Carbon Logic’s value investing approach will capture outsized returns by targeting companies with defendable market positions, and with profitable business trading at a discount to growth, in four main areas:

1. Investment in infrastructure

Capital expenditure on the upgrading and rebuilding of the electrical grid is set to surge globally. Carbon Logic will focus on companies providing the nuts and bolts, or in some cases superconductors and semiconductors, along with software and services to the power industry.

2. Investment in new, cleaner nuclear power

New nuclear technology is being championed as a major part of the solution to both climate change and growing energy demand. Our research indicates the installed fleet of nuclear power stations will have to grow six-fold to meet this demand. This is not priced by the market and investment opportunities in uranium producers offer a return of up to 40 times. Carbon Logic will focus on near-term production in the USA with permitted mines and mills that are trading for less than 1/30 of the resource value.

3. Investment in efficient technology

End use efficiency is expected to provide 7.5% of the reduction in CO2 emissions as consumers move to smart efficient appliances. The EU, among others, is mandating minimum energy efficiency levels and disclosure of most consumer and industrial appliances over the next two years. Carbon Logic’s focus here will be on the providers of power electronics.

4. Investment in pollution control

Pollution control will become a significant business expense, as will increasing the efficiency of power plants and industrial plants. Carbon Logic will invest in service providers who offset CO2 emissions through environmental mitigation activities.

OTHER TECHNOLOGIES

Carbon Logic will invest in sustainable energy solutions with an initial focus on new, cleaner nuclear energy. In the future, Carbon logic will consider investment opportunities in other alternative energy solutions where the science is not yet proven or fully advanced. These technologies include:

1. Wind

The integration of wind into electrical grids remains problematic and requires standby power generation to meet demand when the wind does not blow. Five major players who are capacity constrained and facing material and personnel shortages dominate the wind industry. This along with investor enthusiasm has resulted in unattractively priced investments. Investment in grid upgrade will capture most wind industry growth more profitably. Carbon Logic will monitor the industry for future investment opportunities.

2. Solar

Solar energy production at present is considered too expensive for mainstream use. A silicon shortage has also forced prices up over the last two years and the industry as a whole is not considered to have the ability to be able to scale to meet demand. As this technology develops, investment opportunities may arise.

3. Bioethanol

Bioethanol appears to be only a partial, short-term energy solution. Carbon Logic will continually assess opportunities for investment in biofuels while also monitoring the development of other cleaner vehicle fuels such as methanol and electric-powered vehicles.