If you are talking about new construction it is expensive.
If you are talking inputs it is roughly the same.
You’d have to look up MIT’s archive to see Donald Sadoway’s opinions on this. Good luck MIT put plenty of its stuff behind a paywall. Have at it.
From 2023:
Global Banks Increase Fossil-Fuel Funding as Climate Pledges Crumble
https://www.wsj.com/articles/global-banks-increase-fossil-fuel-funding-as-climate-pledges-crumble-9bbafce4
Global banks significantly increased their financing for coal, oil and gas projects last year [2024] according to a new report by climate advocacy groups, marking a reversal at a time when lenders are backtracking on climate pledges.
The world’s largest lenders committed $869 billion to companies conducting business in fossil fuels in 2024, according to the “Banking on Climate Chaos” report published on Tuesday. This was 23% higher than the previous year and is equivalent to the gross domestic product of Switzerland. The report, which is in its 16th edition, is coauthored by a group of nonprofit organizations including the Rainforest Action Network and the Sierra Club.
DB2
How is this working out for you?
I saw your post was on Sept 2023 and COPF was $36 and today it is $42.
I both buy stock and sell options periodically, so I track them all together as one item. Using current prices, on COPX, my IRR is 13.32%, and on COPA, my IRR is 34.33% (but COPA is under a year so not meaningful yet, and doesn’t have options yet either).
But this is a long-term trade on electrification in general*. I expect copper demand to slowly rise as electrification progresses. It’s not a one year or two year thing, it’s more like a one decade or two decade thing. So far I am just over 3 years into this trade (first copper trade was in Jun '22), and I still buy opportunistically at low prices (haven’t bought any more COPX since Jun '24, all my sold put options have expired worthless since then).
* Because I couldn’t think of any other “efficient” long-term trade on electrification. If anyone can suggest any, I might consider them as well.
I did some queries using Grok. It seems that Aluminium has more demand (than copper) in various applications. It is the main metal used in some growing areas: Rockets, Drones, Electric transformers, EVs.
Then I checked Alcoa. Given the focus on home made manufacturing and tax incentives, PE ratio of 9 and dividends of 1.4% Alcoa seems reasonaly priced.
Yes, aluminum is indeed a metal that is more in demand than copper. But that’s because it is used for all sorts of things - airplanes, cars, rockets, soda cans, etc. But, for this investment, I’m looking for as close to a pure play on electrification as possible.
Alcoa may be a good investment. I haven’t looked at it yet.
fyi, a post that US aluminum is a recycling endeavor
no idea on how relevant to investing in aluminum industry, but presumably relevant
The new Statistical Review of World Energy was just released this week. The latest report contains information for the full year 2024. Below is a table of total world consumption of the three main fossil fuels, given in exajoules, plus a column showing the sum of all three.
World Energy Consumption, Exajoules
Year Oil Nat Gas Coal Sum
2019 194.39 140.59 157.06 492.04
2020 176.76 139.33 152.34 468.43
2021 186.65 144.81 160.71 492.17
2022 192.82 144.21 161.74 498.77
2023 197.40 144.50 163.15 505.05
2024 199.10 148.60 165.06 512.76
As of last year, consumption of petroleum, natural gas and coal are at all-time highs.
There was a hiccup in 2020 due to the world-wide COVID crisis and the economic disruptions it created. Since then, the world has got back to burning fossil fuels in an ever-increasing trend. There is no sign that fossil fuel consumption will peak out any time soon. Even if consumption does level off, or decline some, that doesn’t mean the atmospheric CO2 level will decline. The amount of CO2 going into the air every year ensures an ever-increasing concentration every year.
_ Pete
So…is the current “peak fossil fuel demand” the media stoked hysteria counterpoint to the “peak oil” media hysteria of 2008?
Steve
I haven’t seen any peak fossil fuel demand hysteria, have you? But the rate of increase is measurably slowing. If and when that rate gets to zero, the peak will have been reached.
If that trend is reserved there will never be a peak, but as of now all the indicators are pointing otherwise. Unless you can think of something I’m missing.