Renewable energy needs a rising coal price
New coal mine development might come to a halt as banks, financial institutions, and fund managers avoids funding those projects. Without new supply, coal prices are set to stay elevated for longer if not permanently. Coal price needs to stay elevated for renewable energy to be cost competitive.
The coal supply imbalance caused by ESG investing could benefit existing coal mine owners. Elevated coal prices will provide a windfall to existing coal mine owners such as DMCI Holdings (DMC).
Coal windfall could be reinvested in renewable energy
DMC can reinvest the windfall from coal towards renewable energy projects. DMC can well leverage its engineering and project management expertise in the renewable energy space. Renewable energy projects could come to scale just as coal demand wanes as coal-fired power plants are being mothballed.
DMC can marry renewable solar energy to its various thermal plants in Masbate, Palawan and Oriental Mindoro.
As coal demand wanes, DMC can also focus in nickel mining. Nickel is a key component in batteries which is expected to be in high demand as the world moves toward electrification.
Future of commuting could be electric powered mass/light rail
One of the targets of ESG investing is the fast shift out of internal combustion engine. Banks and financial institutions might soon be pulling out of diesel bus financing for public transportation. This could pave way for more mass/light rail projects in Metro Manila and in key cities in the country.
Just recently, in a press release DMC touted its engineering capabilities in mass/light rail systems. DMC together with Marubeni turned-over the completed 4-kilometer LRT-2 extension to the Department of Transportation.
More and more of this project will be unveiled by the government as the country shifts out of diesel buses for mass transport. DMC will be in the forefront in building these projects.
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