Animal Spirits Podcast - Talk Your Book: Investing in Carbon Allowances

Episode Date: December 13, 2021

On today's Talk Your Book, we spoke with Luke Oliver from Kraneshares about the huge potential in carbon allowances. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits Talker Book is brought to by Crane Shares. Go to craneshares.com to learn more about their ETF offerings. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's wealth management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's wealth management. This podcast is for, informational purposes only and should not be relied upon for investment decisions. Clients of Ritthold's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Michael, there aren't many strategies that you and I don't have at least some cursory knowledge on these days. When stuff comes to us, we've kind of seen it all. This week we're talking about a fund that we basically knew nothing about going into it. The fund is, so I'm still not

quite sure what? No, I'm just kidding. So the inside of this fund are carbon credit futures. Am I saying it right? It's like there are carbon credits. Yeah, carbon allowances for the- Carbon allowances, okay. And there's already a billion dollars in this fund. It was started a little over a year ago. The performance has been fantastic. So this is basically governments incentivizing corporations to stop polluting so much. So if they're going to- Because they need to purchase carbon allowances for whatever emissions they're going to put out. And then once they buy them in the primary market, they then trade in the secondary market. Right. And the hope is that governments push up this price over time because they want to make it harder for companies to be able to

pollute. So I would never say that anything has a built-in bias to go up over time. But I feel like this kind of maybe does. Obviously, there's, I'm missing like everything here because there's no free lunch, but it's a very interesting idea. Why do I say that it's biased to go up over time? Well, because it's a limited supply of these allowances. Scarcity. I mean, you said it not, but it sounds like there is the scarce number of this stuff and these companies are going to be competing for it. And again, they want to make it more expensive over time. So this is a very volatile strategy. Wait, hold on. So they want to, this is both deflationary and inflationary. I think. Because depending on which side you're looking at. The prices are going

to rise, but the amount of carbon allowances is going to shrink overtime? Or it's going to be held constant, I believe. Okay. Anyway. I ask Luke Oliver, who is managing director and head of strategy at crane shares. That's what we talked to today. I was impressed with Luke mainly because he got my back to the future reference. I meant that what did you say? That went way over my head. I completely missed it. What did you say? The Bif Tannen Sports Almanac and back to the future too. Okay. It didn't go over my head. I wasn't listening. Okay. So, The fact that he got that and didn't just bulldoze over that, Luke is good in my book. He said now that he knows we're doing movie lines, if we bring him back, he'll be ready to go with more.

So here's our conversation, and this one's kind of mind-blowing to me, right? With Luke Oliver for the Crane Shares Global Carbon Strategy ETF. We are joined today by Luke Oliver, managing director and head of strategy at Crane Shares. Luke helps manage the Crane Shares Global Carbon Strategy ETF, and I have to admit, Michael and I did some research into this one. This was not the one that we knew a lot about. I think, Luke, you're going to have to educate us here on all this stuff. That's carbon futures and these allowances and what exactly it all is. So let's say we meet you in a bar for beer. Michael and I say, what do you do? And you say, I help manage this fund. Okay, what does this

fund do? Explain that to us. Sure, man, no problem. And we can do it at the bar next time as well. It sounds like we're meeting at a pub. Yeah, here we are. So we're at the pub. What is the carbon ETF and what are the carbon market? So I'll start with what the markets are. It's not controversial at this point. There is high concentrations of carbon in the atmosphere. They're causing warming. They're causing changes in temperatures in habitats and having disastrous effects. And if this goes on unabated, we're going to have some serious problems down the line to the most powerful tool. We've all started to talk about the E and ESG. We've all started to talk about impact investing. We've all talked about firms voting proxies in order of being active and having impact.

what carbon is, is there's two carbon markets, really. There's the offset market and there's the compliance market. The offset market, which I'm going to just touch on and put to the side, is where companies voluntarily opt to reduce their carbon footprint by buying offsets. So maybe those offsets come from preserving a forest, creates a carbon offset, and that allows them to say, we are carbon neutral, they emit carbon, but they also buy these offsets. That's a voluntary market, some interesting dynamics going on over there, but that's not what we cover. What we cover are the compliance markets. These are where governments, so the European Union, the California Air Resource Board, Reggie, which is an organization of 11 states in the

northeast, as well as China, South Korea, New Zealand, various other countries have these programs. But what the programs do is set a cap on how much carbon dioxide or equivalent can be emitted in their region, in their geography, and then they auction those allowances. So it puts a price on carbon. So companies, if you're a power station, you're buying coal, burning coal, creating electricity, you're emitting carbon, you're emitting a huge amount of carbon, and you're not paying for it. And that's causing these devastating effects on the climate, or certainly will over the next few years if we don't do something about it. And so by buying these allowances, it allows them to continue to do that. But here's the trick, that cap is managed

to reduce over time. And that's what creates the objective to reduce emissions by reducing the cap. But that's what makes this interesting in that you have a regulatory authority, issuing a finite number of allowances, and then almost like a central bank, they are telling you that their objective is to tighten and tighten and tighten until this price is much higher and emissions come down. And then you have a audience of companies in those regions that absolutely must buy them, but legally, mandatorily buy these allowances. So you have supply that is finite and reducing and becoming more scarce, and you have somewhat inelastic demand. The only way they can reduce their demand is by actually reducing their emissions. So that kind of sets the scene for

the investment thesis. You have something that is becoming scarce and it has an audience that has to buy them. And managing that demand versus supply reduces emissions and ultimately starts to put a dent in the climate problem. And it's been very successful. What we do is allow investors to get along that price of carbon. And so if you think about what putting a price on carbon does, suddenly you're putting a price on something that's never been charged for before that should have been charged for there's a cost to producing carbon. And so by putting a price on it, three pretty impressive things happen. I mean, this is Economics 101, but there's not so many pure plays when you look in the market today that really just follow these rules.

So very simply, you put a price on it. Suddenly you have an auction revenue. That auction revenue can be put into projects to an R&D and grants into climate change initiatives. And one of a good example is switching buses, municipal buses, into green buses, electric or hydrogen buses. The second pillar is the fuel switching. So if you're a power station or a cement company that's creating all this carbon dioxide buying coal, suddenly coal is getting handicapped because of the amount of emissions it has. You have to buy coal and carbon allowances. Now, if you buy net gas, it's only half the allowances.

So that starts to become relatively cheaper. So you switch naturally to natural gas because it appears cheaper and you just halve your emissions. And then the third one is the most fascinating to me is now there's a price on carbon. there's opportunity for people to create technologies that reduce emissions because there's a value to that now. 20, 30 years ago, if I invented carbon capture technology, no one would care. Today, people are going to say, well, 80 euros a ton of carbon and you can reduce my carbon output by 10,000 tons.

I'm interested in that innovation and I'll sponsor that innovation and I'll invest in that innovation. I'll certainly buy that innovation. And so you get these three-pronged attack that turns capitalism onto the problem of climate change just by putting a price on carbon. The ETF that we're talking about, the crane shares global carbon strategy ETF, the ticker is KRBN, that does not invest in companies that are disrupting this area. This is investing in carbon contracts.

And if I'm right on that, where do these things trade? Are these on exchanges? How does that all work? It's a pure play. It's on the price of carbon. You're getting exposure to the price of carbon. The carbon market have auctions where they auction these allowances into the primary market. Is that Sothebiz?

Something like that. Yeah. The European Commission runs the last. largest. They auction them. Those are then traded in a secondary market, but it's very opaque, it was bilateral contracts between different companies, but then there's a futures market. And it's the futures that give you the liquidity, the transparency, and the ability to access those markets. So we get our exposure through the futures market. Who's the primary buyer at those auction houses? So it's a mixture. So when I say a compliance entity, I mean a power station,

a steel manufacturer that need to buy these in order to continue operating their business. You also see speculators who potentially taking a long position in that primary market. And you might also see certain market makers take a position to buy the physical because they've already sold the futures to somebody so they're covering their risk. So they're the primary users. But the absolute sort of two base entities is the agency issuing them and the compliance company that needs to buy them in order to meet their compliance requirements. It looks like these futures trade in different countries. So there's a European one. You have a California one. A These different, so how do those work? So there's one for each country. Are they segmented?

Well, they're programmed. So there's the emission trading scheme. So California manages one, the California Air Resource Board. And that's connected to several Canadian provinces. So it's California and parts of Canada. That's administered by California. And there is an auction for that. There is a secondary market in that. And there is a futures contract on that. Same thing for Europe. Same thing for Reggie. Same thing for the UK, which has recently broken out of the European Union program. Where do the primary trade, they're unilateral between parties, whether the futures trade, these contracts all trade on ice. So there's some ice Europe for the EUAs in UK, and there's ICE U.S. energy for the Reggie

regional greenhouse gas initiative, that is, which is the northeast of the U.S. and the California. So they're all very transparently cleared at huge exchanges. So what drives the prices of these contracts? Is it weather related? Is it political climate? Like, I have no idea what I'm looking at. All that I know is that this chart looks like Bitcoin in 2020. It's just like straight up into the right. The scarcity thing you said almost sounds a little bit like crypto. It's fascinating because every time I say that, I almost can see in people's minds by making that connection. That sounds a bit like something I've heard somewhere else that there's this like falling cap and the amount issue comes down over time. But it's actually

nothing like crypto in that except for, as you've said, the performance has been up and to the right. Look, were you about to say the prices of these can't ever come down? No, I would never say that. And in fact, I can show you where they have and why they might. But I also can give you why the fundamentals here pretty constructive. But to your point, the crypto, the supply, yes, is a fixed amount in some of these coins. And they're slowly released over time. In this case, you have a government agency fully transparent and they are auctioning these publicly and then reducing that cap over time. So for transparency. The other one, and I won't get into a debate with anyone on the merits of crypto. currencies, but there is a very tangible use case, a utility for owning a carbon allowance. That is, if you're a power company, you want to create electricity, you need to buy that carbon allowance to do that. So there's a very tangible supply demand. So what drives the price, you have inelastic demand, and then you have an increasingly scarce

supply. I really like the idea of the central bank analogy by seeing the European Commission currently buys 24% of every auction into their stability reserve, and they reduce their cap 4.2%. each year. The overall driver of price is going to be that that cap comes down. The supply comes down. The idea, of course, is that you want to make it too expensive for companies to want to use this eventually. You're taxing cigarette prices 400% basically, something similar like that. Yeah, there's an analogy there for sure. And we want to get to a point where the carbon being mitigated increases. And to do that, you need to ride up the marginal abatement cost curve.

So the price of carbon should track where the next ton of carbon can be taken out of the atmosphere or not put into the atmosphere. Some of the big industrial processes, it could be quite expensive where carbon eventually ends up. So look, what does a bear market in this look like in terms of duration and what causes this and how deep can the drawdowns get? Well, we've seen a few examples. So the European market came to market just before the great financial crisis in 2008, 2009. And they oversupply to begin with to make it an easy, simple, well adopted program. And then we had this drop in economic activity. So they had a glup of supply for almost 10 years.

And it was only in 2018, 2019, that we started to see the price start to rise as the supply got used up. That inventory got used up. So we saw sideways to bearish bear market for about 10 years in EUAs. That, though, is somewhat changed now because we've had a shift in policy that we are. European Union really is shifting towards rising the price and hitting their 2030 Paris agreement targets. And of course, COP 26 focused on this a lot. But I'll give you another example. We had recently the month of October, we saw that net gas prices had reached incredible prices, I think 3, 400% up this year. I talked about the fuel switching. Coal gets expensive because

carbon goes up. People switch to natural gas. Well, natural gas became incredibly expensive. And so it stretched out that ability to switch. Now, as natural gas came back down, we saw volatility come back into the carbon market. So you could argue that there's these transitionary correlations to whatever the next cheapest way to mitigate carbon is. We saw some volatility in October. We saw the EUA sell off mostly through October on the back of falling that gas prices. Ironically, or not ironically, but almost by design, the global basket that we have was supported by the US markets. We're rallying during that same time. And we actually were net up in the global price of carbon. I was thinking this, if you're thinking about this from a

portfolio perspective, adding this position to a well-diversified portfolio, trying to think through the correlations. So those correlations could be changing depending on what commodities are doing, basically. But commodities would be the biggest driver? Correlations are low. Historically, the global carbon price has been below 0.4 correlation to equities, below 0.4 to commodities, very little correlations anywhere else. And they don't even correlate to one another. That kind of speaks to the fact that some markets have been more volatile than others, but they've balanced each other But Al, what it correlates to at any given time, I totally agree with you, will change because at the moment it has some correlations to natural gas, because that's the low-hanging

fruit to get away from emitting. Once that fuel switch is done and everyone's using natural gas and not coal, perhaps the correlation becomes carbon and solar, or carbon and wind, or carbon and nuclear. You name the next greener, and that's another debate on what's green and what isn't, but that's where the correlations could go. So I think there'll always be some correlation to something, but it will change. And I love, Michael, like you asked beginning something about, does the weather affect this? Maybe there's a correlation to weather at some point.

If you have a warmer winter, there was less coal being burned for heating and therefore lower emissions and therefore we might have soft carbon prices that winter. So there's lots of things that could cause softness, weakness, but overriding all of that is this falling supply. That supply coming down and this period we're in where we're seeing some price discovery of these carbon going from, you could argue, too cheap to the equilibrium price. I don't think we're there yet in any of those markets. Sticking with Ben mentioned portfolio construction, I mean, this is a big fun.

This honestly surprised me. There's almost a billion and a half dollars in this. Do you have any sense of where is that coming from? Are you the person on the front line explaining this to investors? Because I would imagine earlier, you maybe saw me smiling because I was just thinking like the expression of mine in Ben's face as we're trying to follow you. Like this is completely new to me. I imagine it's new to a lot of investors.

Who is buying this ETF? Our whole team is on the front line talking to clients. And a lot of it is this starting from grassroots, explaining the auction, explaining, going through the whole thing. You've got some nice charts and diagrams that illustrate it as well. So where we're seeing the most adoption is institutional and almost barbells with some self-directed retail as well. And the reason for that barbell is two reasons. One, we've seen family offices, endowments, pensions, really looking at this. I've never talked to so many family offices as I have over the last six months. And they're really picking up on it, wanting this in their portfolio, seeing the opportunity, seeing the diversification benefits. And that's where we've had the big pickup and then some self-directed on the other end of that barbell. The middle section, which is the traditional ETF market, as the wealth advisors, we're not yet on any of the platforms because we're only a little over a year old. And it's something relatively new. So it's taking a little longer to educate and do the due diligence and everything else. Are a lot of the family offices coming to you because of that ESG component of this or because

it's a diversifier or a little bit of both? It's a little bit of both. Certainly the ESG angle, the impact angle is what's attracting people. But a lot of people are writing this for the alpha. They just see the alpha opportunity and they're not putting this just in ESG portfolios. Some are. We're seeing others look at this as from the diversification. But unlike the diversification in say commodities, there is something asymmetrical here. And obviously I have to be careful about how I described this, but you've got this central bank. I keep using it. I love this analogy. I've been using it for about two weeks now. There's an analogy here.

There's someone controlling the supply in order to engineer an outcome. And to engineer that outcome, they need the price to be higher. It means you have to buy every dip then, right? You could argue that. And there's a big dip in California right now. Well, Luke, I don't know if you know this. Ben is a J. Powell affixionado. So that analogy really landed with...

Don't fight the Fed. That landed with him. Do you have any sense of... So this is a new strategy. And my God, I can't believe it's at a billion and a half already, given that it looks like it launched just a year ago or so, is this actively managed? It says that it's an index. What exactly is this following?

It tracks the IHS market global carbon index. And the objective is to provide exposure to that index. We're not actively picking longs and shorts or under overweights to that benchmark. We're essentially providing exposure to that benchmark in a passive way. Of course, these are new markets. We reserve the right to, if we're rolling, rebalancing, we might want to manage that. slightly off index in terms of as a fiduciary to make sure we get our trades on in the most efficient way. Other than that, it's an index tracking strategy. As a benchmark, do you think you

could use this potentially as a benchmark to see how well the world is doing at fighting climate change? So if I told you the price of some of these things or the performance of your fund in three, five, ten years, do you think you could take that data if you had it ahead of time? You had the Bif Tannen that I gave you the data ahead of time. If you had that data, could you say I think this is where we are in terms of fighting climate change. Or do you think that this could become detached enough from reality where the fundamentals and the price might not be in alignment with one another? If I had the Bif Tenant Omniak and it said this is at $200 in two years,

that wouldn't necessarily tell me that the world is great and things are good and we're solving climate crisis. But it would tell me that the price of carbon is at a level where we should be mitigating a lot of carbon and reducing the carbon footprint. and we should have a lot, a huge amount of innovation into greener technologies, more efficiencies, carbon capture. So it's not a benchmark for success. It's an input for getting to the right place. I wouldn't say the higher this goes, the better the world is.

But I say the higher this goes, especially with stability, the better it is for the planet. Your job. I'm sorry. Sorry, for what? Yeah, it's always easy to have something that goes up and to the right. We do have to address. We saw California. We fundamentally think there's an overweight to California.

to be had right now. And yet, California had a big sell-off these last couple of days. And that was actually where we saw a bit of a detachment between speculator flows and where the California auction came in. And what was interesting is some people took that negatively because the auction came in weaker than the futures price. So the futures corrected, of course, futures and the physical always have to converge together. So there's a little bit of a repricing. But what was interesting, what not everyone picked up on is the reason it was weak is there were fewer speculators showed up to the auction. It was just compliance entity. but 10% more compliance entities than usually go to the auction.

So the actual primary demand is increasing. And I thought that was actually a bullish signal underneath what apparently looked like a bearish one. So the market was in contango unless it was in backwardation. Well, there's a whole, and I used to manage commodity funds. I used to live and breathe contango and backwardation. And it's funny that I'm back talking about it again. But certainly there's some in there, but it's not like oil. You're not going to get the direction right and lose.

I still get those two mixed up every time. Same. Is there enough liquidity there? Because obviously there must be for you guys to have a billion dollar fund, but are there entities that could push the prices around maybe where you're seeing, you said this California you expect it to be good, but it's selling off. Is that possible where some big players come in and can push things around? I think this lasts because they're quarterly.

I think what needs to happen is all of the markets need to have more frequent auctions just to give the market more transparency. What happened here and what I've said to some investors that have asked me about this, I've said, well, there was a bit of a shock here. Keep sticking with the power analogy, imagine you were expecting a quarter percent rate hike and you got a half a percent rate hike and you have a wild couple of days. Same thing. So we had a bit of a shock. I think, though, that in having that shock in these relatively new markets, suddenly those hedge funds now are thinking we miss something, what do we need to study for next time and how do we arbitrage that and make sure? And I think you'll have more scrutiny and money going to work trying to smooth out that curve, not because they're altruistic, but because there's opportunities there. So I think, in any asset class flows can ultimately move the market. The markets have been kept in check. They're efficient markets.

I think that they're not as efficient as U.S. large-cap equities, but they're efficient and certainly we just went through a role. We just rolled 100% of the fund into the next year's contract and had almost no impact on our trading. So I think that's the proof of concept on the liquidity side. I understand the institutional desire for this sort of asset class because I can't imagine what it is correlated to. A lot of things have non-correlated.

But then what people really say that they want is negative correlation, especially in bare markets. So I'd be curious to know, again, this is obviously not a hedging against your other asset class strategy. But it does seem to be completely non-correlated. Even as natural gas features are crashing, it seems to be non-correlated. But what would this strategy have done? It wasn't live. What would this have looked like in 2020 in March when everything was correlated and everything went to one? So we were life.

Oh, you are? So it's we're about a year and a half. July 19 we launched. Huh. What am I looking at? You're making me question now. Am I going crazy? The ticker is KRBN?

KRBN. Oh, look at that. I'm glad for a minute there. I thought I was wrong. Oh, wait a minute. Wait a minute. Wait a minute. No, you are wrong, unless I'm wrong.

July 20. I see July 2020. Oh, I'm sorry. Yeah. Sorry, you're right. Sorry, we had the index running prior to that. Oh, so what did the index do? So the index dropped.

Correlations spiked like everything else. We saw correlations move closer to one, although we saw the correlations come back pretty quick after that. So certainly, you're not. completely uncorrelated to anything else. When you say the index dropped, is it like, are we talking like 12% or like 31%? Do you know? I'll have to go back.

Like you said, we weren't live, so I wasn't overly watching what we did there. But the correlations were definitely stepped up. And also it makes sense why they stepped up. You had a reduction in economic activity. So you had less output. You had less emissions. So you had less demand for allowances. So in a recession, it makes sense that this would probably drop as well.

It makes sense that demand for carbon allowances could drop in a recession, but don't forget you've got this accelerating reduction in supply. It's all about the relative, if the economic activity slows down, it might not be enough to slow down the price because the supply keeps. The other thing is in a bare marker, there's also demand for liquidity. So this can get sold for non-economic reasons that can also punish the index. Possibly. As these markets have become more liquid, we've seen the risk-off sentiment in Europe and carbon

sells off too. That tells you that you've got a little bit of people rebalancing. You're kind of moving into the mainstream of portfolios and you might see correlations pick up a little bit. But all of the drivers here are completely different drivers. I mean, again, we'll go back to the weather. There was a story in Europe a couple of months back where the windmill turbines were producing less electricity because they called it global stilling where wind levels had dropped. And as a result, you saw carbon move higher because the idea being if you're not generating it from renewables, someone's going to have to burn coal to create that electricity, and therefore you've got the emissions going up, therefore the demand going up for carbon. So there will be correlations to all sorts of

things, but they're not the same things that are driving everything else. But it's not a magic bullet by no means. To be clear to that point, I see the max drawdown in October 2020 was around 17%. And there's been a handful of other like 10% here and there, even though the chart looks incredible, there have certainly been dips along the way. The volatility is high relative to equities. But the returns have been commensurate with that and from a sharp perspective. Yeah, it's up 100% this year. Yeah. How do you set those return and risk expectations with people? You obviously have the correlation data, but how do you go about setting what's reasonable for people in this fund?

Really, we give them the information. They make the decision on what's palatable. There's a few other things I'll add here. So we talked about correlation. We talked about this potential, you can't call it asymmetric. It's definitely a little bit of a bias to direction here based on the management of supply. And then not only do you then have the ESG and impact element that are attractive, this is almost the secondary and supporting argument that a lot of our clients use when we're making the allocation is it's also a macro hedge to equities because this is a cost that's rising for every company.

This is going to be a drag on equities, maybe belong that thing. And even your ESG portfolio owns a bunch of energy companies that are the greener energy companies and therefore you're still dealing with a big carbon footprint. And then the follow-through of that is if those companies start passing this rising cost to their customers, you could have inflation. So arguably, carbon could be an agent for inflation. And I'm sure we could debate the merits of that, but that's the reality. I see that the currency exposure breakdown, speaking of inflation, we got to talk about currencies, 56% euro, 42% USD and 5% British pound. So currency fluctuations have to play a fairly.

meaningful role in the direction of this portfolio or not necessarily? No, they do. And that's by design because in theory, a futures contract is just a price return, give or take your margin requirements and things like that. We specifically wanted to create a global price of carbon. So we wanted currency exposure. So it does mean we do carry that euro. We do carry that pound. And then we, I guess you're a neutral. If you're a U.S. investor, you're neutral on the dollar part. But we do have a lot of international investors in this fund. If you're a traditional stock picker and you're thinking through which companies are the most impacted by this? Obviously, energy comes to mind, but are there any other sectors or industries that are going to be impacted by the potential

rising price here? Cement, steel, glass, and aviation. Aviation is getting a bit of a pass at the moment, but those three I just mentioned are the ones that get picked up, the biggest polluters. Transport is another one. Agriculture is a huge one. And some of the agriculture and some of the other heavy industry, they're not really going to be able to do much about reducing their emissions, or that they're going to have to keep buying these up until the hundreds before it makes sense for them to switch to some alternative greener. That's also sort of a bullish signal. There's a marginal abatement cost curve that kind of shows you at what price certain industries can decarbonize and it gets up there. Luke, is there anything that we missed?

I mean, this is all very, very new to me and to Ben. So this is super interesting. Anything that we didn't get to that you wanted to? I think we covered a lot. There was a lot in there. we had back to the future references and it was good. I'm glad you picked up on that. Thank you. Yeah. I think the one thing just for people to bear in mind is that the objective here isn't just for the price to go up and be long.

I mean, that's kind of what we all want from a portfolio perspective. I think we covered that. But ultimately, this rising price is for those three reasons I mentioned at the beginning, going to catalyze a shift towards decarbonizing. And it's going to really be powerful and really going to do something that's going to avoid us having huge parts of the earth uninhabitable. by 2050. So this is important stuff. Luke, this is great. Thank you so much for coming on. Thanks, guys. Really appreciate it.

Thank you, Luke. Thank you, Crane shares. Animal Spiritspod at gmail.com. We will see you next time. Thank you.