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December 14, 2017 | Global Equity
Making Coal Great Again?

Portfolio Manager, Global Research Analyst

Alaina Anderson, CFA, partner, is a portfolio manager for the International Leaders and International Leaders ADR strategies. Previously, she was a global research analyst covering real-estate, utilities, and engineering companies. Before joining William Blair in 2006, she was a senior analyst in the investments department of the MacArthur Foundation, where she provided research support for internally managed portfolios and was involved in investment manager due diligence, selection, and monitoring for the foundation’s U.S., non-U.S., and hedge-fund portfolios. Before joining the MacArthur Foundation, Alaina was an investor relations consultant with Ashton Partners and a financial advisor with UBS Painewebber. She is a fellow of Leadership Greater Chicago, a board member of the North Lawndale Employment Network, and a member of the CFA Institute and the CFA Society Chicago. Alaina received a B.S. from the Wharton School at the University of Pennsylvania and an M.B.A. from the University of Chicago’s Booth School of Business.

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“The war on coal is over,” declared Environmental Protection Agency (EPA) Administrator Scott Pruitt when announcing that the EPA would seek to repeal the Obama Administration’s Clean Power Plan. But is the penetration of renewable power generation vulnerable to such policy changes?

The economics of renewable power generation are clearly established. Improvements in technologies are resulting in cost reductions. As a result, Bloomberg New Energy Finance estimates that 72% of the $10.2 trillion spent on new power generation worldwide by 2040 will be invested in new wind and solar photovoltaic (PV) plants. And, in November 2017, the U.S. Senate’s tax proposal, scheduled to be finalized in January 2018, left production tax credits in place on renewables.

There’s no rolling back the economics of renewable power generation.

In my opinion, there’s no rolling back the economics of renewable power generation, in part because of politics.

The graphic below shows why. Wind generators are primarily located within the blue bands and coal generators within the black bands, with solar generators on the outskirts. But as you can see, the wind and coal generators are located primarily within red states—those controlled by Republican legislatures after the 2016 elections. They’re in Iowa, in Nebraska, in Minnesota, even Texas—and it would be very politically difficult to disrupt the economics of those states.

Additionally, wind and solar employ a substantial number of people in the United States—just north of 475,000, according to the Department of Energy as of Q1 2016. That’s significantly more than coal employs at 160,119. Congress is not going to want to put those people out of work.

And that’s why, as growth investors, we’re looking at investment opportunities in renewable power generation.

 

Portfolio Manager, Global Research Analyst

Alaina Anderson, CFA, partner, is a portfolio manager for the International Leaders and International Leaders ADR strategies. Previously, she was a global research analyst covering real-estate, utilities, and engineering companies. Before joining William Blair in 2006, she was a senior analyst in the investments department of the MacArthur Foundation, where she provided research support for internally managed portfolios and was involved in investment manager due diligence, selection, and monitoring for the foundation’s U.S., non-U.S., and hedge-fund portfolios. Before joining the MacArthur Foundation, Alaina was an investor relations consultant with Ashton Partners and a financial advisor with UBS Painewebber. She is a fellow of Leadership Greater Chicago, a board member of the North Lawndale Employment Network, and a member of the CFA Institute and the CFA Society Chicago. Alaina received a B.S. from the Wharton School at the University of Pennsylvania and an M.B.A. from the University of Chicago’s Booth School of Business.

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