5 ms·

Not really. You don't need to get anywhere close to 100% to effectively make coal too expensive to be worth it. Even if he just convinces a few big ones that w

Not really. You don't need to get anywhere close to 100% to effectively make coal too expensive to be worth it. Even if he just convinces a few big ones that will make coal operations more expensive, hence less attractive also for other ones, hence more expensive... . Viscous cycle, virtuous cycle and all that. To win you only need the price to increase to a higher level than preferable alternatives and the market will do the rest.

LatteLazy 7y ago
How does not being funded by a few investors etc make it more expensive to be funded by others? Remember, these projects are inherently very profitable because coal is cheap and easy (and dirty, but dirty isn't a cost). If a big name won't invest for a 5% return, I'm sure 1001 small names will...
- diffeomorphism 7y ago
  > How does not being funded by a few investors etc make it more expensive to be funded by others? Supply and demand. If the number of investors goes down, the remaining ones can charge higher rates. The 1001 small names would be stupid to invest for 5% if they can get 6%. The coal company would build even more plants if it were lucrative, but at 6% such and such big investment does not make financial sense anymore.
  - sjwalter 7y ago
    Then central banks are poised to unleash a wave of coal on everyone to fight coronavirus as cost of capital is gonna get way cheaper in the coming months.
  - gruez 7y ago
    That also works in reverse. The higher the interest rate gets from supply and demand, the higher supply will be from defectors. You might be willing to divest if it doesn't cost you much, but if it means losing out on 20% of returns, you might consider otherwise.
  - 99052882514569 7y ago
    It's self-correcting. At 6%, more interest will be shown by other sources of funding, who will then enter the game and lower the interest rate as a result. The world is awash with capital right now, money sitting around idle, looking for a place to be invested. Just look at how much money is being thrown at startups, how low interest rates are for countries who were bankrupt or on the verge of bankruptcy <10 years ago. This scheme is guaranteed to fail right now. Maybe in another credit crunch it has a chance?
    - diffeomorphism 7y ago
      That is not what "self-correcting" does. Your argument does not show that it won't go up, but only that it won't go from 5% to 15% but rather find some balance at, say, 8%. Mission accomplished, coal is now at a disadvantage compared to what it was before. > The world is awash with capital right now, money sitting around idle, looking for a place to be invested. And considering that coal is not doing well (and thus has to offer higher rates), much of that money will be invested elsewhere. Sure, some will still be invested in coal but less than it would be if you didn't do that. This type of argument pops up often: "but there is a small counteracting effect, so it will balance out to not do anything". No, it does not work like that.
      - 99052882514569 7y ago
        >Your argument does not show that it won't go up, but only that it won't go from 5% to 15% but rather find some balance at, say, 8%. Mission accomplished, coal is now at a disadvantage compared to what it was before. Or it will settle at 5.01% due to the fact that a middle eastern sovereign wealth fund or two will be bigger than all investors who sign up to this scheme put together. >And considering that coal is not doing well (and thus has to offer higher rates), much of that money will be invested elsewhere. Sure, some will still be invested in coal but less than it would be if you didn't do that. But that has nothing to do with global warming or ethics of coal. It's mostly due to natural gas becoming so much more economical, which is mostly due to the shale gas revolution. It's a huge benefit to the planet, but mostly an incidental one. Of course politicians and energy companies will still use it to pat themselves on the back very very publicly. >This type of argument pops up often: "but there is a small counteracting effect, so it will balance out to not do anything". No, it does not work like that. Depends on the scale of the pro-acting effect. My guess is that the effect of 'ethical investment' due to ethics/global warming alone, and not due to fundamentals of energy markets that have to do with prices of natural gas, will be close to zero. If I'm wrong, it'll only be because a majority of investors who would have otherwise invested in coal (important distinction) jump on board this campaign, or close to a majority.

LatteLazy 7y ago

How does not being funded by a few investors etc make it more expensive to be funded by others? Remember, these projects are inherently very profitable because coal is cheap and easy (and dirty, but dirty isn't a cost). If a big name won't invest for a 5% return, I'm sure 1001 small names will...

diffeomorphism 7y ago
> How does not being funded by a few investors etc make it more expensive to be funded by others? Supply and demand. If the number of investors goes down, the remaining ones can charge higher rates. The 1001 small names would be stupid to invest for 5% if they can get 6%. The coal company would build even more plants if it were lucrative, but at 6% such and such big investment does not make financial sense anymore.
- sjwalter 7y ago
  Then central banks are poised to unleash a wave of coal on everyone to fight coronavirus as cost of capital is gonna get way cheaper in the coming months.
- gruez 7y ago
  That also works in reverse. The higher the interest rate gets from supply and demand, the higher supply will be from defectors. You might be willing to divest if it doesn't cost you much, but if it means losing out on 20% of returns, you might consider otherwise.
- 99052882514569 7y ago
  It's self-correcting. At 6%, more interest will be shown by other sources of funding, who will then enter the game and lower the interest rate as a result. The world is awash with capital right now, money sitting around idle, looking for a place to be invested. Just look at how much money is being thrown at startups, how low interest rates are for countries who were bankrupt or on the verge of bankruptcy <10 years ago. This scheme is guaranteed to fail right now. Maybe in another credit crunch it has a chance?
  - diffeomorphism 7y ago
    That is not what "self-correcting" does. Your argument does not show that it won't go up, but only that it won't go from 5% to 15% but rather find some balance at, say, 8%. Mission accomplished, coal is now at a disadvantage compared to what it was before. > The world is awash with capital right now, money sitting around idle, looking for a place to be invested. And considering that coal is not doing well (and thus has to offer higher rates), much of that money will be invested elsewhere. Sure, some will still be invested in coal but less than it would be if you didn't do that. This type of argument pops up often: "but there is a small counteracting effect, so it will balance out to not do anything". No, it does not work like that.
    - 99052882514569 7y ago
      >Your argument does not show that it won't go up, but only that it won't go from 5% to 15% but rather find some balance at, say, 8%. Mission accomplished, coal is now at a disadvantage compared to what it was before. Or it will settle at 5.01% due to the fact that a middle eastern sovereign wealth fund or two will be bigger than all investors who sign up to this scheme put together. >And considering that coal is not doing well (and thus has to offer higher rates), much of that money will be invested elsewhere. Sure, some will still be invested in coal but less than it would be if you didn't do that. But that has nothing to do with global warming or ethics of coal. It's mostly due to natural gas becoming so much more economical, which is mostly due to the shale gas revolution. It's a huge benefit to the planet, but mostly an incidental one. Of course politicians and energy companies will still use it to pat themselves on the back very very publicly. >This type of argument pops up often: "but there is a small counteracting effect, so it will balance out to not do anything". No, it does not work like that. Depends on the scale of the pro-acting effect. My guess is that the effect of 'ethical investment' due to ethics/global warming alone, and not due to fundamentals of energy markets that have to do with prices of natural gas, will be close to zero. If I'm wrong, it'll only be because a majority of investors who would have otherwise invested in coal (important distinction) jump on board this campaign, or close to a majority.