Jinhyung Kwon – EdgePoint Partner Since 2020 (Toronto, ON – Financial District)
Science or tobacco (Go West) - Geoff MacDonald talks about how fossil fuels have become the "new tobacco" in the media.
Note – Due to technical issues, we’re giving our readers another chance to read Geoff’s commentary.
This week in charts
Inflation was supposed to be done by now…
Maybe two years from now?
Where Canadian workers went
Nuclear Shutdowns Have Already Harmed the Planet
In total, since 2012, the carbon costs of nuclear phaseout policies in developed countries add up to about 800 million tons of CO2. To place that number into context, that’s enough CO2 emissions to melt 2400 km2 of Arctic summer sea ice, plus or minus another 240 km2. It equates to a full two years of nationwide fossil CO2 emissions from a medium-sized country like Turkey, Australia, or the United Kingdom, or more than 0.1 parts per million of the 416 parts per million of carbon dioxide in the planet’s atmosphere.
These totally unnecessary carbon emissions will continue to grow over the coming decades, with one academic paper estimating that added global emissions from Germany’s nuclear phaseout alone will total 1100 Mt of CO2 by 2035. With each additional year, the consequences of reactor shutdown decisions made years ago continue to accumulate around the world.
Why do shutdowns of nuclear power plants increase a country's fossil carbon emissions? This effect occurs because to date, low-carbon electricity formerly generated by decommissioned nuclear power plants in the wealthy world has largely been replaced by fossil fuels, causing added carbon emissions as a direct result of nuclear phaseout policies.
But even to the small degree that falling nuclear electricity generation has been replaced by renewable power, this represents “treadmill decarbonization” where low-carbon energy is simply replacing other low-carbon energy sources instead of reducing overall fossil fuel consumption. At a time when governments should be seeking to maximize the pace of clean energy deployment and taking fossil fuel power off the grid, treadmill decarbonization counterproductively expends resources swapping out clean nuclear energy for renewables while letting fossil fuel plants continue to run.
UBS Global Real Estate Bubble Index 2022
Real house price levels in Vancouver and Toronto have more than tripled in the last 25 years. An urban housing shortage amid strong population growth and falling mortgage rates are typically seen as the two main culprits of the long-term property bonanza in both Canadian cities. High investment demand has also added significantly to the price increases. The index has been flashing warning signals in the last couple of years.
The housing boom has become more of a countrywide phenomenon and is therefore hardly driven by a shortage of construction. In such overheated markets, with already very stretched housing affordability, the recent rate hikes by the Bank of Canada could be the last straw that broke the camel’s back. New buyers and owners during mortgage renegotiations not only need to pay higher interest rates but are also required to provide more income to qualify for a mortgage. Price correction is already in the making.
This week’s fun finds
Halloween – EdgePoint’s favourite holiday
Not just because it’s associated with orange, but because our fun-sized partners (and a few full-sized ones) get to dress up. A few even came into the Toronto office to trick-or-treat.
Edge-ucation camp
For “Take Our Kids to Work” day, we were able to bring back Edge-ucation camp, our financial literacy camp for teenagers. We talked about compounding, inflation and other basics.
"Some of the guys who made far less than me bought the $700,000 homes, and the Rolex watches, and the big luxury cars. I used to tell them, "You're crazy, you should be saving your money." They'd just laugh and make jokes about me stashing my money away. But I could see what they were doing. They were throwing away their future. So many of them were living for today and not even stopping for a minute to think about ten years down the road when their playing careers were over and the money stopped pouring in. And by the time they realized what I was telling them was true, it was too late.I can't tell you how many ex-teammates have asked me for money. It's heartbreaking for me to say no, but I do because I warned them. I told them to save."
