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Macro overview by Global Fund Exchange

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Investing in the future mega macro trends of our planet - Energy, Agriculture, Water, Natural Resources

Investing in the future mega macro trends of our planet - Energy, Agriculture, Water, Natural Resources


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  • Fix charts, perhaps re-color? AL to add source: Sigma XI
  • NY to fix grid in back
  • Lighter on background, maybe add picture in bottom right corner
  • Olympics slide updated as of May 2011 with 2010 year end data. Notes:“A report by the Pew Charitable Trusts lists China as the world’s largest clean energy investor with a whopping $54.4 billion invested in 2010, with Germany following in second place with $41.2 billion invested and the United States in third with $33 billion. China first surpassed the United States as the world’s clean energy investment leader in 2009.”
  • World Bank reports global demand for water is doubling every 21 years – water supply cannot remotely keep up with demand as population soars, countries develop and agriculture expandsGlobal water sector currently valued at $425 billion; over next 20 years expected to reach $6 trillion, an annual growth rate of 14%Water is our most critical resource. Cost of water is <1% of disposable income, increases are inevitable 17.5 million gps (gallons per second) of water are used globally, compared to 41,000 gps of oil. Technologies for cleaner and more efficient water utilization are imperative for future generationsShrinking supply of fresh water resources as a result of weather changes, pollution, over exploited ground water aquifers and aging and obsolete infrastructure are driving stimulus and incentives worldwideProfit opportunities in infrastructure, smart meters, water rights, desalination, purification & energy efficiency
  • Talking points: Every second, the world uses 17.5 million gallons of water (compared to 41,000 gallons of oil). $150 billion required to upgrade aging water infrastructure in U.S. $125 billion new funding to build new wastewater treatment plants and expand distribution in China.NY to flip waterfall in background
  • Replace chart with our version
  • Make this picture transparent for background. Take top sentences and make “cool quotes” like earlier clean energy slide. Maybe insert pictures in a horizontal row along the bottom of resources I mention – i.e. iron, aluminum, copper, nuclear power plant, lithium
  • PEOPLEGlobal population increases by 79 million people per year, combined with dramatic increased demand from developing countries and a 9% current average oil depletion rate make oil an unsustainable commodityPeople are causing global warming by burning fossil fuels (like oil, coal and natural gas) and cutting down forests. Scientists have shown that far more CO2 is being released into the atmosphere than ever in thousands of yearsRising seas as a result of global warming would inundate coastal communities, contaminate water supplies with salt and increase risk of flooding by storm surge, affecting millions of peopleThe world will need a whopping 64 mbpd of new capacity between 2009 and 2030 to meet an anticipated demand growing at 1.6% per year…. the equivalent of adding 6 new Saudi ArabiasClimate change has become a top political priority. Increased pressure for global action will affect conventional fossil fuels and the economy surrounding themPLANETDemand for oil is increasing; however discovery of new supply has been in continuous decline for over 40 years. The impact of the emissions produced from the increased demand for fossil fuels will be catastrophic for our planet. Increased demand for these commodities will insure depletion of the available reservesFor every 9 barrels of oil we consume, we’re only discovering one. All readily available oil has peaked, leaving reserves that are much more difficult and expensive to obtainHigher levels of CO2 have already caused ocean acidification. Scientists warn of devastating effects on marine life and fisheriesExtreme weather events -heat waves, droughts and floods- are predicted to increase in frequency and intensity, causing loss of lives and property and throwing agriculture into turmoilCO2 can remain in the atmosphere for decades. Even with potential of lowered emission rates, we will be experiencing the impacts of climate change throughout the 21st century and beyondPROFITTraditional fuel sources will still be necessary to satisfy future demand, but will grow cleaner and more efficient with new technologyParadigm shift is occurring, but it will be an evolutionary process converting the planet to renewable resources. This “Bridge” period presents many opportunities for Traditional EnergyFalling commodity prices have delayed many oil infrastructure investments; may result in a supply crunch with higher oil prices than we have ever seen IEA projects spending of $26 trillion by 2030; over $1 trillion per year; to build, maintain and replace energy infrastructureEmerging cleaner technologies applied into traditional energy have the potential for improved efficiencies, increased production and distribution, and improved products and processes all at a reduced footprint
  • Transcript

    • 1. INDUSTRY OVERVIEW
      2
    • 2. POPULATION & ENERGY DEMAND
      We believe “Investing in the Future of Energy” is the most significant investment opportunity of our time.
      Population and income growth are the two most
      powerful forces behind the demand for energy
      Over the last 20 years..
      Population increased by 1.6 billion people
      Real income rose by 87%
      Over the next 20 years…
      1.4 billion projected increase in population
      100% projected increase in real income
      As a result, by 2030…
      Primary energy use expected to grow 40%
      93% of growth to come from non-OECD economies
      Developing countries to consume 2/3 of all global energy
      We are witnessing a paradigm shift in global energy
      New opportunities in both clean and traditional energy as
      efficiencies improve
      Fossil fuel energy sources are diversifying
      1990-2010: Fossil fuels made up 83% of energy growth
      2010-2030: Contribution projected to fall to 64%
      Rise of coal & natural gas
      China is building a new coal plant every week, tripling its consumption and becoming a net importer of coal
      New drilling techniques are “revolutionizing” natural gas industry
      Growing impact of climate concerns
      Source: Sigma Xi
    • 3. OIL DEPENDENCY
      By 2025, global oil demand likely to be 60% greater than
      today
      Annual rate of oil consumption growing in developing powers: China - 7.5% & India - 5.5%
      Both expected to take a “quantum leap” over the next decade
      “Peak Oil” concerns
      Experts say many of the Middle East oil nations, including Saudi Arabia, are already pumping oil from known “post peak” fields
      Once an oil field has reached “peak oil” – the rate of decline is dramatic and can be as much as 10% per year
      Growing interest in ‘unconventional’ oil plays
      ‘Big Oil’ shifting focus to shale gas, tar sands, offshore fields
      Source: CIA World Factbook
    • 4. INVESTMENT IN CLEAN ENERGY
      The International Energy Agency (IEA) predicts low carbon energy investments will reach $1.6 trillion by 2050.
      Global New Investment in Clean Energy (actual)
      Annual Required Clean Energy Capital (projected)
      Source: Bloomberg New Energy Finance, 2010
    • 5. CLEAN ENERGY INVESTMENT TRENDS
      Investing in clean energy is a top priority around the world.
      Worldwide investment topped $243 billion in 2010 -
      a 630% increase from 2004 levels
      China:
      As a percentage of GDP, China’s investment in alternative energy is already 10X that of the U.S.
      United States:
      $94.1 billion in U.S. stimulus funding dedicated to renewable energy sector over the next decade
      Europe:
      Germany, Spain, Italy focusing on solar energy
      UK and Scotland developing significant off-shore wind and tidal resources
      Middle East:
      New programs to promote and develop solar and wind farms and solar-powered desalination
      Using oil more efficiently through fuel cells, carbon sequestration, oil gasification, and green building.
      City of Masdar in Abu Dhabi:
      Aims to be the first carbon-neutral metropolis in the world and the center of global renewable energy research
      Source: The Pew Charitable Trusts, 2010
      Clean energy resources will affect all technologies and
      have an impact on every region of the globe
      Significant contributor to future energy demand
      Total clean energy generating capacity nearly doubled over past 3 years due to strong incentives and falling costs
      Projected sector growth to 934MW by 2020 –
      a 431% increase over 10 years
      Technology advancements increasing cost competitiveness
      Wind turbine costs have fallen 15-20% over past few years
      Energy storage and smart grid systems increasing energy efficiency
    • 6. RENEWABLE ENERGY OLYMPICS
      Sources: The Pew Charitable Trusts, 2011; SOPAC Applied Geoscience and Technology Division, 2011; Reuters; JDPower & Associates, 2011
    • 7. With 17.5 million gallons used every second…
      Water is our most critical resource.
      GLOBAL DEMAND FOR FRESHWATER
      The British non-profit International Alert released a study identifying 46 countries home to 2.7 billion people where water and climate stresses could ignite violent conflict by 2025
      UN Secretary-General Ban Ki-moon: “The consequences for humanity are grave. Water scarcity threatens economic and social gains and is a potent fuel for wars and conflict.”
      "We think there'll be world wars fought about water in the future," predicts the aptly named Peter Spillett of RWE/Thames Water, one of the three largest water companies in the world.
      World Bank reports global demand for water is doubling every 21 years – supplies cannot remotely keep up with demand as population soars, nations develop and agriculture expands
      Freshwater consumption has doubled since World War II and is expected to increase another 25% by 2030.
      Humans are extracting freshwater at rates up to 100X the natural replacement rate (World Water Council)
      Neyyar Reservoir Trivandrum, India
      MiyunReservoir Beijing, China
      Reservoir, Southern Spain
      Lake Mead Reservoir, USA
      Reservoir, Queensland, Australia
    • 8. THE CASE FOR INVESTING IN WATER
      The Water / Energy Conundrum
      Energy and water are inextricably linked
      It requires energy to produce and treat water, and vast water supplies to generate energy
      Fossil fuel power plants consume more than 500 billion liters of freshwater every day in the U.S. alone
      China’s reliance on coal will increase demand for water to 215 trillion gallons by 2030, 52 trillion more than currently available
      Strain on global infrastructure will catalyze
      new investment
      Estimated $1 trillion needed over next 20 years to meet global demand for clean water
      U.S.: $150 billion required to upgrade aging water infrastructure
      China: $125 billion new funding to build wastewater treatment plants and expand distribution
      Sector poised for tremendous growth
      Global water sector currently valued at $425 billion
      Over next 20 years expected to reach $6 trillion, with an annual growth rate of 14%.
      On average, water costs are less than 1% of disposable income, making price increases inevitable
      285 public water stocks / $750 billion market cap
      Profit opportunities in:
      Infrastructure
      Smart meters
      Water rights
      Desalination
      Purification
      New technologies
      Energy efficiency
      Wastewater reclamation
    • 9. GLOBAL AGRICULTURE CHALLENGES
      Population, rising income and urbanization are shifting global
      dietary patterns
      World population to top 9 billion by 2050
      Agricultural output needs to grow 70% to meet new demand
      Newfound prosperity will catalyze a “historic shift” in global dietary patterns
      Growing middle class shifts away from grains and vegetables to a more meat-centric (and more energy-intensive) diet.
      FAO statistics show “remarkable” increase in consumption of livestock products in East Asia, mainly due to China.
      Significant growth projected by 2030
      Decreasing availability of arable land
      Arable land per person decreasing in Asia, where demand for food is increasing the most
      ‘Land grab’ phenomenon
      In 2009, foreign investors purchased 111 million acres of farmland in developing world - a tenfold increase over 10 years
      The biggest buyers? Sovereign wealth funds from China, India & Middle East seeking agri resources
      Competition from biofuels
      New mandates will require 240 million more acres for biofuel crops; equivalent of 50% of arable land in North America and 6% of world total arable land
      1 out of every 4 ears of harvested corn in the U.S. - the world’s largest producer - winds up in an ethanol plant.
      Generating 1 gallon of fuel from irrigated corn requires 650 gallons of water
    • 10. WHY INVEST IN AGRICULTURE?
      Are we witnessing the “end of cheap food?”
      Over next decade, Food & Agriculture Organization (FAO) predicts grain prices will remain 15-40% higher than 1997-2006 levels
      Last year, the cost of total global food imports topped $1 trillion for only the second time in history.
      In 2011, costs of food imports are on track to reach record highs, warns United Nations
      Commodity volatility in an uncertain market
      Sky high food prices are nearing 2008 records, prompting U.N. to warn of pending “food crisis”
      Weather anomalies have devastated crops, leading to price jumps in wheat, soybeans, corn, coffee, sugar and other basic commodities.
      Agriculture has a severe water problem
      Nearly 70% of global water consumption is used for irrigation
      Agriculture can command up to 90% of domestic water resources in developing nations
      Every year, the global agricultural sector wastes approximately 60% of the 2,500 trillion liters of water it uses
      Irrigation and crop yield challenges
      Despite years of advances, gains in agriculture yield per acre have slowed down to less than 1% a year
      New investment is crucial
      FAO says new demand requires a 47% increase in annual investment in agriculture in the developing world
      Current investments levels of $189bn must reach $279 billion/year at a minimum, and $479 billion/year to combat global hunger
    • 11. INVESTING IN NATURAL RESOURCES
      “ We are running a natural resources deficit. It takes 1 ½ years to replenish 1 year’s consumption of natural resources.
      By 2030, meeting global resource demands will require the equivalent of two Planet Earths.”WWF, Living Planet Index Report 2010
      Energetic Limits to Economic Growth
      Resources and energy supplies are “limiting factors” to economic growth & development
      Developing economies rely upon access to industrial metals & minerals
      Resource demand from developing world to exceed that of developed world by 2015
      China now consumes:
      One-half of world’s iron ore
      One-third of world’s aluminum
      One-quarter of world’s copper
      Increased spending on infrastructure worldwide
      Resource scarcity prompts race for overseas supplies
      Developing nations racing to make foreign acquisitions in a “global land grab”
      China, India & Middle Eastern nations have struck notable deals in Australia, Africa & South America
      Demand increasing for rare earth elements & lithium
      Crucial for clean energy technologies, advanced batteries, electric vehicles and high technology manufacturing
      China dominates rare earth market with 95% of supplies
      A Nuclear Energy Comeback
      China has 20 new nuclear plants under construction and plans for six-fold increase over next decade.
      Global demand for mined uranium predicted to increase 4X over the next 30 years
    • 12. HEDGE
      SYSTEMATIC
      CARBON
      ENERGY
      RESOURCES
      AGRICULTURE
      WATER
      CLEAN ENERGY
      PROFIT
      PEOPLE
      PLANET
      COMMODITY
      STRATEGIES
      EQUITY
      STRATEGIES
      TREND
      STRATEGIES
      Population growth
      79 million people/year
      Energy demand to increase 50% by 2030
      Diversification of energy resources
      Significant profit opportunities
      Economic, political & social catalysts
      INVESTING IN THE FUTURE OF ENERGY
      Dramatic increase in energy spending
      Stimulus Spending
      Energy security
      Resources vs. Consumption
      Largest global macro theme worldwide
      Pollution & climate change
      Water scarcity & increased demand
      ENERGY – WATER – RESOURCES – CLIMATE
      CONUNDRUM
      MACRO SNAPSHOT
      THE BRIDGE PERIOD
      Traditional energy becomes cleaner & >>>
      more energy efficient
      <<< Clean energy becomes more cost efficient & accessible

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