Sunday Thematic & Weekly Recap

Do Energy Transition and Trade Challenges Drive Shortages – Intervention Seldom Helps
June 23, 2024
Commodities Mentioned:
Hydrogen, Crops, Renewable Fuels, Ethylene, Propylene, Ethane, Naphtha, Butadiene, LNG, Crude Oil, Biomass, MSW, EVs, CO2
Companies Mentioned:
Nutrien, Issaquena Green Power, Air Products, Dow, Wanhua, INEOS, Braskem Idesa, SABIC, Satellite, Fulcrum BioEnergy, Tesla, BYD, Fisker, Rivian, Lucid, Polestar, Amazon, Canadian Solar, Trina Solar

C-MACC Sunday Thematic and Weekly Recap

Do Energy Transition and Trade Challenges Drive Shortages – Intervention Seldom Helps

  • Government interventions are rising globally, whether to encourage climate-related behavior or address trade and national security issues. The risk is that inefficiency and redirected capital stalls supply growth.
  • In our weekly Ag report, we discussed slowing productivity gains as technology matures – with all increasingly focused on lowering environmental footprints, cash is less likely to flow toward productivity.  
  • With many US and European energy transition initiatives also comes capital inefficiency in some ideologies. As industry redirects capital from growth programs to decarbonization, we may be leaving the growth to China.
  • Otherwise, we look at the search for lower-cost ethylene feedstock and the consequences for co-products, what is driving shipping, consumption or inventories, other routes to hydrogen, and big challenges of the EV makers.

Exhibit 1: The link with fertilizer is relevant, but R&D has dropped in crop chemicals and seed traits, and discoveries are incremental rather than blockbusters. Productivity could stagnate or reverse as more cash diverts to “green” goals.

Source: Nutrien – 1Q24 Earnings Presentation, June 2024

See PDF below for all charts, tables and diagrams


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