REO = Rare Earth Oxide – a chemical from a collection of minerals whose particular properties can be exploited for certain technologies integral to the green energy transition, defense technology, artificial intelligence, supercomputing and ultra-advanced semiconductor production. REOs are unevenly distributed throughout the Earth’s crust, with some only known to exist in financially viable amounts in one or two areas worldwide. 

Eco-Urban Carrying Capacity

Cities, massive agglomerations of individuals cooperatively living together in concentration, are widely extant around the kingdom of the living, and they are not a human invention. Nonetheless, it is human cities and the growth of their environmental impact that are now the center stage of the living kingdom, and their environmental impacts are paramount. Because cities offer greater economies of scale and allow humans to live with generally less resource-use-per capita than rural inhabitants, we cannot neglect continuous improvements in eco-urban development in the ongoing design of our species’ future.

Since all cities have a dramatic impact on the local environment, determining a population carrying capacity for an urban area that sustainably manages its ecological impact is perhaps the most important metric in all future urban planning. As most of the world will wind up living in cities over the coming decades, each locality needs to begin collecting and analyzing metrics on overall resource usages, waste production levels (including carbon!), and how much food can be produced and sourced locally versus imported in from nearby regions. Nearly all cities fail to produce even close to enough food to be nutrition-sustainable; there are great strides yet to be made in this respect. Investors should look to Singapore for modeling of best-use practices in land and water management, urban infrastructure, green architecture, and self-sustainability.

Resource Extraction

A critical lynchpin in the current global resource extraction concern is what can be thought of as the human civilization energy requirement. This is not an exact figure, but rather a metric of how much total energy humanity utilizes/consumes to power its global society. Energy use is growing dramatically across Asia, particularly in the PRC and throughout Southeast Asia^(OWID), and the major energy/fuel providers are the primary beneficiaries of this growth. As the green energy transition continues (which is, of course, a non-negotiable eventuality, if we agree that we intend to survive) it is the same legacy energy providers that are best positioned and best capitalized who will facilitate the operations. The resource transition will be from fuel-intensive (ie:, oil, coal, natural gas, etc.) to mineral-intensive (REO-based batteries, wind turbines, advanced rocketry and satellites, nuclear reactors, photovoltaics, etc.) and will be funded and performed primarily by the largest and usual players, those most likely to survive the enormous capital and logistic requirements.

As much as it may pain many environmentalists to admit, the largest fossil fuel companies are also many of the most likely leaders in the future clean energy game. Resource extraction is a complicated endeavor, requiring businesses to navigate swamps of land use and zoning rules, environmental harm, environmental activist blowback, massive upfront investments, possibly years of lead time before a profit can be turned, fluctuating extraction site viability due to volatile resources prices on the open market, opportunistic local officials who make ethics and information transparency more difficult, and countless other regulatory, financial and unforeseeable circumstances related to resource exploitation. New and undercapitalized companies trying to open up new (or newly-viable) mines or processing plants and carve out market share in the ever-expanding green energy game will continue to have a hard time not being trampled or acquired as the larger players deploy their larger resources and pre-existing resource extraction relationships with international governments, gobbling up an ever-greater market share themselves all the while.

Who will be the winners of the resource extraction game? Whichever among the big players deploys capital and efforts the fastest and most broadly will have first position and primary name recognition, with the leader spot already being challenged by Saudi Aramco, the mammoth Saudi Arabian natural gas and petroleum SOE with over USD$160B in profits in 2022. Going green is a key (marketable) focus for Aramco, and large capital outlays in that direction (like the USD$1.5B sustainability fund unveiled last October) will force competitors to follow suit—a good thing for everyone.

As the bulk of investments swings over to low-carbon technologies, the REO and mineral-based resources that enable those technologies will be folded into the greater energy-acquisition supply chain infrastructure, continuing to bring new entrants with specific mineral-rich deposits domestically into the game in new ways. The Philippines has the only two chromium mines in East or Southeast Asia, and some of the only extraction sources outside of Africa.^(USGS) Similar is true for four titanium-zirconium extraction operations in Vietnam, which only have one other titanium mine regionally, in China, to compete with.^(USGS)

As always, countless new and yet-to-be-discovered technologies use these and other REOs to facilitate novel advanced functions; it is impossible to know for sure which new markets will open up in the future, but it it’s not impossible to determine, with a fair degree of support, who will be able to take advantage of new developments the quickest and most efficiently.

Carbon Trading

Putting a market price on carbon is an eventual certainty in the global economy. It has already begun in some local areas and the widespread economic effects are profound. Across the trans-Pacific, “cap-and-trade” programs (which regulate the given carbon markets) exist in Japan, South Korea, China, New Zealand and Canada, with many more in consideration or early stages. In the US, no national program exists, though (now twelve) states on the East coast have formed the Regional Greenhouse Gas Initiative cap-and-trade conglomerate, and California operates a tightly regulated program (largely boosted by the popular Zero-Emission Vehicle (ZEV) credit) with Tesla being one particularly notable success story. Tesla famously raked in hundreds of millions in $USD each quarter from regulatory credits in California until it finally accounted for profitable revenue in 2020.

Implementing a pricing of carbon and allowing the mostly-free market to determine value and demand is a proven effective way to not only accelerate the innovation and adoption of eco-friendly and green energy technologies, but also support new entrants into concentrated industries, improve environmental data collection and analysis efforts, and constructively network a growing general public interest and awareness in the interconnectedness of human society with the natural world.

In 1997, in perhaps the largest and/or best known prior example, the Kyoto Protocol established billions of clean development mechanism (CDM) carbon offset credits and passed them out to 111 member nations over the ensuing years. In 2013, uncertainties about future prices in the international market caused the price to crash below about 1 euro/tonne, where it still remains.^(RT) This does not prove that carbon trading programs are inherently flawed or unsuccessful, only that international concerns can make internationally-based markets less stable; local markets, as previously mentioned, have fared far better.

Japan’s J-Credit Scheme, which has a purely national focus, has only been open for 10 years and already has nearly a thousand (944) projects in development.^(JC)

Canada’s GHG Offset Credit System, just launched in 2022, is another strong federal effort to encourage market-based incentives for the use and development of green technologies in businesses to reduce their environmental impact.

As these programs find continuing local success, the capitalist impulse will motivate their further spread throughout other nearby regional markets, a net positive for awareness about environmental impact. Investors would be wise not to overlook the impact of a carbon credit market applied onto the companies and industries they are targeting because, as was proven the case with Tesla, deftly navigating carbon credit regulatory terrain can be very worth the effort, allowing new competitors to gain leverage in industries being reshaped by environmental concerns.   

From a stepped-back view, carbon trading is one approach to humanity’s reconciliation with its energy use, particularly as it pertains to atmospheric emissions. Each year, more and more cities, counties, provinces, states, regions and nations are facing up to the ecosystemic realities of human existence and putting policy action into place where the environmental consciousness has risen to such heights that elected officials can’t hope to succeed without addressing it. As the proportion of humanity adjusts upwards towards environmental consciousness, so will the most clever capitalists (many of them employed at major energy companies, others at young “green” and tech startups with remarkable, yet-to-be-widespread technologies) find opportunities to negotiate their enterprises through public and market sentiments into eco-conscious profitability.