The chairman of one of my funds kindly emailed this fascinating snippet last week.

This first story I think sums up brilliantly why anyone interested in decarbonization and a strong ESG agenda needs to be investing in renewable energy funds.

The observation comes in a Kepler note on Greencoat UK Wind (UKW).

“The managers estimate UKW prevents over 1m tonnes of CO2 per annum from being emitted with thermal generation being the alternative. We calculate that this is equivalent to 0.8kg per share. Setting this into context, a flight from London to Milan emits 181kg of CO2 (Source: Atmosfair). A £10k investment in UKW is equivalent to 5.6 tonnes of CO2 “prevented” per year.”

This is I think utterly fascinating. Most consumers and investors worried about offsetting their carbon footprint have been directed to pay money to forestry developers who plant trees. This is an excellent pursuit and one I would applaud but it’s not an investment on which you will see any direct, individual return. You will of course benefit from a more natural, lower carbon-climate system.

Why not encourage all those flyers – and eco worriers – to just invest in a renewable fund? Our personal footprint is around 7.1t based on the last figures I saw a few years ago, whereas a return flight to New York is likely to use around 1.2t of C02. So, on this basis a £10k investment in a renewables wind fund could offset all that use. And along the way you get an investment in a fund that has increased steadily in price and is likely to yield around 5% per annum.

On a side note, I see the FT reported that some new offshore wind sector auctions have been pitched at prices that may not ever require any government subsidy. This resonates with stories I’m hearing from India and the US where solar pricing is now much cheaper than cheap coal.

We are I think rapidly approaching the crunch point where legacy energy infrastructure is the dog wagging the tail. The frontline of new production capacity is cheaper than the legacy sources but the nature of the energy infrastructure forces us to lengthen the lifespan of these legacy facilities.

One other observation today, on lifetime mortgages.

I’ve been quietly watching the growth of the equity release and lifetime mortgage sector for some time now. Despite worries about financial covenants and the impact of increasing customer longevity, the tide is slowly turning towards these products. We hear lots of politicians babbling on about how to incentivize downsizing but my sense is that this probably won’t get anywhere. Most pensioners don’t live in huge mansions and are clearly reluctant to sell up and engage in the misery of dealing with lawyers and estate agents.

Equity release products and lifetime mortgages represent the market’s answer to the problem. I note that Nationwide is now moving aggressively into the market with some excellent products. There are also new players in the market such as which put out an interesting press release on its new low rates last week.

It says that its new best buy lifetime mortgage product has a rate of 2.82% APR (2.74% MER) which “beats its own previous market-leading rate of 3.02 APR (2.98% MER), which was released in August.”

Why these ever-lower rates? The answer seems to be a record number of sales in the bulk annuity sector. “With gilt rates falling, those managing investments on behalf of annuity providers have been searching for stable, low-risk investments — and lifetime mortgages have hit the spot.”.

These low rates represent a real bonus for older investors who have otherwise been punished by QE and a low rates for longer market environment.  Their savings might not be producing much in the way of income yields, but every 1% off the lifetime mortgage rate represent s a huge cumulative impact on a carefully structured lifetime mortgage product. To give an example, lets assume that a 70 year old pensioner borrows 20% of their home worth £200,000. That £40,000 initial principal sum has increased to £87,644 by the time the pensioner is 90 years old if the interest rate is 4%. But at 2.82% that sum at age 90 is £69,760, a reduction of roughly £18,000.