with our manufacturing off-shored to the likes of China. All of our clothing, TVs, Phones, garden furniture, washing machine etc. etc. is mostly imported along with all the carbon footprint associated with extracting the raw materials, manufacture and transport of the huge volume of goods.

Our real emissions are therefore probably closer to 3% so we should not be too complacent.

What About Other Countries?

The world's biggest carbon emitter China has pledged to become carbon neutral by 2060 and has recently announced that it will not finance new coal production in other countries. However its domestic consumption is heavily dependent on coal which accounts for two-thirds of electricity demand with solar and wind providing 30%

The US is the world's second largest carbon emitter behind China. It has pledged to reduce emissions by 50% by 2030 compared to 2005. It is aiming to become net zero by 2050 and Biden has pledged to aim for 100% carbon-free electricity by 2035.

India is the world's third largest carbon emitter and has pledged to reduce emissions by 35% by 2030 which is clearly unambitious. It has not set a target date for net zero and has not (so far) delivered an updated NDC for COP26. India has announced plans to increase coal production as part of it's post-covid economic recovery.

The EU is responsible for around 8% of global emissions and has legislated to reduce GHG emissions by 55% by 2030.

Whilst many countries have pledged to reduce emissions over the longer term...2050 or 2060, action on short term reductions are important so there needs to be much more focus on ways to get emissions down by at least 50% by 2030. This looks increasingly unlikely with just over 8 years to go. Currently we are seeing carbon emissions still rising year after year (except 2020 due to Covid lockdown) and we are on track not for a reduction but an increase of 16% by 2030.


A lot of focus will be on securing net zero emissions by 2050 and keeping the lower target of 1.5C "within reach". The recent IPCC report confirmed that 1.5C was still possible "but only if unprecedented action is taken now".

There is no sign of unprecedented action from any G20 country. The pledges from each country made in Paris in 2015 were not enough to keep warming below 2.0C let alone 1.5C and the updated pledges (NDCs) for COP26 are still not enough.

Personally, I can only conclude that our world leaders do not yet take the climate issue seriously...they are not responding with the urgency required to tackle a climate crisis because they don't really accept we have an emergency. Sure they will make promises and the event will be hailed as a success...but then it will be back to economic growth and business as usual. Subsidies and licences for new coal, oil and gas to grow our economies and preserve jobs; more and more consumption and more air travel and world fact just more of everything.

And of course the climate problems will get worse each year and on we go to COP27 in if by arranging a conference each year and reading lots of reports and discussing the issue they are actually doing something.

So, I am really not expecting very much but would like very much to be surprised! Until there is sign of real progress, I will continue to take an increasingly defensive position with my may be some time!

Over to you...what do you think about the climate issues and the COP26 gathering? Leave a comment below.

Tuesday, 5 October 2021

Bluefield Solar - Final Results

Bluefield Solar (BSIF) was added to my SIPP portfolio in March 2019. It's initial focus was purely on solar power in the UK but last year the Company resolved to broaden its focus to include up to 25% in other forms of renewables such as wind and also energy storage and also expand overseas. They have recognised that storage of renewable energy will become a vital part of the transformation towards net zero emissions over the coming years and I certainly think this is a smart move.

In June, the company announced a deal to acquire 109 small-scale onshore wind turbines for £63 million located throughout the UK. 90% have government subsidies and the remainder will be exposed to fluctuating power prices. BSIF have tapped investors for a further £105m to fund the purchase with an offer of shares at 118p which represented a premium of 8%.

Approximately 60% of solar assets are covered by the old subsidy scheme which provides a guaranteed return for 20 years from the date of connection to the grid. The other 40% have rolling power purchase agreements which generally last for 3 years and are then renewed.


The company has today issued full year results to end June (link via Investegate). Underlying earnings per share reduced by 3.9% to 9.16p and the share price total return including dividends fell by -3.8% due to a 10% fall in the share price from 135p at the start of the period. There has been a corresponding drop in the premium to net assets - 18% last year but now around 8%.

The company pays quarterly dividends and will pay out a total of 8.0p for the year which gives a yield of 6.5% based on the current share price of 123p. However, the board have now de-linked dividend increases from RPI.

The total annualised return for shareholders since launch in 2013 has been 75%.

Chairman John Rennocks said: "We are pleased with the strong earnings performance in the period despite covering a particularly challenging time for the energy markets due to the turbulence caused by Covid 19. We were pleased to deliver a sector leading dividend of 8p per share, post debt amortisation to shareholders while the Net Asset Value also held up well which we believe will support the share price going forward. The robust nature of the earnings from the portfolio during the pandemic highlights the durability and defensive nature of the Company's investment strategy. We look forward to updating the market on further attractive investment opportunities in due course."


The ability to store excess renewable energy will be the key to a full transition on the UKs path towards net zero by 2050. The government have recently relaxed the rules to encourage far more storage capacity which should be good for the likes of Bluefield. They have excess capacity and spare land which could lead to productive partnerships with storage providers subject to planning considerations.

Energy Pricing

The recent rise in wholesale energy prices should be good for the Company's model over the coming year. The average contracted price for the coming year from June 2021 is £61.7/MWh compared to just £48.2/MWh over the past year mainly due to Covid. Solar+storage and wind+storage can replace the baseload capacity previously provided by coal and now by gas. An increase in storage capacity will be essential to manage and smooth out the intermittent nature of renewable energy - the wind doesn't always blow and the sun doesn't always shine.

BSIF have now increased the life expectancy of its solar assets from 25 years to 40 years. Unfortunately, so far, this has not resulted in a boost to NAV which one might have expected to see.

Share price & NAV(red line) past 12 months


Obviously a disappointing year for this fund and the renewables sector generally. However, the longer term prospects remain bright and the government have recently announced its ambition to make the UK grid fossil free by 2035 which should support increased funding and opportunities for wind and PV solar.

A further focus on decarbonisation will come from the COP 26 gathering next month where global leaders will lay out their plans to limit global warming to 1.5C and set out how they aim to reach net zero emissions by 2050.

Over the past year I have been reducing my weighting to the renewable infrastructure sector and have therefore sold several holdings and reduced my holding in Bluefield Solar from 5% to just 2% of my 'green' portfolio. However I plan to continue to hold this lower weighting in the hope of a better performance from Bluefield going forward.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

Friday, 1 October 2021

Ceres Power - Interim Results

Ceres is a fuel cell technology and engineering company and is listed on AIM. It is a world leader in low cost, next generation fuel cell technology which can facilitate the transition to zero-carbon emissions. They aim to play a central role in the global transition to clean, affordable energy to help address the climate crisis and this is why Ceres Power was added my green portfolio in February 2020. The technology can be used in a variety of applications - transport, heavy industry, data centres and home heating.

Fuel cell technology is already a core component of energy strategies in Japan, Korea, Germany and the US. Ceres are working with global leaders such as Bosch to embed their technology in mass market products. The stationary global fuel-cell market is estimated to be worth over $40bn by 2030


In January 2020, German engineering giant Bosch increased its holding in Ceres from 4% to 18% citing their steel fuel cell technology as potentially the best in the business. Bosch say the market for the fuel-cell power station could be worth €20bn by 2030. It plans to invest €400m into its solid oxide fuel cell business between now and 2024 and will also install 100 small scale fuel cell power stations this year to generate power for industrial and residential customers as well as data centres.

Other partners include China's engines giant Weichai Power who hold a 20% equity stake.

The company has licence agreements signed up with four of the world's largest engineering and power companies including Japan's Miura and Doosan of S. Korea who are a global leader in the stationary fuel-cell market.


The company has this week released results for the half year to end June 2021 (link via Investegate).

Ceres is growing quickly. From just under £1m in 2015, they have increased revenues significantly in the past four years. Just in the past 6 months revenues increased by 95% to £17.4m (2020 £8.9m). They anticipate around £31.5m for the full year. Current market cap. is around £2bn with a share price of £10.80.

Gross profits increased to £12.2m (£7.1m) on margins of 72%.

The company has a strong balance sheet with no debt and cash in the bank of £263 million boosted by a placing of new shares in March which raised £180m.

The company plan to move to the main market next year and should enter the FTSE 250 which means they will be picked up by various index funds.

Share price past 12 months

Commenting on the results, CEO Phil Caldwell said: "We are pleased to report a strong performance for the Company in the first half of 2021, including a notable increase in our revenues at sector-leading gross margins. The outlook for clean technology innovation and hydrogen remains strong, buoyed by growth in strategies, regulation and green investment. Our partners continue to announce significant developments in the scale and application of our technology and the high level of interest and early engagement around its use for electrolysis to produce green hydrogen is very promising."

Huge Potential

The company are working on a first-of-a-kind 1MW solid oxide electrolyser which is hoped will be operational in 2022. This should unlock the potential for green hydrogen for use in industrial processes and energy generation.

Whilst there are many companies in the proton membrane fuel cell sector, global companies are signing up solely with Ceres in the solid-oxide fuel cell department where the company is a global market leader.

Solid Oxide Fuel Cell

The company doesn't want to focus on fuel cell manufacturing but rather a technology licensing company working closely with a range of partners who are looking to adapt their business' and address the huge challenges posed by climate change. Over the past 6 months these account for 60% of revenues.

Analysts at Berenberg have likened the companies licensing model to ARM Holdings whose RISC technology became the default during the smartphone revolution of the past decade. The broker suggests they could generate revenues of £800m each year from licensing agreements with their partners over the coming decade.

With the COP 26 climate gathering coming next month, the focus is on the ambition of decarbonisation and hydrogen technology. Ceres is well placed to play its part in the global transition to affordable clean energy supported by some of the world's most progressive players in those markets.

The shares currently account for 5% of my green portfolio.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation... investing in smaller companies can be rewarding but is higher risk - always DYOR!

Monday, 27 September 2021

My Year in the Veg Garden

It's Autumn, the nights are drawing in, the leaves are falling and Strictly is back...

Time flies, it will soon be a year since moving to my new house in the leafy suburbs with a garden. So I thought it would be a good opportunity to give an account of my efforts towards self sufficiency in the garden.

The first job was to install a water butt to collect rainwater for the Summer months. My house is on a water meter and I don't like the idea of paying for watering the garden when I can collect gallons of rain water for free. Luckily, the local water company United Utilities had an offer for a half-price 100L container and also a garden compost bin both made from recycled plastic. It was a simple job to connect to the downpipe of the garage and the container was full within the first week.

The next project was to construct a raised bed to grow some of the root veg that needs plenty of deep soil for best results. I bought a few lengths of pressure treated timber from a local supplier in their sale. This was cut into lengths approx. 2m x 1m...roughly coffin shaped! I then chose a sunny aspect in the corner of the garden and removed the turf from the the lawn and was pleased to see lots of earthworms which is a good sign of soil fertility. My family made good use of the turf to repair patches of their lawn dug up by their dog.

The raised bed was constructed and put in place in early Spring. I then filled the bed with a mix of well-rotted manure, soil and peat-free compost and allowed it to settle for a month or so to remove any air pockets.

I ordered my veg seeds from an old friend Cathy from my days in Devon who runs Tamar Organics. Beetroot, Leeks, Runner Beans, Various Salads, Parsnips, Cougette and Chilli Peppers would be a good start.


I have a conservatory to the back of the house and this was an ideal place to sow the leeks, courgette seeds and beans. This started in March and April and I used some old cardboard egg boxes and the middle of toilet rolls (thanks weenie) filled with a mix of soil and peat-free compost. It was really good to see the new shoots poking through after a couple of weeks.

The parsnips and beetroot are best planted out in the garden as they don't like being disturbed. The Spring had a few unseasonal cold snaps in April, also very dry but after a slow start they seemed to get going with some heavy rain and then warm sun in late May. I also put up a wigwam of canes in the border for the beans and transplanted them as well as sowing some spares directly at the base of the canes. The salad was sown throughout May and June in the flower borders.

July turned out to be hot, sunny and dry with temperatures reaching 29C so I was out most evenings watering from the rain harvested earlier in the year. When the water butt was full I siphoned some off into a spare empty wheelie bin which holds a further 200L...unfortunately, with no tap, it was a bit of a problem transferring it to my watering can when half empty!

I think climate change will put a lot of pressure on our precious water supply in the coming years so it seems like a good idea to try to conserve the plentiful amount of rain water and conserve mains water for drinking.


For the past few months I have enjoyed lots of organic, fresh times far too much coming at once so family and neighbours have enjoyed the surplus. The runner beans have been prolific throughout August and September, the beetroot is delicious...simply boiled whole and then eaten still warm with a slice of thick wholemeal bread and hummus. The leeks and parsnips are to be enjoyed later in the year.

Runner Beans, Courgette, Beetroots & Jalapenos

The chilli peppers were grown indoors on a sunny window sill but needed to be put out each day so the flowers would pollinate. In the end, just one plant produced around 30 peppers...not quite as hot as I like for jalapenos but still very acceptable. Some of the surplus was made into jars of chutney by my daughter and was very tasty!

I also have a mature apple tree in the garden which has provided fruit over the past month or so (windfall) with more to come in the Autumn. I had a go at apple pie and also apple and blackberry crumble...certainly room for improvement but passable with lots of custard.


Of course, there are lots of environmental benefits to growing veg apart from the cost savings. It cuts down on food miles, much of the green beans sold in the supermarket is flown in from the likes of Kenya. Likewise with salads which are transported many road miles for cleaning and packaging in plastic before distribution to the stores. How much simpler to walk to the end of the garden!

The flowering plants such as runner beans are great for bees and pollinating insects

Jalapeno chutney...delicious!

Also there's the sense of achievement in the whole journey of nurturing the lifecycle of the various vegetables from seed to plate over the season and then composting the plant. Finally, there is the benefits to mental health from just getting your hands dirty and working with the soil and its amazing just how much produce can come from a single small seed. This is not just any old courgette, nor is it a M&S courgette but its MY courgette!

Next Year

So, a good start and already thinking about what to try next year. I like radish so they are on the list, maybe also some celery, peas and different types of beans and maybe some spinach which I hear is fairly easy and also outdoor tomatoes. I will also have a go at preserving some of the produce and also making some chutneys.

If there are any veg gardeners reading, let me know what has worked for you...leave a comment below.

And to finish...from John Keats "To Autumn" seems appropriate:

Season of mists and mellow fruitfulness,
Close bosom-friend of the maturing sun;
Conspiring with him how to load and bless
With fruit the vines that round the thatch-eves run;
To bend with apples the moss'd cottage-trees,
And fill all fruit with ripeness to the core;
 To swell the gourd, and plump the hazel shells
With a sweet kernel; to set budding more,
And still more, later flowers for the bees,
Until they think warm days will never cease,
 For summer has o'er-brimm'd their clammy cells.

Tuesday, 21 September 2021

The Case for Gold

In recent months I have become increasingly bearish on global equities. The main concerns are the increased debt arising from Covid over the past 18 months and secondly our lack of progress on the existential threats posed by climate change. I think these two elements could seriously impact the markets over the coming months and years so I have decided to de-risk my portfolio and move into government bonds and gold.

Why Gold?

In the past, I have never been a big fan of holding gold. Obviously it cannot provide an income so that was one reason back when I needed dividend income to bridge the gap after taking early retirement in 2008. But that doesn't mean there is no fact I was surprised to learn that over the past 15 years or so, gold bullion has generated a capital appreciation of 11% p.a. on average.

At the time of moving to retirement we had the financial crisis and the slump in interest rates on cash deposits. In 2007, it was common to get 5% or 6% annual interest on cash deposits but over the past 12 years, returns have been dire and provided an average return of just 6% over the whole period. Over the same time frame inflation as measure by RPI has risen by 39%...therefore a real negative return of -24% for savers. Cash deposits are likely to remain at low levels for the foreseeable future.

The Gold Standard

Back in the day we had a thing called the gold standard which provided stability for the major currencies such as the US $ and the British pound. The Bretton Woods agreement of 1944 established a system through which a fixed currency exchange rate could be guaranteed using gold as a universal standard.

Of course, under this system it was not possible to create more money during a crisis and after the Vietnam War and the oil crisis of the early 1970s, President Nixon 'suspended' the conversion of the dollar into gold - effectively creating fiat currency and the ability for governments to print money to protect the financial other words, a magic money tree!

Currencies are therefore becoming lass stable and only continue so long as there continues a collective belief in the monetary system. Gold can therefore be regarded as insurance against a fall in the purchasing power of modern currencies. Maybe crypto currencies such as Bitcoin can be regarded in a similar vein as we transform towards a digital world.

The Vehicle

It's always possible to buy gold coins and store them at home but for most this is not very practical. The easiest method is to hold physical gold via an exchange traded fund in your pension or ISA.

SGLN price past 3 years

I decided to go with the largest fund which is iShares Physical Gold (SGLN) which has been around since April 2011 and with low annual charges of 0.15%. The fund has assets of $12.8 trillion.

Other options could be a fund such as Blackrock Gold & General or LF Ruffer Gold for example but as my platform charges are capped for shares and ETFs with AJ Bell, the iShares option is the better one for me.


Apart from the Covid dip last year, the bull run in equities has continued for quite some time. The US markets are close to their all time high point...maybe there's more to come - who knows? But for me, it seems prudent to bank some of the gains made over this period and squirrel them away into the 'safe' for the time being.

S&P 500 Index past 5 years

We have the COP 26 conference coming to Glasgow in November and an opportunity for world 'leaders' to actually do what they all know needs to be done. However, given their collective track record so far, I am not overly confident in the ability of governments to get to grips with the climate crisis. I think the worsening climate situation could well become the biggest threat to the stability of global markets. We have the 'Code Red' warning last month from the IPCC and now the latest report from the UN says that emissions will be 16% higher by 2030 whereas they need to have fallen by at least 45% by this date to be on track for net zero by 2050. Actions or lack thereof over the coming year or two should give us a better indication on whether our politicians and world leaders are up to the job.

Sept 2021 (click to enlarge)

For now I will continue to hedge my bets with gold, precious metals and government bonds. The shares were purchased at an average price of £24.50 and held in both SIPP and ISA and with my precious metals ETF now make up 8% of my portfolio.

As ever, this article is merely a record of my personal investment decisions and take on the risk/rewards associated with the current markets. It should not be regarded as an endorsement or recommendation - always DYOR!

Monday, 13 September 2021

ITM Power - Full Year Results

Hydrogen is the most commonly occurring element in nature and is set to play a defining role in the 'green' industrial revolution as the world moves to replace fossil fuels. It can be stored and used to power long-distant transport such as cars, lorries, trains and ships. It can be used to generate electricity. It can be stored and transported for use at a later date. Green hydrogen made from renewable energy such as wind and solar is a clean source of energy and when used the only emissions are water and heat.

ITM Power (ITM.L) designs and manufactures products which generate clean hydrogen based on Proton Exchange Membrane technology. Earlier this year it opened its new Gigafactory in Sheffield with the prospect of producing 1GW of clean hydrogen each year. It is estimated that the new factory will cut the costs of electrolysers by 40% due to increased automation and economies of scale.

ITM was one of the first additions to my green portfolio back in August 2019.


It has recently announced results for the year to end April 2021 (link via Investegate). Obviously, there has been the impact of Covid over the trading year.

Total revenues including grant income fell by 6% to £5.1m (2020 £5.4m), with grant income reduced to just £0.8m (2020 £2.1m).

The company has seen an increase in qualified tender opportunities to £378m (£195m) and a corresponding contracts backlog of £171m (£119m) including contracts in the final stages of negotiation.

The company made a loss of £26.7m which was broadly in line with management expectations. The joint ventures with Linde and Snam are likely to reduce exposure to future development risks.

Graham Cooley, CEO, commented , "2021 has been another transformational year for ITM Power.  We attracted a strategic investor in Snam S.p.A., and through our fund raise in October 2020 developed a platform to deliver to market our next generation product, the 5MW Gigastack, two years earlier than previously planned.  We also moved into Bessemer Park, the world's largest PEM electrolyser factory and commenced manufacturing there in January 2021.  We have seen national commitments to net zero accelerate, and I believe we are very well placed, with our partner Linde, to address the rapidly growing demand in the market."

New gigafactory, Sheffield

The company maintains a positive outlook. Installation of the 10MW REFHYN project in Germany is now complete with a further 10MW planned. Work in progress has more than doubled to £36m representing 43MW of electrolysers. Global energy markets are increasingly recognising the need for the use of green hydrogen for energy storage, transport and heating. The UK Committee on Climate Change suggest we will need between 6 and 17GW of electrolysis to reach net zero emissions by 2050.

Earlier this year, the European Commission announced its EU Hydrogen Strategy and its Energy Systems Integration Strategy. The announcement prioritised the development of renewable hydrogen, produced using mainly wind and solar energy. From 2020 to 2024, they will support the installation of at least 6GW of renewable hydrogen electrolysers in the EU, and the production of up to one million tonnes of renewable hydrogen. ITM with its partners Linde and Snam are well positioned to benefit from these opportunities.

3 Yr Share Price

The results demonstrate a lot of potential from many different areas but progress towards profitability remains slow. The market does not seem impressed with the results and the share price has taken a hit...down 54p (11%) to 415p at the close today.

The potential for green hydrogen worldwide is huge but for investors in the individual companies, it remains risky as nobody really knows who will come out on top... still 'jam tomorrow'. Revenues of £5m are small compared to a market cap. of over £2bn so I am hoping to see more progress on a scaling up of operations over the coming year. The share price has made progress with a rise from 250p last year, reaching a high point of over £7 in January before sliding back - but still quite a jump from my purchase price of 37p just over two years back.

In the past few months I have started to take some of the profits from my green equity investments as I move to a more defensive position. This includes a reduction in my ITM holding - down from 9% at the start of this year to currently 3% of my green portfolio.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation... investing in individual companies listed on AIM can be rewarding but is higher risk compared to collective investments - always DYOR!

Wednesday, 8 September 2021

Tax Increases for NHS Backlog and Social Care

Yesterday, the PM announced plans to increase taxes to pay for the NHS backlog resulting from Covid and to increase funding for the costs of long term care.

So, from next April this will include an extra 1.25% on NICs for employees who's earnings are above the lower limit of £120 p.w. and will also include those who are still working beyond state pension age. In addition there will be an extra 1.25% for employers.

This will mean an extra £255 for those on an average wage of £30,000 p.a.


In addition, there will be a 1.25% increase to the tax on dividend income. This will include the self employed and company directors who choose to pay themselves with dividends in addition to a salary. From next April the tax for basic rate will increase from 7.5% to 8.75% and the higher rate will go up to 33.75%.

The first £2,000 of dividend income is tax-free so this tax increase will affect those who receive dividends above this figure. For example, investors who pays basic rate tax and have an income portfolio of £80,000 which pays an average of 4% in dividends i.e. £3,200, will pay an additional 1.25% on £1,200 or £15 per year. Of course dividends held in a tax-free ISA or pension will not be affected.

Social Care Cap

From October 2023, the total anyone will have to pay towards care costs will be capped at £86,000. However the cap only applies to care costs such as assistance with dressing, washing and eating, it does not apply to accommodation costs such as the cost of food, heating and rent which could amount to one third of residential care bills.

Those with assets of under £20,000 will have these costs fully paid by the state whilst those with assets between £20,000 and £100,000 will get some help.

The above tax hikes are estimated to bring in an additional £36bn in the first three years but most of this - around 85% - will go to the NHS and only around £5bn for social care.

I doubt there will be much improvement in social care provision any time soon.

State Pension Triple Lock

I was on track for an 8% rise in my state pension next year due to the link to the increase in wages but 'for one year only' in 2022, the triple lock will be replaced by a double lock and the increase will be linked to the higher of inflation or 2.5%.

I suspect most pensioners will understand this move and that to have kept the link to artificially high earnings growth due to the pandemic and furlough scheme would have been unfair.

The current (new) state pension is £179.60 per week so an expected 3% inflation increase will take the figure to £185...£9,600 p.a. An 8% uplift would have resulted in a payment of £194 - £10,090 p.a. so my contribution to pay for the NHS and social care is £490 per annum!

Wednesday, 18 August 2021

An Important Role for Hydrogen

It's now two years since I became interested in the investment potential of green hydrogen and added ITM Power to my portfolio. This was followed by several more players and my thoughts on the global potential for hydrogen expanded in this article.

Hydrogen stocks were the flavour of the year in 2020, some doubling in price and which provided a good boost to my returns for the year but inevitably they have since fallen back over recent months.

Many countries in Europe already have hydrogen strategies in place - Germany, France, Spain for example - and billions of euros have already been pledged to support the expansion of hydrogen. The EU has a target of 40GW of low carbon hydrogen by 2030 compared to just 5GW in the UK.

Last weekend, India's Prime Minister, Narendera Modi placed green hydrogen at the heart of the country's energy security and climate action. India is the world's third largest emitter of CO2 so an important development.

China, the world's largest source of greenhouse gas emissions (28%), is also the world's largest producer of hydrogen. However most of this is currently produced using coal. It is likely that they will gradually move towards green hydrogen as they transition to a carbon neutral economy by 2060 ( may become 2050).

UK Hydrogen Strategy

Last year the PM set a target of 5GW for green hydrogen in his 10 point plan for a 'green industrial revolution'. As part of this plan, this week the government has published it's long-awaited hydrogen strategy (link to 60 page pdf)

"Working with industry, our ambition is for 5GW of low carbon hydrogen production capacity by 2030 for use across the economy. This could produce hydrogen equivalent to the amount of gas consumed by over 3 million households in the UK each year. This new, low carbon hydrogen could help provide cleaner energy to power our economy and our everyday lives – from cookers to distilleries, film shoots to power plants, waste trucks to steel production, and 40 tonne diggers to the heat in our homes.

Meeting our ambition means rapid ramp up of production and use of hydrogen over the coming decade. In every country of the UK, there are ambitious, world-leading projects ready to deploy at scale, saving carbon and creating jobs". Kwasi Kwarteng, Energy Minister

The Minister travelled north to the new factory of ITM Power in Sheffield for the launch of this new strategy and the paper features a case study of ITM and its electrolytic hydrogen production!

The government clearly recognises that hydrogen will play a critical role in our transition to net zero emissions by 2050 and it could provide one third of our energy requirements. What they seem more unclear on is to what extent this will be clean, green hydrogen made from renewables and what role blue hydrogen (made from fossil fuels) will play. 

They have adopted a 'twin track' policy. There are lots of reference throughout to "low carbon" hydrogen which of course = fossil fuel. Making hydrogen from fossil fuels is problematic as it relies up capturing the CO2 emissions - a technology that is to date unproven.

So far as I can make out, hydrogen will not make much of a contribution to our plans for decarbonisation of the economy by 2030 or even 2035. It seems the emphasis is more for the longer term goal of 2050 by which time HMG estimates we will need 250 - 460TWh of hydrogen (currently we use around 20TWh mostly from fossil fuels). The target for 2030 is just 5GW.


Heating accounts for three-quarters of emissions from our buildings and represents around a quarter of all our CO2 emissions so this area will be critical on the road to net zero. The vast majority of our homes and commercial premises are heated by natural gas so it will be a huge challenge to replace all those gas-fired boilers.

We are still awaiting the Heat/Homes strategy so it will be interesting to see whether HMG clarify the role hydrogen will play in the future compared to heat pumps. For the time being, this strategy talks about a 20% blend of hydrogen and natural gas to 2030 to heat up to 3 million homes. 

The range from 2035 is 0 - 45 TWh...i.e unknown! Could be big, could be zero...we could do with some leadership and clear vision in this area.


The strategy is clearer and shows that  hydrogen will play a big part in the decarbonisation of a range of sectors where electrification is not feasible or just too costly. Long distant heavy-duty transport, buses,  shipping, trains, chemical industry and high temperature furnaces used in steel for example.

Already in service in London

Blue v Green Hydrogen

My impression is that blue+carbon capture is the preferred option for this government, certainly over the coming decade. The lack of emphasis on green hydrogen is a mistake imho. Just last week, academics from a US university warned that using blue hydrogen could produce 20% more emissions than continuing to use natural gas.

Chris Jackson stepped down as chair of the UK Hydrogen & Fuel Cell Assn. following publication of the government's strategy saying:

 "I believe passionately that I would be betraying future generations by remaining silent on that fact that blue hydrogen is at best an expensive distraction, and at worst a lock-in for continued fossil fuel use that guarantees we will fail to meet our decarbonisation goals,"

Most green groups as well as the green energy providers are urging HMG to avoid blue hydrogen and focus on green.


The is a decent first effort in parts but much more work is required to get up to speed. The strategy is muddled and needs more work to give a clear lead to the private sector and policy makers in business. In some ways it plays into the hands of the fossil fuel industry by supporting blue hydrogen and why the support for carbon capture which is far from a reliable and proven technology at this point?

Mr Muddle

We need more urgency in our ambitions to decarbonise and 5GW of hydrogen just indicates this government lacks a sense of urgency which prompted the 'code red' warning on climate from the IPCC last week.

We are late with this half-hearted strategy and risk losing out commercially to other countries such as Germany with its focus on green hydrogen, S Korea, US and China who are more far-sighted regarding the benefits of getting ahead with support for their hydrogen industry.

HMG admits there will not be significant amounts of hydrogen for some time and it will not be heating our homes in the coming decade - around 1TWh by 2030 compared to total energy consumption of  435TWh used currently. This tells me the government have yet to accept that we actually have a climate crisis...they lack urgency and ambition. We can't afford to dilly-dally on the way forward for the coming decade, we have a narrow window to get this right, the crisis demand bold and decisive action from our politicians now.

So, marks out of 10...maybe a 4, must do better! We have a climate emergency, HMG declared this in parliament in 2019 so it's about time they started to act like we have an emergency and drop the complacency.

Monday, 9 August 2021

Code Red for Humanity - IPCC Climate Report

The Intergovernmental Panel on Climate Change (IPCC) have delivered their assessment on the state of global climate change. This will be the first update since the last report in 2013 and will be a key report for leaders when they meet up in Glasgow for COP 26 in November.

This report from the world's leading climate scientists shows how close we are to the brink of an irreversible and multi-faceted global catastrophe caused by extreme weather resulting from global warming.

We are now in the last chance saloon and the next meeting of global 'leaders' at COP 26 could well be the last opportunity to act decisively and urgently to address the crisis.

Key Findings

Obviously everyone can see the effects of global warming in the news - most recently the devastating floods in Germany and China, wildfires in Turkey and Greece as well as the whole west coast of the US and Canada. Clearly the world must know that the climate crisis is not something coming down the line in the's already here.

The main points :

  • The past 5 years have been the hottest on record
  • Humans are responsible for this warming
  • Warming was 1.1C higher by 2020 compared to the period 1850 - 1900
  • 1.5C will be reached by 2040 but more likely in the early 2030s if global emissions are not slashed
  • Sea level rise of 2m by 2100 cannot be ruled out
  • We currently emit around 40 billion tonnes of CO2 each year...a further 500 bn will take us to 1.5C (carbon budget article)
  • There will be an increase in extreme events "unprecedented in history" even at 1.5C

So, the lights are flashing red on the climate dashboard but this has been the case for some time and I don't think many people will be surprised by the key findings.

Credit BBC (click to enlarge)

The reality is that 75% of global warming is caused by the burning of fossil fuels so the world must quickly wean itself off this addiction and move to green alternatives such as wind, wave, solar, geothermal and hydrogen...we already have all the technology in these areas, we just need to shift the funding away from coal, oil and gas. Global financial markets can be part of the solution to this existential crisis.


One of the fundamental aspects of life is that everything is interconnected to everything else. We have seen how a new strain of virus in one part of the world quickly spread around the globe and suddenly brought the whole economy to a virtual standstill.

The climate crisis poses a far greater threat than coronavirus. It is an existential threat to the way we have lived for many thousands of years. We clearly need to address this threat with the same focus and determination used to tackle the pandemic - there will be no vaccine to save us from climate change.

We are seeing more stormy weather, more wildfires as the warming continues year on year. But what really concerns the climate scientists is the increasing risks of triggering a tipping point which would lead to runaway warming which we could not stop. This is the effect of feedback loops where one aspect of warming makes a change to another aspect which in turn amplifies the first aspect more. So, a warmer planet leads to melting of the polar ice and permafrost which then releases trapped greenhouse gases such as methane which warms the planet even more.

By continuing to ignore the science and delay meaningful action we are literally playing with fire.

Wildfires in Greece...10th day and no sign of an end

We saw the reaction in the markets last March at the outbreak of the pandemic. All of a sudden we see a 10% drop in a single day and investors are like rabbits caught in the headlights. I can't imagine what would happen when news of a global tipping point broke. Hopefully we can get our act together and head off the worst of the climate crisis but to be honest, our record so far does not fill me with confidence.

My overall impression is that the investment professionals such as bankers, city analysts and most fund managers are well behind the curve when it comes to the risks associated with climate change. I suspect most will regard it as a problem for the future which may slow down economic growth. I think this attitude reflects a lack of understanding of the threats posed by global warming. As the former governor Mark Carney said last year "Once climate change becomes a defining issue for financial stability, it may already be too late". So, I believe the smart investors will be getting up to speed on the economics of climate, evaluating the risks and outlook and then re-evaluating their asset allocation.

Personally, I think the risks to the markets and wider global economy posed by the climate crisis at this point are high and investors should proceed with caution. Others may well disagree, and I absolutely accept that everyone will have their unique perspective, but at the very least evaluate the risks.


Global leaders, the top business executives and the global community can no longer afford any further delay in making the difficult decisions needed to address this crisis. I must admit that given their track record, I am not really optimistic they will get to grips with the issues and take the actions required and therefore from an investor point of view I will certainly be reducing equities and increasing bonds to de-risk my portfolio over the coming months

In May, the IEA set out their roadmap to limit warming to 1.5C and which ruled out all new coal, oil and gas exploration and development from this year to have a chance of meeting this limit.

"The world will soon face catastrophe from climate breakdown if urgent action is not taken" Alok Sharma, President of COP 26 (Aug 2021).

For many people all around the world this has been the hottest summer of their lives...however it will most certainly be the coolest summer of the rest of their lives. Politicians, policy makers, business leaders, celebrities, ordinary people ...we all need to act now. In 5 years time it could well be too late to avert the crisis.

"This is not the first generation of world leaders to be warned by scientists about the gravity of the climate crisis, but they're the last that can afford to ignore them" Doug Parr, Greenpeace UK.

Feel free to share your thoughts and feelings on the climate crisis. Leave a comment below...all views on this important subject welcome.