OTTAWA (CP) - Abrupt climate change may soon force governments to choose between feeding people and fuelling SUVs, a respected investment firm says in a new study.Toronto-based Sprott Asset Management says global warming is occurring faster than expected and rising demand for so-called green fuel will cut into food supplies.
The investment firm produced a bleak study that also predicts increased regulation and ballooning deficits as governments try to cope with more frequent climate-related disasters while building new infrastructure to reduce carbon emissions. Hyperinflation is seen as a plausible result.
"Governments, business and the general public are just now waking up to the seriousness of global warming as we witness its consequences unfolding around the planet," CEO Eric Sprott and market strategist Kevin Bambrough wrote in the report.
The authors of the study are also predicting a huge expansion of nuclear energy, saying it is the cheapest non-carbon energy source that can be developed on the scale needed to meet growing fuel demands.
Most environmentalist continue to adamantly oppose nuclear power, but Bambrough said the technology is being improved, and none of the alternatives can supply energy on the scale needed.
The study raises major concerns about the current rush to biofuels such as ethanol and biodiesel. Biofuels are expected to figure prominently in Ottawa's new "made-in-Canada" clean air plan, due this fall.
"As oil prices surge the incentive to produce energy from vegetable oils heightens," the authors predict.
"This in turn is likely to result in the increased cultivation of plants like palm and soybeans, used to make biofuels.
"When we take into consideration the potential shortages of food crops that may result from an abrupt climate change, it is likely that governments will soon be facing a choice between feeding people and feeding SUVs."
The latest research shows biofuels require more energy to produce than they release when used, says the study. Corn, for example, requires 29 per cent more energy than the fuel produced.
Expansion of the biofuels industry is a major cause of rainforest destruction in Brazil and Southeast Asia, the report adds.
Carbon sequestration and coal gasification get high marks as potential technologies to slow the buildup of carbon in the atmosphere.
Uranimum mining is one of the big investment opportunities in a generally bearish picture, Bambrough said in an interview.